This article was published on April 4, 2025, at 5:11 p.m. on the ChosunBiz MoneyMove site.
Kyobo Life Insurance Chairman Shin Chang-jae continues to dispute with financial investors (FIs) over a put option (stock purchase claim), while analysis suggests that IMM Private Equity (PE) is maintaining a minimum exercise price of 310,000 won to protect the investments of institutional investors (LPs), including the National Pension Service, a major player in the capital market.
On the 4th, according to the investment banking (IB) sector, IMM PE announced the day prior that Kyobo Life Insurance must fulfill the put option. IMM PE noted that "the International Chamber of Commerce (ICC) Arbitration Tribunal acknowledged that Chairman Shin must appoint an appraiser and submit a valuation report according to the shareholders' agreement, and the court approved this," emphasizing that "Chairman Shin must submit the valuation report and fulfill the put option."
The unusual issuance of a statement by IMM PE was due to a ruling by the court that declared the enforcement fine imposed by the international arbitration tribunal on Chairman Shin to be invalid. The Seoul Central District Court ruled in favor of the plaintiff in the lawsuit filed by Shin regarding the authority review claim for the imposition of the ICC enforcement fine. The court stated that "the imposition of fines by the arbitration tribunal does not meet the requirements for compulsory enforcement under domestic civil execution law."
Within the IB sector, it is analyzed that IMM PE's strong stance is closely related to institutional investors, including the National Pension Service. IMM PE secured a 5.23% equity stake in Kyobo Life Insurance by investing 242.6 billion won in 2012, during which the National Pension Service contributed 50 billion won as part of a co-investment fund.
For IMM PE, which must consider the position of the National Pension Service, it is difficult to reach an agreement that involves enduring losses without justification. While the per-share price level that only recovers the principal reaches 310,000 won, the National Pension Service could become embroiled in controversy for accepting a price that incurs losses without procedural legitimacy, as institutional investors could be exposed to scrutiny regarding whether they made appropriate investment judgments.
An individual in the IB sector said, "If IMM PE only considers the interests of the operators, it is certainly a possible choice to cut losses, which could lead to more room for negotiation," but added, "It is showing a strong stance to minimize the losses of institutional investors, including the National Pension Service." This individual also noted, "The prolonged conflict and the significantly strained relationship with Chairman Shin's side is one of the reasons for not reaching an agreement."
In contrast to IMM PE, EQT Partners appears to be hindered by the mid-tier investment cost. EQT did not immediately repay the acquisition financing raised at the time of investment and instead recovered part of the investment through recapitalization. It subsequently secured additional mid-tier funds, with the investment cost reportedly formed in the low 300,000 won range.
◇ Conflict that has persisted since 2018… Needs to be resolved for holding company transition
With the recent ruling by the domestic court, Chairman Shin can delay the selection of an appraiser and the pricing procedure. However, an agreement with the FIs is necessary, as the transition to a holding company is also a longstanding desire for Kyobo Life Insurance.
Since IMM PE has immediately appealed this decision, the agreement could gain momentum depending on the outcome. Shinhan Investment Corporation, which is mediating the conflict between Kyobo Life Insurance and the FIs, is expected to lead this transaction.
Affinity and GIC recouped their investments at a slightly lower price of 234,000 won per share than the principal investment amount (245,000 won) in Kyobo Life Insurance last month. The two investment firms determined that wrapping up the conflict at a reasonable level rather than continuing it was in their best interest. They also withdrew the international arbitration lawsuit filed against Kyobo Life Insurance.
In 2012, Kyobo Life Insurance FIs (Affinity, GIC, IMM PE, EQT) entered into a shareholders' agreement with Chairman Shin by purchasing a 24% equity stake in Kyobo Life Insurance from Daewoo International at 245,000 won per share. The agreement states that if Kyobo Life Insurance's initial public offering (IPO) does not occur by the end of September 2015, the FIs can exercise the put option and sell their equity to Chairman Shin. However, the IPO of Kyobo Life Insurance was unsuccessful, and when Chairman Shin refused to fulfill the put option at a price of 410,000 won per share in 2018, they continued the international arbitration lawsuit against him.
Kyobo Life Insurance reported the prosecutors for alleged violations of the Certified Public Accountant Act, involving individuals from Affinity and Deloitte Anjin, leading to escalating tensions between the two parties. Kyobo Life Insurance claimed that Deloitte Anjin colluded with the FIs to inflate the fair market value of the put option, but both Affinity and Deloitte Anjin were found not guilty in both the first and second trials.