Kyobo Life Insurance Chair Shin Chang-jae is repurchasing a 5.33 percent stake in the insurer from Affirma Capital, raising hopes that ongoing legal battles with other financial investors could also be resolved soon.
Seoul-based private equity firm Affirma agreed Friday to sell its stake in Kyobo Life for 216.2 billion won ($148.8 million), or 198,000 won per share, according to industry reports. The price matches Kyobo Life’s 2023 repurchase of a 2 percent treasury stake from employees and Goldman Sachs, as well as Meiji Yasuda Life’s sale of a 1 percent stake to a private equity firm in March 2024.
The deal ends a yearslong dispute that began in 2018, when Affirma exercised a put option requiring Shin to buy back its stake for 397,900 won per share. In 2007, Affirma invested in Kyobo Life at 185,000 won per share under a stock purchase agreement that allowed it to exit if the insurer failed to go public by 2012. As Kyobo repeatedly delayed listing, Affirma invoked its right, but Shin rejected the demand, arguing the valuation was inflated.
The following year, Affirma took the case to the International Chamber of Commerce for arbitration.
Shin’s settlement with Affirma could set a precedent for his legal battle with another group of investors led by Affinity Equity Partners. The consortium, which holds a combined 24 percent stake in Kyobo, also exercised a put option in 2018, demanding Shin buy back shares at 410,000 won per share.
As with Affirma, Shin refused, and the dispute escalated to ICC arbitration. In both Affinity and Affirma's cases, the ICC initially ruled that while the investors’ put option exercise was valid, Shin was not obligated to repurchase the shares at their demanded prices.
Momentum in the Affinity case picked up in December when the ICC gave its second ruling in the consortium’s favor, ordering Shin to repurchase its stake after determining a fair market value through an external agency.
An industry insider said Shin was able to reach a deal with Affirma faster because the case had not gone to a second ICC ruling, leaving room for negotiations. Affirma’s initial 185,000 won per share investment — which was below the 200,000 won Shin deemed reasonable — also helped facilitate the agreement.
Shin is undergoing an evaluation process with EY Hanyoung as the external appraiser for the Affinity case. Industry watchers expect him to seek to use the 198,000 won per share price from the Affirma deal as a reference. The minimum repurchase price for the consortium’s investors will be 245,000 won per share, their 2012 investment price.
Meanwhile, Shin is financing the Affirma buyback with 200 billion won from Shinhan Securities and Korea Investment & Securities, with a Kyobo Life official stressing that the financing will not affect the insurer’s financial standing.
jwc@heraldcorp.com
