Kyobo Life resumes IPO push
Kyobo Life Chairman Shin Chang-jae
By Lee Kyung-min
Kyobo Life Insurance confirmed its plan to resume stalled steps for an initial public offering (IPO) next year, buoyed by what it claims was a victory in a years-long dispute with a financial investor over a put option worth 2 trillion won ($1.6 billion).
The insurer said it seeks to list on the benchmark KOSPI in the first half of next year. The firm held a board meeting, Tuesday, before filing a preliminary review for listing with the Korea Exchange next month.
The IPO is aimed at diversifying capital procurement methods in preparation for new international accounting standards as outlined by International Financial Reporting Standard (IFRS 17) and Korea-Insurance Capital Standard (K-ICS) set to take effect in 2023, thereby laying the foundation to become a financial holding company. IFRS 17 issued by the International Accounting Standards Board in May 2017 standardizes insurance accounting globally to improve comparability and increase transparency. K-ICS was locally developed to measure the available capital-to-capital requirement ratios of insurance companies.
The size and timeline of the IPO will be confirmed following a comprehensive review of market conditions.
The resumption comes about three years after Kyobo announced the plan in the second half of 2018 when the put option dispute arose.
The International Chamber of Commerce (ICC) said Sept. 6 that the investor, a consortium led by Affinity Equity Partners, a Hong Kong-based private equity firm, was within its rights to execute the put option with Kyobo, but the price of 409,000 won demanded by Affinity should be adjusted.
Both Kyobo and Affinity claim they came out as the winner. The life insurer said the ICC not only dismissed Affinity's claim that the put option should be upheld at the per-share price of 409,000 won, but also ruled that it does not have to pay interest accrued during the time that the deal was stalled.
However, Affinity said it won the arbitration, because the ICC recognized both the culpability of Kyobo Life Chairman Shin Chang-jae and the validity of the put option contract.
Investment conditions have improved for insurers, driven by a recent rise in market interest rates after remaining at ultra-low levels due to expansionary policies triggered by the COVID-19 pandemic and uncertainties in the regulatory environment.
The issue the largest shareholder being prohibited from selling his stake will be resolved upon the lifting of a court injunction sought by Affinity on the seizure of Kyobo's shares, it added.
“We expect cooperation from the Affinity consortium since they can no longer claim that they have to exercise the put option for the repeated delay in our firm's IPO,” a Kyobo official said. “We will do our best to successfully promote the IPO in cooperation with major stakeholders such as firm employees, shareholders and underwriters.”