Muristek
Kyobo Life's headquarters building in central Seoul
A South Korean court on Thursday ruled in favor of Affinity Equity-led financial investors in Kyobo Life Insurance Co., rejecting Kyobo's claim that the investors had unfairly inflated its valuation to sell their shares back to the unlisted insurer for a higher price.
The verdict by the Seoul Central District Court comes as Kyobo has been at odds with the Affinity-led group, including Singapore's GIC, Baring Private Equity and IMM Private Equity, which were unable to exit their 1.2 trillion won ($1 billion) investment in the insurer for a decade.With their dispute showing no signs of ending, the ruling could further delay the initial public offering of the country's third-largest life insurer, which last December applied for a preliminary review of its IPO."If we employ other valuation methods not used by Deloitte Anjin, Kyobo Life would be valued at 429,000 won, higher than its estimate," a judge said in his verdict. "It is difficult to say the Affinity-led consortium used a valuation tool in their favor."With no progress in Kyobo’s IPO efforts, the Affinity-led group in late 2018 called on Kyobo Life top shareholder and Chairman Shin Chang-jae to buy back their shares at 409,000 won apiece, or about double their purchase price. They valued the insurer at around 8 trillion won, far above the market estimate of 3 trillion to 5 trillion won. Rejecting the demand, Shin filed a complaint against two employees of the consortium and three accountants of Deloitte Anjin last year and argued their valuation on Kyobo was based on a falsified financial report. In relation to the allegations, prosecutors demanded up to one and a half years in prison for five people, respectively, involved in the valuation process.But the Seoul district court cleared the accused of the charges against them, a decision that appears contradictory to the ruling from the International Chamber of Commerce (ICC), the world's leading arbitral institution.In September of last year, the Paris-based institution dismissed the investors' proposal to sell each of their Kyobo shares at 409,000 won back to the insurer. But the ICC gave a nod to their rights to exercise the put options on Kyobo shares granted in September 2012.Following the court's ruling, Affinity Equity said in a statement it would go to the next round of arbitration with Kyobo to resolve the dispute over the put option.IPO ON THE TABLEKyobo was aiming to go public this year. But the Korea Exchange had delayed its review for Kyobo's preliminary IPO application pending a court decision on this case, which the bourse operator said could affect Kyobo's governance structure.Back in 2012, Affinity Equity, GIC and two other financial investors had acquired a combined 24% stake in Kyobo for 1.2 trillion won from then Daewoo International Co., currently POSCO International. The share purchase included a put option, which they were allowed to exercise to Kyobo's Shin, if Kyobo failed to go public by September 2015.By So-Ram Jung and Hyun-Ah Ohram@hankyung.comYeonhee Kim edited this article
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