(Adds background, analyst, RMI statement, share price)
By Vidya L Nathan and Carolyn Cohn
LONDON, Dec 14 (Reuters) - South Africa's Rand Merchant Investment Holdings RMIJ.J ramped up its presence in the British insurance market on Wednesday with the purchase of a 30 percent stake in Hastings HSTG.L , 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 .FTMC . 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. 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 share capital. 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)