EUREKO BUYS OUT RUSSIAN INSURER ORANTA

On 12 September, the parent company of Interamerican, the European Group Eureko B. V. and the Russian Group PromSvyazCapital Group (PSC) announced that they had signed a contact for Eureko to assume all the insurance activities of the PromSvyazCapital Group. This relates to the insurance companies Oranta and Oranta-M (a stock insurance company linked to the State) which are collectively known as Oranta. The completion of this buy out is subject to the fulfilment of certain conditions, including management approval.
The buy out is a business opportunity that comes at the ideal time for Eureko. It ties in with the company's strategies and goals for the geographical expansion of the Group, as it offers a timely and immediate presence in the powerful market of Russia and fits with Eureko's ambitions for Central and Eastern Europe.
Oranta is a company which is growing at an incredible rate, and its gross earnings from insurance more than doubled during 2007. It has a complex distribution network for insurance services via multiple channels all over Russia, centred on Moscow and St. Petersburg, but with offices in most large towns throughout the country. At present, the most of the company's activity is focused on motor insurance. Oranta is now becoming active in property insurance, which has great opportunities for growth.
Russia is one of the largest, and now strongest, developing economies, and its GDP has increased more than 50% in real terms between 2000 and today. In the insurance sector, consolidations and mergers are continuing at an accelerated pace, with the result that large companies are acquiring an exceptionally large share of the market.
The Eureko Group has a leading position in the European insurance market. Based in the Netherlands, where it is the largest insurance company, it is also active in a further 11 countries. Eureko aims to broaden its geographical presence beyond the developed markets of Western Europe towards the developing markets of Central and Eastern Europe (where it is already investigating the main companies), including the Balkans and Russia. In 2007, Eureko bought out one of the largest Turkish insurance companies, while in Greece, the President of the Group Maarten Dijkshoorn, in a recent visit to Interamerican, noted that it is interested in looking into every possible opportunity for buyouts or collaborations.
The PromSvyazCapital Group is an extensive business conglomerate, with multiple investments in different sectors of the Russian economy. The Group operates as a private insurance fund, with its main strategic sectors being: financial services; the media; real estate and evaluation of real estate; and unification and merging of systems. The Group's investment portfolio also includes machine tools and telecommunications equipment.
Commenting on the agreement, Thomas van Rijckevorsel, member of the Eureko Board of Directors responsible for the Group's international activities, said: "Oranta fits in perfectly with Eureko's development targets. The opportunities which this deal offers us will contribute to achieving our strategic goals. In spite of the continuing financial difficulties globally, Eureko intends to carry out the strategy it has adopted for international growth with consistency."
On behalf of the sellers, Pavel Khokhryakov, President of the Board of Directors and international advisor of the PromSvyazCapital Group, remarked: "The business plan for our Group is to buy out businesses and to create significant returns for our shareholders in 3-5 years. Our analyses predict that Oranta will grow rapidly once it is bought out by Eureko, but would have expanded more slowly if it had remained with PromSvyazCapital. Consequently, we maintain the belief that the agreement we have signed will serve both Eureko and PromSvyazCapital exceptionally well, as well as the customers and the staff of Oranta."
The deal is still subject to the issuing of management approval, and completion is expected at the end of November 2008.