Saturday 01 Nov 2014

KAMCO Begins Procedures in Kyobo Ins. Sale

According to a recent report from Money Today’s the bell, KAMCO has begun procedures to dispose of its stake in Kyobo Life Insurance. Please see our translation for the details.

Korea Asset Management Corporation (KAMCO) began the valuation process for Kyobo Life Insurance on Feb 1st. The national asset manager will choose the preferred bidder in May for the sale of its 9.9% stake in the insurer.

According to finance industry sources, KAMCO plans to officially announce the sale in March, after the valuation has been completed. Notice will be sent to domestic and foreign institutional investors, letters of Intent will be received until April, and the preferred bidder will be determined in May.

Over the coming weeks, KAMCO will be inspecting the insurer’s financial situation, calculating the enterprise value and the disposal price. Given that Kyobo Life is traded over-the-counter, KAMCO will be very cautious in calculating the price.

An M&A industry source said, “KAMCO doesn’t have a controlling stake in the company so it is unlikely to receive a premium. Last year at book value, the shares were valued at 250 thousand won, so they are predicted to sell for around 300 thousand won.”

Domestic and foreign investors have shown their interest in the sale despite the lack of control.

An individual in the M&A industry said, “Domestic and foreign PE firms, and financial holding companies are interested in the stable dividend income, and the margin from an IPO. If the price is appropriate, the sale will most likely be accomplished smoothly.”

He also said, “Domestic financial holding companies also show great interest in taking over Kyobo Life to use as a distribution channel for insurance. Furthermore, the takeover the stakes of Kyobo Life could become a starting point for a purchase of Daewoo’s stake in the company.”

Last December, Daewoo International selected Woori Investment & Securities Co., Ltd. and Macquarie Securities as consultants. However the negotiation to dispose its 24 percent stake in Kyobo Life has yet to get under way. Daewoo International is still exploring various methods for achieving liquidity.

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