Kyobo Life eyes 2022 IPO to end feud with investors

Kyobo Life Insurance Co. on Tuesday applied for a preliminary review of its public listing with the Korea Exchange, three years after it canceled the IPO plan at the end of 2018 amid a thorny dispute with overseas investors.

The IPO is expected to take place in the second half of next year at its earliest, according to investment banking sources. Its public listing may end a years-long feud between Kyobo's top shareholder and Chairman Shin Chang-jae and the financial investors (FIs) composed of Singapore's GIC, Affinity Equity Partners, Baring Private Equity and IMM Private Equity. 

"The preliminary review application for an IPO, in the middle of a legal dispute, indicates Kyobo's determination to proceed with the IPO next year," said one of the banking sources. "Its IPO may be able to win approval in the first half of next year, and take place in the second half at its earliest."

The country's second-largest life insurer has been under mounting pressure from the FIs, led by Affinity Equity, which were unable to exit their 1.2 trillion won ($1 billion) investment in the insurer for almost a decade.

The group of four financial investors had acquired a combined 24% stake in Kyobo for 1.2 trillion won in 2012 from then Daewoo International Co., a trading company of the now-defunct Daewoo Group.

The share purchase included a put option which they can exercise to Kyobo's Shin, if Kyobo fail to go public by September 2015.

Kyobo had made several attempts at an IPO which fell through, however, due to tightened regulations on the insurance sector and prolonged low-interest rates.

With no progress in Kyobo’s IPO efforts, the Affinity-led group in late 2018 called on Shin to buy back their shares at 409,000 won a share, or double their purchase price. They valued the unlisted life insurer at around 8 trillion won. 

Rejecting the demand, Shin filed a complaint against the FIs and their accountants, arguing its valuation was unfairly inflated.

Its first trial ruling is due on Feb. 10 of next year.

WIDE VALUATION GAP

Kyobo Life is traded at the mid-50,000 won range in over-the-counter (OTC) markets, compared with the average of 40,000 won last month. In 2019, it underwent a 5-for-1 stock split.

Last month, the stock was traded at an average of about one-fifth of the Affinity-led group's purchase price.

Based on the OTC market value, Kyobo is worth 5.5 trillion won, below the 8 trillion won range proposed by the financial investors.

Shin, as Kyobo Life’s largest shareholder, holds a 33.78% stake and controls 36.91% of the insurer when combined with the stakes held by his family members and related parties.

This September, the Affinity-led group sped up their exit efforts, urging Shin to hire a third-party institution to assess his company's share price at which they can exercise the put options granted in 2012.

Write to Ye-jin Jun at ace@hankyung.com
Yeonhee Kim edited this article.