This article was published on March 25, 2025, at 5:39 p.m. on the ChosunBiz MoneyMove site.
Corsair Capital, a private equity firm that has held a stake in Kyobo Life Insurance since 2007, has opted for a collateral loan rather than selling its equity. This decision is interpreted as Kyobo Life Insurance starting to resolve conflicts with financial investors and determining that retaining its equity is more beneficial than selling it.
According to the investment banking industry on the 25th, Corsair Capital agreed to borrow about 860 billion won using its 9.79% stake in Kyobo Life Insurance as collateral. The loan is intended to repay existing investors while remaining a friendly shareholder of Kyobo Life Insurance.
The lender is a special purpose company established by Shinhan Investment Corp. Kyobo Life Insurance Chairman Shin Chang-jae has pledged his equity as collateral to the SPC, which collects investment funds to provide loans. Shinhan Investment Corp, which established the SPC, is reported to have played a leading role in resolving conflicts between Chairman Shin and the financial investors.
This SPC raised funds from a consortium of securities firms. Daishin Securities is responsible for about one-third of the total amount, while Shinhan Investment Corp, Kiwoom Securities, and Hana Securities are expected to contribute more than 150 billion won, with Korea Investment Securities also contributing over 50 billion won. The close relationship between Daishin Securities and Kyobo Life Insurance's major shareholders appears to have influenced this.
◇ Expectations for IPO through governance improvement… Holding is more beneficial than selling
Analysts suggest that Corsair Capital's shift to a tactic of equity lending instead of selling is due to a higher valuation placed on Kyobo Life Insurance. As conflicts between Kyobo Life Insurance and financial investors gradually ease, expectations around the transition to a holding company, succession, and initial public offering (IPO) have increased. Chairman Shin, 72 this year, holds 33.78% of Kyobo Life Insurance's equity. His eldest son, Shin Joong-ha, does not hold any equity.
Moreover, the requirement for financial authorities to conduct a suitability review in order to ascend as a major shareholder of an insurance company is cited as one reason Corsair Capital could not sell its equity. The SPC that should purchase Corsair Capital's equity acquired a 4.45% stake in Kyobo Life Insurance held by the Government of Singapore Investment Corporation (GIC) on the 7th, meaning if it also buys Corsair Capital's equity, Kyobo Life Insurance's holdings would exceed 10%.
An investment banking source stated, "From Corsair Capital's perspective, the largest shareholder is providing collateral, so they have received benefits as a friendly shareholder," adding, "This suggests that the alliance between Kyobo Life Insurance and friendly financial investors has solidified considerably."
With this transaction, only IMM Private Equity and EQT Partners remain as financial investors in conflict with Kyobo Life Insurance. Each firm holds a 5.23% stake in Kyobo Life Insurance. They maintain that selling below the principal amount (24,500 won per share) is unfeasible. It appears that Kyobo Life Insurance will seek to secure these firms' equity once the international arbitration case is completed this year.
The Ontario Teachers' Pension Plan (OTPP) and the overseas secondary private equity firm Pantheon also currently hold 7.6% and 2.3% of Kyobo Life Insurance equity, respectively, but they too are classified as friendly financial investors like Corsair Capital.