S.Korea's ING Life banks on high dividends to help sell $1.2 bln IPO

Samsung Life Insurance

19/04/2017 07:44

* S.Korea's 5th-largest life insurer to list in 2nd week of 
May 
    * Paid 58 pct of net profit as dividends in 2016 
    * ING Life says can continue paying high dividends 
 
    By Joyce Lee 
    SEOUL, April 19 (Reuters) - 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.  urn:newsml:reuters.com:*:nL3N1HP24E 
    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.  urn:newsml:reuters.com:*:nL3N1HR1DA 
 urn:newsml:reuters.com:*:nL3N1HP2RV 
    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 
 032830.KS  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  INGA.AS  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  MS.N  and Samsung Securities  016360.KS  are 
advising the IPO. 
($1 = 1,140.0000 won) 
 
 (Reporting by Joyce Lee; Editing by Muralikumar Anantharaman) 
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters 
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net)) 
 
Keywords: SOUTHKOREA ING LIFE INSURANCE/IPO