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| Kyobo Life Insurance Chairman Shin Chang-jae speaks during a management strategy meeting at its headquarters in Seoul, Jan. 9, 2022. Yonhap |
By Lee Min-hyung
Kyobo Life Insurance's highly-publicized aim of establishing a financial holding company continues to face uncertainties, as a prolonged legal battle against the insurer's second-largest shareholder ― Affinity Equity Partners ― shows no signs of abating anytime soon.
The life insurer recently revealed its plan to launch a financial holding firm by the end of 2024, in a bid to preemptively respond to worsening industry conditions in the face of a global economic slowdown and demographic changes. The insurer has a controlling stake in its financial subsidiaries, such as Kyobo Securities and Kyobo AXA Investment Managers.
However, the legal dispute returned to square one recently after a Seoul court ruled in favor of Affinity. Five officials from Affinity and Deloitte Anjin ― an affiliated accounting firm of the private equity firm ― were acquitted of accounting fraud charges involving the alleged manipulation of Kyobo's pre-initial public offering (IPO) price, according to the recent ruling by the Seoul High Court.
The dispute is centered on a put option agreement that the Hong Kong-based private equity firm and Kyobo signed earlier. Under the agreement, the Affinity-led consortium could withdraw its investment in the insurer if it does not go public by 2015. But Kyobo delayed the listing timeline, causing a legal dispute to erupt over the proper pricing of the insurer's pre-IPO valuation. The issue was also brought to the International Chamber of Commerce for arbitration.
The Affinity-led financial investors hold a 24 percent stake in Kyobo and can exercise considerable influence in the insurer's key decision-making processes. Kyobo needs the consent of two thirds of its shareholders to get the green light to establish a financial holding firm.
Both sides remained cautious about commenting on the matter.
"We are still contacting our investors ― including the Affinity consortium ― and persuading them to consent to the agenda," a spokesman for Kyobo Life Insurance said.
An official from the Affinity consortium also declined to comment in detail on the issue.
"No specific progress has so far been made on Kyobo's plan, so we are taking a wait-and-see approach for the time being," the official said. "But one thing we can say is that we view Kyobo's bid to establish the financial holding firm and the ongoing legal dispute as totally different matters."
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