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. Last Updated: 07/27/2016

AXA Buys RESO Stake for $1.2Bln

Europe's second-biggest insurer, AXA, has made a major entry into Russia with a deal to buy a 36.7 percent stake in insurer RESO-Garantia for about 810 million euros ($1.16 billion).

The French insurer said the transaction was expected to be completed during the first half of 2008 and added that its investment was expected to be accretive to its earnings within three years.

RESO has a 7 percent share of its market and was Russia's second-largest insurance company in the first half of 2007, AXA said.

In the first half of 2007, RESO posted revenues of 446 million euros and a net profit of 41 million euros.

"This strategic investment is an excellent opportunity for AXA to enter the Russian insurance market, which offers strong growth prospects and a favorable business environment," AXA chief executive Henri de Castries said in a statement.

"With this acquisition, AXA will further reinforce its growth profile and increase its exposure to emerging insurance markets," he added.

AXA also said it had the option to buy out the remaining stake in RESO through call options that could be exercised in 2010 and 2011.

It added that AXA and RESO's shareholders had agreed to form a joint venture to develop an operation on the country's emerging life and savings market.

Brothers Sergei and Nikolai Sarkisov together own 85 percent of RESO-Garantia, and company president Andrei Savelyev owns 5 percent. The European Bank for Reconstruction and Development bought a 10 percent stake this year for $150 million.

Investment banks earlier this year valued RESO at $2 billion to $2.4 billion for a planned initial public offering, which was subsequently postponed.

AXA said both the RESO managers and the EBRD would sell a stake to AXA proportionate to their holding. It will also grant a six-year $1 billion credit facility to RESO's main shareholder.