(Adds background, analyst, RMI statement, share price)
By Vidya L Nathan and Carolyn Cohn
LONDON Dec 14 South Africa's Rand Merchant
ramped up its presence in the British insurance market on
Wednesday with the purchase of a 30 percent stake in Hastings
, driving the UK firm's shares to 2-1/2 month highs.
Hastings, which listed just over a year ago, has made
headway in a competitive sector by focusing on selling motor
insurance via price comparison websites.
Hastings Investco, the firm's main shareholder, and other
individual shareholders are together selling up to 30 percent of
the firm to RMI in a deal worth between 487.3 million and 499.5
million pounds ($634.61 million), Hastings said in a statement.
RMI offered between 248 pence and 255 pence per Hastings
share, the top end of which represents a 15 percent premium to
the stock's Tuesday close.
"The acquisition meets RMI's objectives of diversifying
geographically, adding a significant traditional financial
services business alongside its existing portfolio," the
investment firm said in a separate statement.
RMI has a majority stake in OUTsurance, which offers motor
and home insurance in Africa, Australia and New Zealand, and
minority stakes in insurers Discovery and MMI, which also have a
presence in Britain.
KBW analysts said in a client note they saw RMI's stake
purchase in Hastings as "an endorsement by a player who has a
track record in identifying companies in the insurance space
that have superior...growth outlook," reiterating their
outperform rating on the Hastings stock.
Hastings' stock closed up 6.8 percent at 236.5 pence, one of
the best performers on the FTSE 250 index. RMI's share
price was steady at 40 rand.
As part of the deal, which makes the South African
investment firm the biggest shareholder in Hastings, RMI's Chief
Executive Herman Bossman has been named to Hastings' board.
The stake sale to RMI comes two months after holding vehicle
Hastings' Investco and founding shareholders Neil Utley, Utley
Family Charitable Trust and Richard Brewster sold about 45
million shares, or 6.8 percent of the company's then issued
Hastings said it welcomed RMI's investment, which both firms
have capped at 29.9 percent.
($1 = 0.7871 pounds)
(Editing by Martina D'Couto and Adrian Croft)