Highly Successful IPO
Korea Life shares sells like hot dogs with too much buy offers as they began trading on the floor
Korea Life Insurance Co. set its IPO price for its shares at 8,200 won per share, but on the initial trading day of the shares, the price jumped as high as 9,000 won per share, only to close the day at 8,850 won per share, up1.72 percent from the IPO price.
Korea Life, the second biggest life insurer in Korea has decided its initial share price set at 8,200 won per share following discussions with Daewoo Securities Co., its initial public offer manager held on March 5, the company said recently.
Korea Life wanted to set the share price ranging from 9,000 won to 11,000 won per share, but decided otherwise in consideration of the stock market conditions, which don't look favorable to the IPOs.
The company's decision is likely to have a large impact on the life insurance firms that are to follow Korea Life's lead in the IPOs including Samsung Life and Kyobo Life.
The life insurance company's first day trading uplifted its market capitalization to7.686 trillion won, ranking the 29th among the listed companies at Korea Exchange, which ranks the 7th among Asian life insurance firms and the 27th among global life insurance firms.
The company's first-day trading volume numbered 65.610 million shares, accounting for 11 percent of total shares traded on March 17 amounting to 582.1 billion won.
Vice Chairman Shin Eun-chul said Korea Life achieved a rapid growth since its become an affiliate of Hanwha Group in 2002 with its total assets over 50 trillion won compared to 10 trillion won in 1996, and the company's reach expanded in a huge way both at home and overseas. Korea Life is the first Korean life insurer to operate in Vietnam licensed by the Vietnamese authorities to show off its operation capacity both at home and overseas, the chairman said.
The listing of shares on the stock exchange as the start, Korea Life would be reborn as a global life insurer, providing top value to shareholders and top satisfactory treatment to customers. Industry sources said Korea Life would be a different company now that it is a public company. The company is not subject to made its financial statements based on the requirements for listed companies and make them public, along with other company records to make its management transparent.
Korea Life can also use the fund created through its listing, in addition to 2 trillion won set aside for investment this year, to take over non-financial companies through M&As including Daewoo Shipbuilding changing the landscape of the life insurance industry, industry sources said. Korea Deposit Insurance Corp. would be able to recoup the public funds injected into Korea Life to save it amounting to 3.5 trillion won(25 percent of stakes) by selling the stakes.
Daewoo Securities officials said the decision to set the IPO per share price lower than expected reflected the demand for new shares at the stock market and on the whims of such large life insurers as Samsung Life waiting on the wing to take on its IPO.
The lowered share price will have different impact on shareholders such as Hanwha Group (67 percent) and Korea Deposit Insurance Corp,(33 percent) two major shareholders of Korea Life.
Hanwha Group people feel that the share price is appropriate in terms of the current economic conditions as it is designed to attract long-term investors rather than hedge funds. In fact, the group would not incur large losses from its holdings in Korea Life as it bought back the Korea Life shares at per share price of 2,274 won to pay off its debts to Korea Deposit Insurance and the difference would be 5,926 won per share.
On the other hand, Korea Deposit Life Insurance would not be able to fully recoup the public funds injected into Korea Life as the per share price is a little below the level that would enable the company to get its entire public funds back. The per share price would have to be around 10,534 won. But Korea Deposit Insurance is more interested in seeing Korea Life is able to list its shares successfully as its loss would be far bigger if Korea Life stays unlisted and it if goes public, the loss would be around from 20 billion won to 30 billion won for Korea Deposit Insurance. nw
Top officials of Korea Life Insurance Co. led by Vice Chmn. Shin, 3rd L, celebrate the successful initial public offering of the company at Korea Exchange on March. 17.