Japan's SBI Holdings Targets Kyobo Life Insurance Shares Held by Canadian Teachers' Pension Plan

Expected Acquisition of Life Invester's Stake
Share Price Estimated at 200,000 to 230,000 KRW per Share
Regulatory Approval Required for Foreign Ownership Exceeding 20%
Negative Sentiment Toward Japanese Capital and Put Option Dispute as Variables

Japanese SBI Holdings is expected to expand its stake in Kyobo Life Insurance to 20%. It is anticipated to purchase shares owned by the Ontario Teachers' Pension Plan (OTTP) of Canada and a foreign special purpose company (SPC). However, under domestic insurance law, foreign shareholders need approval from financial authorities to increase their stake, which remains a variable.

According to the investment banking (IB) industry on the 18th, SBI Holdings is expected to acquire Kyobo Life shares held by OTTP and Life Invester. Their respective shareholdings are 7.62% and 2.30%. The purchase price SBI Holdings will pay is expected to be between the prices paid by Affinity Equity Partners (234,000 KRW per share) and Apolma Capital (198,000 KRW per share), who recently sold their stakes.

Industry insiders believe that existing shareholders IMM Private Equity and EQT Partners are demanding prices above 300,000 KRW per share, causing conflicts with Kyobo Life Chairman Shin Chang-jae, so the realistic available shares are only those held by OTTP and Life Invester. Corsair Capital, a private equity fund friendly to Kyobo Life, also holds 9.79% but is unlikely to put its shares up for sale. Corsair Capital raised loans using Kyobo Life shares as collateral to return investment funds to limited partners (LPs). It is expected to recover its investment when Kyobo Life goes public (IPO) or converts into a holding company and purchases shares.

Earlier, SBI Holdings announced it would increase its stake in Kyobo Life to 20%. Currently, SBI Holdings holds a total of 9.10%, including 9.05% acquired from Affinity Equity Partners and 0.05% from the Government of Singapore Investment Corporation (GIC). If it acquires shares from OTTP and Life Invester, the total stake will reach 19.02%. This will make SBI Holdings the second-largest shareholder of Kyobo Life after Chairman Shin (33.8%), and Kyobo Life will become an equity-method affiliate of SBI Holdings. The plan is to strengthen collaboration with Kyobo Life and build an insurance business portfolio, which is weaker compared to securities and banking.

However, there are also forecasts that SBI Holdings' acquisition of Kyobo Life shares will not proceed smoothly. Under the Insurance Business Act, foreign insurance companies or foreigners must obtain approval from the Financial Services Commission to acquire more than 20% of a domestic insurer's shares. In cases of complex structures such as indirect investments through SPCs, shareholding ratios are judged based on the actual owner, making it difficult to disperse investments by using multiple subsidiaries.

There is also expected resistance to the major domestic life insurers' shares falling into foreign capital. Previously, SBI Holdings became the second-largest shareholder of Hyundai Swiss Savings Bank in 2013 and secured management rights through rights offerings. An IB industry official said, "With many immediate issues such as conflicts with invested FIs and holding company conversion, it is uncertain whether financial authorities will easily approve this. Given Kyobo Life's scale, it may be difficult for SBI Holdings to secure management rights, but it is questionable whether financial authorities will view this favorably."