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| The headquarters of Seoul Guarantee Insurance (SGI) in central Seoul / Courtesy of SGI |
By Anna J. Park
In a move to officially kick-start its IPO process, Seoul Guarantee Insurance (SGI) aims to submit a preliminary evaluation application to the Korea Exchange (KRX) in June.
The company announced earlier this week that its plan to submit the preliminary IPO application next month will not change, unless a major market shift occurs.
"The company has been working on matters of the public listing, since the Korean government announced in July last year that it plans to sell the stake of SGI it held in order to retrieve public funds," SGI said. "The specific timeline for the IPO will be decided later, considering market conditions and discussions at the government's public funds management committee," it explained.
The government announced last July that it plans to accelerate the retrieval of public monies amounting to 10.2 trillion won ($7.7 billion) that it lent to SGI during the Asian financial crisis in the late 1990s.
SGI was launched in 1998 by a merger between two local guarantee insurance firms that faced insolvency amid the economic crisis. Altogether, public funds of 10.2 trillion won were injected into SGI over the following two years of the crisis to support the insurance firm's enormous payments for corporate bonds that it guaranteed.
As a result of the public funds aid, the state-run Korea Deposit Insurance Corporation (KDIC) holds a 93.85 percent stake in SGI. So far, nearly half of the injected public funds have been retrieved through the insurance firm's dividends, as the KDIC has received about an average of 210 billion won as annual dividends.
As the KDIC is facing a deadline for the completion of the retrieval of the public funds by 2027, the state-run company plans to sell 10 percent of SGI stocks, which it holds during the IPO process, while the remaining stakes would be sold in block deals or open bidding throughout 2025 and 2026.
If the IPO succeeds as planned, it will be the first case of a public company to do so, since the Korea District Heating Corporation went public in 2010. It is expected that SGI will make its stock market debut as early as the second half of this year.
As of the end of 2022, SGI guarantees 420 trillion won, while holding 5.49 trillion won in capital. The company's corporate value is estimated between three to five trillion won.
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