Kyobo Life to complete IPO by H1 2022, hints at expanding financial services

South Korean insurer Kyobo Life Insurance plans to go public on the Korea Exchange by 2022, a process stalled due to a shareholder feud over the past few years, the company said Wednesday.

The initial public offering will lay the groundwork for the company to turn into a financial group with a holding company structure to offer a wider range of financial services other than insurance, setting aside its yearslong battle against minority shareholders, according to the company.

The life insurer, Korea’s third-largest by assets, held a board meeting Tuesday to discuss ways to file for the initial public offering with the KRX before end-November and complete the IPO to list on the KRX’s main bourse, the Kospi, during the first half of 2022, the company said in a statement.

According to Kyobo Life, the signs of an end to a low-interest environment bode well for a more reasonable valuation of Kyobo Life.

Kyobo Life did not disclose details as to how many shares it will float for the 2022 IPO or how much it wants to raise via the IPO. But it said the IPO proceeds will be used to secure new growth engines, invest in new business areas, improve brand value and allow its shareholders to cash in on their earlier investment in Kyobo Life.

Kyobo Life added that the IPO is a preemptive measure, aimed at diversifying its channel to raise new capital before Korean insurers face tougher guidelines for their balance sheets. New accounting standards, including International Financial Reporting Standard 17, go into effect in 2023.

The news comes as Kyobo Life’s bid to go public, announced in December 2018, was left unfulfilled amid a shareholder feud between Chairman Shin Chang-jae and Affinity Equity Partners, which leads a minority shareholder group.

The two sides have been at odds over whether the minority shareholders are eligible to exercise their rights to sell their stake to Shin -- a put option -- at a certain strike price.

A recent arbitration ruling at the International Chamber of Commerce in September found that Shin has no obligation to buy back the minority shareholders’ combined 24 percent stake in Kyobo Life for 2 trillion won ($1.7 billion) plus interest due on a late payment.

But he is obligated buy back the shares, and the International Chamber of Commerce urged the two parties to renegotiate the strike price.

“The affinity-led consortium has sought to exercise the put option to cash in on their investment because our IPO was essentially ground to a halt,” Kyobo Life said in a statement.

“We expect (the minority shareholders) to sincerely cooperate with Kyobo Life’s IPO. ... Kyobo Life is more eager than ever to complete the IPO.”

The battle between Shin, Kyobo Life’s biggest shareholder, and minority shareholders surfaced when the minority shareholders demanded an IPO before September 2015, but Shin took no action.

The investor consortium sought to exercise the put option in March 2018 following an ultimatum, setting a strike price at 409,912 won apiece. The consortium bought Kyobo Life’s shares for 245,000 won apiece in 2012, in hopes of exiting from the company in the event of an IPO.

Kyobo Life’s chairman refused to negotiate at the time. Minority shareholders argued that Shin had boycotted the process of arranging the strike price, thereby preventing the two parties from renegotiating the price.

Meanwhile, Kyobo Life filed a criminal complaint against the minority shareholders, accusing them of colluding with accountants to influence the pricing of their shares.

A separate court trial is underway in Korea surrounding possible violations of the Certified Public Accountant Act by international shareholders and their accountants.

By Son Ji-hyoung (consnow@heraldcorp.com)