Seoul Guarantee Insurance takes steps for Kospi debut

Seoul Guarantee Insurance headquarters. [Courtesy of Seoul Guarantee Insurance]

Seoul Guarantee Insurance, a leading guarantee institution in South Korea, has passed the preliminary review by the Korea Exchange for its initial public offering, paving the way to become the first public company to debut on the stock market in 13 years.

Seoul Guarantee Insurance announced Wednesday that it had been cleared of the preliminary review required for the listing, two months after the company filed an examination request with the bourse operator in June.

Companies that receive preliminary approval for listing are obligated to complete the listing process within six months.

With the preliminary review completed, Seoul Guarantee Insurance is set to initiate the listing process. The joint lead managers for the listing are Mirae Asset Securities Co. and Samsung Securities Co.

Established in 1998 through the merger of Daehan Guarantee Insurance and Korea Guarantee Insurance, Seoul Guarantee Insurance achieved sales of 2.61 trillion won ($1.95 billion) and an operating profit of 745 billion won in 2022.

The upcoming IPO is expected to mark the first public company to go public in 13 years since the IPO of Korea District Heating Corp. in 2010. Seoul Guarantee Insurance plans to determine the timing for submitting a securities report and listing after September. Market insiders anticipate that the company will likely pursue the listing within this year.

Korea Deposit Insurance Corp. (KDIC) is the largest shareholder of Seoul Guarantee Insurance with 93.85 percent stake. KDIC plans to prioritize the sale of its 10 percent stake. The market estimates the value of the company to be around 3 trillion won.

Based on the company’s capital as of the end of 2022, Seoul Guarantee Insurance’s price-to-earnings ratio (PBR) stands at around 0.6.

KDIC has invested 10.25 trillion won so far, realizing about 4 trillion won in returns through dividends while seeking to secure an additional 6 trillion won. If the company is valued at more than 3 trillion won in the IPO, KDIC’s proceeds from the share sale would be limited to 300 billion won. This means KDIC would need to meet the target amount through a combination of dividends and stake sales even after the listing.