SGI targets W2tr Kospi debut in March

Korea Herald

19-02-2025

South Korea's top guarantee insurer shows confidence in its second shot at market debut
Seoul Guarantee Insurance is set to list on South Korea's benchmark Kospi next month, pitching itself as a stable dividend play to long-term investors.
'Through this listing, we aim to strengthen our position as the sole comprehensive guarantee insurer in the country and establish ourselves as a leading dividend stock with a more proactive shareholder return policy in partnership with market investors,' SGI President and CEO Lee Myung-soon said during a press meeting in Seoul on Wednesday.
Founded in 1969 as Korea Fidelity & Surety, SGI maintains a dominant position in the local market, offering a broad range of guarantee and surety products for both corporate and individual clients. It also has a presence overseas, with a branch in Vietnam and an office in Indonesia, key locations where domestic companies are conducting business.
For its upcoming IPO, SGI has set a target price range of 26,000 won to 31,800 won ($18 to $22) per share, valuing the company at up to 2.22 trillion won. The valuation benchmarks major nonlife insurers, including Samsung Fire & Marine and Hyundai Marine & Fire.
This move marks SGI's second attempt at an IPO after shelving its initial bid last year, when it sought a valuation exceeding 3 trillion won with a price range of 39,500 won to 51,800 won per share.
A key driver for the listing is the planned exit of Korea Deposit Insurance Corp., which owns 93.85 percent of SGI and has about 5.6 trillion won invested in SGI that is yet to be recouped.
As in its previous IPO attempt, SGI will not issue new shares, with all 6,982,160 shares on public offer coming from KDIC's holdings -- meaning the proceeds will go directly to the major shareholder.
SGI is positioning itself as a reliable dividend stock, underpinned by its dominant market position. It has paid dividends for 13 consecutive years, with an average payout ratio of 53 percent -- higher than the 19 percent average of six listed Korean nonlife insurers and close to market leader Samsung Fire's 55 percent.
To bolster shareholder returns, SGI unveiled a three-year value enhancement plan in January, targeting an annual shareholder payout of 2 trillion won through 2027. This equates to a dividend yield of around 10 percent at the proposed IPO price. The company plans to distribute a 2 trillion won year-end dividend for 2024 in April, ensuring IPO investors who hold shares through early April qualify for the payout.
SGI is targeting institutional investors, particularly long-term funds favoring dividend stocks. Industry insiders expect a strong push toward Asian long funds, following the company's overseas roadshows with institutional investors in Singapore and Hong Kong earlier this month.
A senior SGI official noted that foreign investors' responses have been significantly more positive this time, particularly after addressing concerns about overpricing and the overhang from KDIC stake. KDIC has extended its lock-up period from six months to one year.
'We have made substantial enhancements to our pricing and shareholder return policies, and KDIC's lock-up extension aims to minimize the impact of its remaining stake sale on the share price,' the official said, adding that both companies are closely coordinating to ensure its exit does not adversly affect the insurer.
Starting Thursday, the company will initiate a weeklong bookbuilding process for institutional investors, with public subscription scheduled for March 5-6.