Skepticism remains over Kyobo Life's IPO plan

Kyoto Life Insurance headquarters in central Seoul / Courtesy of Kyobo Life Insurance

By Anna J. Park

While Kyobo Life Insurance has announced its plan to go public on the country's benchmark KOSPI in the first half of next year, many market watchers remain skeptical of the plan, given the deep-seated disputes that have been dragging on for years between the insurance firm and its foreign financial investor consortium.

One of the major reasons for their skepticism is that it's highly unlikely for a firm to be granted permission to pursue an initial public offering (IPO), when the candidate firm's major shareholders are involved in serious legal disputes.

Not only is Kyobo Life quarreling with its financial investors ― a consortium led by Affinity Equity Partners, which purchased a 24 percent stake in Kyobo in 2012 ― over a put option contract, but the insurance company is also involved in a legal case. Last year, the firm accused related officials at Deloitte Anjin of violating the Certified Public Accountant Act, by colluding with the financial investor consortium to inflate the fair market value of Kyobo shares subject to the put options.

The Korea Exchange (KRX), the country's bourse operator, said that it's still too early to make a clear-cut judgment on the matter, leaving the window open for the possibility of the IPO.

“Regarding whether legal disputes could make a company's IPO impossible, the exchange first needs to thoroughly review the comprehensive impact of the ongoing legal disputes on the IPO candidate company's overall management situation,” a KRX official said, stressing that it's too early to predict the feasibility of the IPO for the time being.

As of now, Kyobo Life remains the only unlisted private company among the country's top three insurance companies. It attempted to go public in 2018, but failed to follow through with its IPO plan, due to an arbitration case hanging at the International Chamber of Commerce (ICC), as the firm fought hard with the investor consortium over the put option contract. The ICC concluded the case in September, saying that the investor consortium is within its rights to execute the put option.

While the put option price should be readjusted, the two sides' don't seem to have narrowed their differences.

In an official statement announced by the investor consortium, Thursday, they once again urged Kyobo Chairman Shin Chang-jae to carry out the put option, before making any attempts to pursue the IPO.

“As the ICC ruling confirmed the validity of the put option contract and the violation on the part of Chairman Shin, we urge Chairman Shin to immediately follow through on the put option obligation,” the statement read. “Once Chairman Shin implements the put option obligation, the disputes among the shareholders will be resolved, and there will be no barriers to Kyobo Life's IPO.”