(Updates with analyst comment, stake offer details)
By Maya Nikolaeva
PARIS, June 16 (Reuters) - French credit insurer Coface launched an initial public offering (IPO) worth up to 895 million euros ($1.2 billion) on Monday as its owner Natixis seeks to reduce it exposure to the sector.
Coface is fully owned by French investment bank Natixis, and the stock market listing on Euronext in Paris is part of its plan to gradually dispose of its stake and focus on wholesale banking, asset management and specialised financial services.
Natixis is selling more than 50 percent of Coface shares, at 9.6 to 11.2 euros per share. The offer values the credit insurer at about 1.6 billion euros based on a median share price of 10.4 euros, according to Reuters calculations.
The sale is expected to lift the core tier one ratio of Natixis - a measure of a bank's ability to withstand shocks - by 20 to 40 basis points from 10.6 percent as of the end of March, a banking analyst in London said.
This would easily surpass new global minimum capital standards as banks are under pressure from regulators and investors to show they are financially sound and as many in Europe face their strictest health check yet.
Natixis declined to comment on the analyst estimate.
Coface is the world's third-largest credit insurer with a market share of 14 percent at the end of 2012, the company said.
Market leader Euler Hermes - which is majority-owned by German insurer Allianz SE and has a market capitalisation of 3.88 billion euros - had 34 percent and Atradius, 15 percent.
Coface offers insurance to protect companies against the risk of default by their customers. It wants to focus on this and has sold its third-party recovery business and its factoring operations outside Germany and Poland.
Factoring is a service offered to companies that includes purchasing invoices from them, often at a discount, to provide them with added liquidity and take on the credit risk for collecting the debts.
The IPO will close on June 25 and be priced on June 26. An overallotment of a maximum of 15 percent of the offer will be available, which would bring the total stake on sale to up to 58.1 percent from 50.5 percent.
Set up in 1946 as France's export credit agency, Coface was privatised in 1994 and bought out by Natixis in 2002, becoming a fully-owned subsidiary in 2006. Coface delisted in 2002.
Coface aims to launch new products, such as offers for small and medium-sized companies, and hopes to boost its presence abroad by expanding in 10 new countries.
The firm has not specified which new markets it aims to enter. It said it would strengthen its presence in Latin America in 2014, where it already has business in 9 countries. It earns more than half of its revenues in western and northern Europe.
Coface's 2013 revenues fell 1.6 percent to 1.49 billion euros as the premiums it charged to clients fell 0.9 percent.
Moody's rating agency estimated last November that Coface's three-year average return on equity had lagged those of its peers, at 7 percent versus more than 10 percent. Moody's said this was due to the firm setting aside more money for losses and a higher level of capital to protect against risk.
$1 = 0.7345 euros Additional reporting by Matthieu Protard; Editing by Geert De Clercq and Pravin Char