Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Seoul Guarantee Insurance kicks off IPO process
Seoul Guarantee Insurance (SGI) headquarters in central Seoul / Courtesy of SGI
By Anna J. Park
KDIC-owned insurer's IPO to accelerate retrieval of remaining public funds
By Anna J. Park
Seoul Guarantee Insurance (SGI) has officially entered a listing process and is expected to become the first state-run company to debut on the main benchmark KOSPI since 2010.
According to the Korea Exchange (KRX), the bourse operator, it received an application earlier this week from SGI for a preliminary evaluation ― the first official step to follow when a company aims to go public. Given the usual timeline it takes following the application for the preliminary evaluation, SGI will likely be listed within the fourth quarter of this year.
Currently, state-run Korea Deposit Insurance Corporation (KDIC) holds a 93.85 percent stake in SGI, as the result of 10.2 trillion won ($7.9 billion) of public funds injected into the firm to salvage massive payments for corporate bonds it guaranteed during the Asian financial crisis in the late 1990s. So far, 5.6 trillion won of public funds remains outstanding, while 4.6 trillion won, or 45 percent of the injected public funds, have been retrieved through the insurance firm's dividends payouts as of the first quarter of this year.
With its annual revenue posting 2.6 trillion won last year, the estimated corporate value of the firm stands at around 2 trillion won ($1.5 billion) to 3 trillion won. The public company has a dividend payout ratio of 50.2 percent for this year, the same ratio as last year, meaning that more than half of its net profit goes to dividend payments. The high dividends payout ratio is to facilitate the return of the public funds to the main shareholder KDIC.
During the public offering, 6.98 million shares of SGI, or about 10 percent of its existing shares held by KDIC, will be sold, instead of issuing new shares for the listing process. The strategy aims to induce stock price hikes by making only a small portion of shares available for sale. Samsung Securities and Mirae Asset Securities are serving as underwriters for the IPO process.
SGI had previously planned to go public by the end of the first half of this year, yet it had to be delayed by a few months due to market conditions. The submission of the application for the preliminary evaluation was originally scheduled for March, but it was delayed by three months.
If the IPO succeeds as planned, SGI will be the first public company to be listed in 13 years, since the Korea District Heating Corporation went public in 2010.