Private equity-owned ING Life Insurance Korea is banking on its hefty dividend payouts to draw investors to its planned initial public offering (IPO) that could raise as much as $1.2 billion in one of South Korea’s bigger public floats.
The nation’s fifth-largest life insurer by assets, wholly owned by Asia-based MBK Partners, will list in the second week of May, CEO Cheong Mun-kuk said on Wednesday. The IPO would be South Korea’s second-largest float so far this year, behind Netmarble Games’s planned $2.4 billion IPO.
The two IPOs come at a time of heightened geopolitical tensions in the region over North Korea and amid a corruption scandal that has led to the ouster of president Park Geun-hye and fresh presidential elections in May.
But ING Life Insurance Korea said investors asked no questions about the geopolitical and political risks to the IPO, choosing instead to focus on its operations.
“They (investors) were very interested in our attractive dividends,” Cheong told reporters, adding hedge funds, especially, responded positively.
ING Life paid dividends of 182.5 billion won ($160.09 million) in 2016, or about 58 percent of net profit excluding one-off costs, according to company data.
Cheong said the company has the ability to continue paying such dividends as it has a good capital-adequacy ratio and depends on higher-margin captive agents for its growth, instead of on lower-margin channels such as bank partnerships to sell its policies.
ING Life’s risk-based capital ratio, a key measure of insurers’ ability to pay policyholders, was 319 percent in end-2016, compared to South Korea’s No. 1 insurer Samsung Life’s 302 percent, according to Korea Life Insurance Association data. ING Life had 5,118 captive agents as of end-2016, company data showed.
The company said in a filing last month it is selling 33.5 million shares at an indicative price range of 31,500 won to 40,000 won per share, with the IPO seen worth between 1.05-1.34 trillion won. Pricing is expected on April 24, and listing is expected in the second week of May, Cheong said.
MBK, which acquired ING Life from ING Groep in 2013, will retain about 59.1 percent stake of the company after the float, giving the whole company a pre-listing valuation of 3.28 trillion won.
Morgan Stanley and Samsung Securities are advising the IPO