Kyobo Life's war with major foreign shareholder rages on

Kyobo Life Insurance headquarters in Gwangwhamun in central Seoul [KYOBO LIFE INSURANCE]

Kyobo Life Insurance's annual general meeting Wednesday was disrupted by its second-largest shareholder, Affinity Consortium.

Attorneys dispatched by the group of private equity companies, which controls 24 percent of Kyobo Life, disrupted the meeting with repeated questions and objections that were not relevant to the agenda of the meeting, said Kyobo Life on Friday.

The consortium's partners are Affinity Equity Partners, IMM Investment, Baring Private Equity Asia and GIC.

They made “false allegations that Kyobo Life Chairman Shin Chang-jae and some executives breached professional duties," said Kyobo Life.

In 2012, Affinity Equity Partners and its partners in the consortium acquired a 24 percent stake in Kyobo Life previously held by Daewoo International.

The partners were given a put option to sell their shares to Kyobo Life Chairman Shin if Kyobo Life failed to complete an initial public offering by September 2015. They tried to exercise the put option in 2018 and demanded 409,912 won ($340) per share, higher than their buying price of 245,000 won.

Shin rejected the price, saying it was inflated. Affinity Equity Partners and its partners took the case to the International Chamber of Commerce (ICC) for arbitration, which ruled that Shin did not have to buy the shares from them at the proposed price. They filed another case with the ICC in March.

The company said it believed the consortium’s motive for inflating the put option price was to delay the IPO and prepare for a hostile takeover. It said it believed the consortium knew Shin would not be able to pay the put option price even after selling all his shares. Shin is the largest shareholder of Kyobo Life with a 33.78 percent stake.

Affinity Consortium rebutted Kyobo Life’s arguments.

“Affinity Consortium has no interest at all in controlling Kyobo Life’s management and did not and will not pursue a hostile M&A,” said the consortium in a statement in response to Kyobo Life’s statement.

“If Chairman Shin carries out the put option, the Affinity consortium will no longer be Kyobo Life’s shareholder. So connecting [our attempt to carry out the put option] and a hostile takeover is preposterous.”

BY JIN MIN-JI [jin.minji@joongang.co.kr]