UPDATE 1-Generali takes indirect stake in Russian insurer

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Europe's third-largest insurer, Italy's Generali , has acquired an indirect stake in Russian insurer Ingosstrakh to gain a foothold in the fast-growing market, Generali's partner in the venture said.

Generali paid an undisclosed price for a 49 percent stake in PPF Beta, an investment vehicle managed by the Czech-owned private equity group PPF Investments, which owns 38.46 percent of Ingosstrakh, the second largest Russian insurance company.

PPF Investments announced the agreement on Wednesday after revealing Generali's intention to take a stake in PPF Beta in mid-October.

Generali has been seeking to expand into Russia after setting its sights on becoming the sector leader in central and eastern Europe by buying a stake in leading Czech insurer Ceska Pojistovna in July.

Italy's insurance market leader has come under pressure from investors to secure a deal which would put it on a par with larger rivals such as France's Axa and Germany's Allianz AG .

Generali runs its central European business together with the PPF Group of Czech billionaire Petr Kellner, who is an investor in PPF Investments. But the private equity investment firm is run separately from Kellner's PPF Group, which is active in insurance and consumer lending in central Europe and Russia.

The deal with PPF Investments means Generali will join battle with Russia's Basic Element, an industrial holding company controlled by Russian billionaire Oleg Deripaska and the majority shareholder of Ingosstrakh.

PPF Investments and Basic Element have already locked horns over PPF's influence in the firm.

This dispute follows a general meeting of Ingosstrakh shareholders on Oct. 8 when Basic Element voted to quadruple the firm's registered capital to 10 billion roubles through a closed issue of shares.

A Russian court has issued an injunction blocking the capital hike, which threatens to dilute PPF's stake in the insurance company to less than 10 percent. (Reporting by Marek Petrus)

Keywords: GENERALI RUSSIA/

[PRAGUE/Reuters/Finance.cz]