Kyobo regaining momentum for IPO next year

Kyobo Life Insurance's headquarters in Seoul / Courtesy of Kyobo Life Insurance

By Lee Min-hyung

Kyobo Life Insurance has reiterated its strong determination to complete its planned initial public offering (IPO) by the first half of 2022 after applying for a preliminary screening.

The move shows the life insurer's intent to clear away ongoing management risks stemming from a legal dispute with a consortium of investors led by Affinity Equity Partners. Kyobo and the Hong Kong-based private equity firm are engaged in a lawsuit over their different valuations of the Korean insurer's pre-IPO stock price.

Earlier, Affinity argued that it could withdraw its invested capital in the insurer unless Kyobo went public by the end of 2015. But with Kyobo delaying the timeline, both sides started escalating a dispute over their put option agreement, under which they failed to reach a consensus for the proper pre-IPO stock valuation of Kyobo.

But with the prosecution recently having sought prison sentences of a year and a half for five figures from Affinity ― including one from Deloitte Anjin ― who have been charged with writing an overvaluation report on Kyobo, the insurer has gone one step closer to the IPO initiative.

Despite the decision by the prosecution, it still remains to be seen whether Kyobo will be able to end its IPO procedure as scheduled, as there stands a chance that a court will rule in favor of Affinity. Under the scenario, the insurer's planned IPO is expected to be postponed, and the Korea Exchange will not issue permission on the pre-IPO screening.

Kyobo is one of the nation's so-called big three life insurers, along with Samsung Life Insurance and Hanwha Life Insurance. But Kyobo is the only major insurance firm here that is unlisted. Kyobo considers its IPO a timely opportunity to remove the management risk threatened by Affinity.

The securities industry estimates Kyobo's valuation at around 3 trillion won ($2.51 billion). In 2020, the company generated a net profit of 382.9 billion won, down 29.9 percent from the previous year.

“The upcoming court ruling will determine when Kyobo will be able to pass the preliminary screening for the IPO,” an industry source said.

Kyobo's largest shareholder is Chairman Shin Chang-jae. The Affinity consortium is the second-largest shareholder after acquiring a 24 percent stake in 2012 for 1.2 trillion won. The consortium demanded the Kyobo chief buy back its shares for 409,000 won each while exercising their put option agreement, but Kyobo refused due to the pricing.