Kyobo's IPO picks up steam as court rejects Affinity's request

Kyobo Life Chairman Shin Chang-jae / Korea Times file

By Anna J. Park

Kyobo Life will speed up its planned initial public offering (IPO), after a local court dismissed an injunction suit filed by Hong Kong-based private equity firm Affinity earlier this week.

Affinity filed the injunction suit at the Seoul Northern District Court in early October, demanding Kyobo Life carry out its obligation to repurchase the company stakes that Affinity planned to sell through exercising its put option, as stipulated in their investment contracts signed in 2012.

However the Seoul court dismissed Affinity's request, giving Kyobo Life the green light to proceed with its IPO plan within the first half of next year.

“With the win in the injunction suit, Kyobo Life's IPO is expected to gain further momentum,” a Kyobo Life official said.

The roots of the years-long legal battle between Kyobo Life and Affinity go back to 2012, when a consortium of financial investors led by Affinity Equity Partners purchased 24 percent of Kyobo Life's shares with the condition of a put option.

The financial investors' contract with Kyobo Life stipulated that Affinity could exercise the put option of selling its Kyobo stake back to Chairman Shin Chang-jae, if the insurer failed to go public by 2015. After Kyobo Life failed to reach the deadline, Affinity announced in late 2018 that it would exercise the put option, asking Shin to repurchase the stake in accordance with the contract.

However, Kyobo Life said that the price of the put option exercise ― 409,000 won ($344) per share ―- which is almost double the initial investment price of 245,000 won per share ― had been calculated unreasonably, and thus was invalid.

Kyobo Life refused to repurchase the stake on the grounds that it was based on an unreasonable stock price. Affinity, unable to exercise its put option, filed an arbitration case to the International Chamber of Commerce (ICC) in March 2019. The ICC announced its verdict in September of this year, in which it said that, while the investor consortium is within its rights to execute the put option, the price should be readjusted, bringing a de facto victory to Shin.

Meanwhile, a criminal case involving allegations the Certified Accountant Act was violated by three accountants from Deloitte Anjin and two executives from the financial investors' consortium is still ongoing at the Seoul Central District Court. They're allegedly being accused of violating the act in their estimation of the put option price. The verdict is scheduled to come out in early February, and prosecutors have sought prison terms of a year or a year and a half for them.