Kyobo gears up for IPO once again
Kyobo Life Insurance Chairman Shin Chang-jae speaks during a management strategy meeting at its headquarters in Seoul on Jan. 9. Courtesy of Kyobo Life Insurance
By Lee Min-hyung
Kyobo Life Insurance has pledged to try again for a long-awaited initial public offering (IPO), after the move was blocked last Friday when the Korea Exchange didn't grant its approval during a preliminary examination.
The exchange operator did not share additional reasons behind the decision, but the ongoing legal dispute between Kyobo and its financial investor ― led by Affinity Equity Partners ― is considered to be the core reason behind the exchange operator's lack of approval.
“Kyobo makes it clear that we will push ahead with the IPO again after ending the dispute with our shareholders as soon as possible,” a spokesman at Kyobo said.
Kyobo Chairman Shin Chang-jae Friday attended a meeting of the exchange's listing committee to underscore the need for its timely IPO.
“About two-thirds of our shareholders are in favor of our listing, and Kyobo is in dire need of the IPO for the firm's sustainable growth and development,” he told reporters after the meeting.
The Affinity consortium is the Korean insurer's second-largest shareholder, acquiring a 24 percent stake in 2012 for 1.2 trillion won ($921.7 billion). The consortium demanded that the Kyobo chief buy back its shares at 409,000 won apiece by exercising its put option, but the insurer declined to do so, citing excessive pricing.
A put option is a derivative instrument that gives the holder the right to sell an asset, at a specified price, by a specified date to the writer of the put.
Under the put option agreement, Affinity was given the right to withdraw its investment unless Kyobo went public by 2015. After Kyobo delayed its IPO timeline, Affinity ended up exercising the right. Both sides have yet to reach any clear consensus over the valuation of the insurer's pre-IPO stock price.
The case was then brought to the International Chamber of Commerce (ICC) for arbitration. The authority said that Shin did not have the duty to buy back the shares at the price offered by Affinity, nor did he have to offer any interest payments or compensation to the investor, during the first round of arbitration last September.
The Affinity consortium appealed to the ICC and called for a second arbitration.
Kyobo urged Affinity to stop taking legal measures that block its planned IPO.
“Affinity should drop any idea of disturbing our IPO plan by engaging in a useless legal battle, and cooperate with Kyobo as its second-largest shareholder,” the Kyobo spokesperson said.
The Affinity consortium, however, stepped up its criticism of Kyobo, urging Shin to fulfill his responsibility first before carrying on with the IPO.