Kyobo Life Insurance Chairman Shin Chang-jae and the financial investor (FI) Affinity Consortium's 'put option dispute' has concluded after 7 years, accelerating Kyobo Life Insurance's transition into a financial holding company that has been pursued since 2005.
Kyobo Life Insurance is expected to enter the mergers and acquisitions (M&A) market for business diversification alongside its transition into a financial holding company. Kyobo Life Insurance currently has subsidiaries including Kyobo Bookstore, securities firms, asset management companies, and trust companies, but does not own non-life insurance companies or savings banks. Given that Kyobo Life Insurance has reviewed the acquisition of non-life insurance companies several times, it is likely to emerge as a 'big player' in the insurance M&A market.
According to the insurance industry on the 10th, Kyobo Life Insurance reported the establishment of a financial holding company at its regular board meeting in February 2023 and declared its transition into a financial holding company. To establish a financial holding company, it must go through board resolutions, shareholders' meeting resolutions, and approvals from the Financial Services Commission in sequence.
The reason for the lack of progress in establishing the financial holding company was due to shareholder meeting resolutions. Kyobo Life Insurance attempted to pursue a spin-off, splitting its subsidiary stocks and cash, and incorporating them into the newly created financial holding company's subsidiaries. For this, more than two-thirds of shareholder agreement is needed at the shareholders' meeting following board resolutions. However, the Affinity Consortium, which held a 24% equity stake and was the second-largest shareholder, became an obstacle due to the dispute with Chairman Shin over the put option.
However, on the 7th, the situation changed as Affinity Equity Partners and the Singapore Investment Corporation, who constitute the Affinity Consortium, sold their respective stakes in Kyobo Life Insurance, 9.05% and 4.5%, to a special purpose company (SPC) established by Japan's SBI Group and Shinhan Investment Corporation. Kyobo Life Insurance expects that the remaining two funds, IMM Private Equity and EQT Partners, will also sell their respective stakes of 5.23%. If this contract is finalized and the consortium officially disbands, there will be no shareholders opposed to the spin-off.
Chairman Shin purchased the entire 5.33% stake held by Affirma Capital last month, increasing his equity interest from 33.7% to 39%. Combined with the 9.05% stake from SBI Group and the 5.12% shares owned by members of Chairman Shin's family, Shin's friendly equity exceeds 50%. SBI Group is known to have a close relationship with Kyobo Life Insurance. Kyobo Life Insurance CEO Cho Dae-kyu noted after the equity sale agreement that "Kyobo Life can focus more on the transition to a financial holding company and future-oriented challenges."
If Kyobo Life Insurance successfully establishes a financial holding company, it is expected to pursue M&A for business diversification. Currently, due to regulations such as the Insurance Business Act, investments in subsidiaries and affiliates are limited, but once it transitions to a financial holding company structure, capital procurement will become smoother, making investment expansion easier. Business diversification is also essential for Kyobo Life Insurance's other goal, an initial public offering (IPO).
The insurance industry expects Kyobo Life Insurance to actively consider the acquisition of a non-life insurance company. Previously, after officially announcing the establishment of a financial holding company in 2023, Kyobo Life Insurance examined the acquisition of Lotte Insurance, Kakao Pay Insurance, and MG Insurance. Lotte Insurance and MG Insurance are still up for sale.
An insurance industry official stated, "There are restrictions on investment limits in affiliates due to insurance business act regulations, but becoming a financial holding company will provide advantages such as increased investment limits," adding, "Once the financial holding company is established, an environment will be created for Kyobo Life Insurance to reconsider the acquisition of a non-life insurance company."