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Seoul Guarantee Insurance Reduces IPO Valuation by 40% Ahead of March Launch

by Kaia

Seoul, South Korea – Seoul Guarantee Insurance Co. (SGI), a state-owned insurer, has significantly reduced its target valuation by 40% as it prepares for a public offering on the South Korean stock exchange.

In a prospectus filed with the Financial Supervisory Service on January 24, SGI revealed plans to raise between 1.82 trillion and 2.22 trillion won (approximately $1.3 billion to $1.5 billion) in its initial public offering (IPO). The offering will involve the sale of 6,982,160 shares held by the Korea Deposit Insurance Corp. (KDIC), which owns 93.85% of the company.

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The new price range for the IPO is set between 26,000 and 31,800 won per share, which marks a 38.6% decrease from the previous range of 39,500 to 51,800 won proposed in October 2023. SGI postponed the IPO in 2023 due to weak demand during the bookbuilding process.

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The shares will be offered for subscription from February 20 to 26, with the company aiming for a debut on the Kospi main bourse on March 14.

Recovering Public Funds

The IPO is part of an effort by KDIC to recover public funds injected into SGI between 1999 and 2001. SGI was established following the merger of two financially struggling Korean guarantee insurers, which were bailed out by KDIC to the tune of 10.25 trillion won during the aftermath of the 1997-98 Asian financial crisis.

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To entice investors, SGI has pledged to pay a dividend of 200 billion won for its 2024 earnings, representing a dividend yield of around 10% for IPO subscribers. Over the next three years, the company plans to return 200 billion won annually to shareholders through a combination of dividends and stock buybacks.

The IPO marks a pivotal moment in the company’s history, as SGI seeks to strengthen its financial position and provide returns to both public investors and private shareholders.

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