Seoul Guarantee Insurance marks strong Kospi debut despite market concerns
Seoul Guarantee Insurance, South Korea's leading guarantee insurer, marked a strong debut on the local stock market Friday, defying concerns over a market slowdown and potential overvaluation.
According to the Korea Exchange, SGI closed its first trading day at 32,000 won ($22) per share, a 23 percent gain from its offering price of 26,000 won. The stock opened with a 7.88 percent gain and briefly reached an intraday high of 32,150 won.
The debut rally surprised many, as market sentiment had been largely subdued ahead of the offering. The price was set at the lower end of its target range, following disappointing demand forecasts from institutional investors and lackluster results during the actual public subscription.
Concerns over weak investment sentiment, coupled with the lack of new shares issued, were expected to deter investor participation in the IPO. Issues of overvaluation also persisted, despite the company reducing its size from over 3 trillion won from its initial target during its first IPO attempt in 2023.
However, SGI's emphasis on shareholder returns appears to have resonated with investors. The company positioned itself as a dividend stock, targeting long-term investors with a three-year plan to distribute 2 trillion won annually in dividends.
The insurer also confirmed a 2024 year-end dividend of the same amount, offering a compelling incentive for investors, as those holding shares through April will qualify for the payout, which is estimated to be around 11 percent of the offering price.
SGI, the only comprehensive guarantee insurance provider in Korea, now boasts a market capitalization of 2.23 trillion won, ranking 144th on the Kospi and fifth among insurance stocks.
Meanwhile, SGI's listing primarily aimed to facilitate the exit of its largest shareholder, the Korea Deposit Insurance Corporation, which has left around 5 trillion won in public funds to be recovered from its investment in the insurer. All publicly offered SGI shares came from KDIC's stake, with the corporation estimated to have recouped 181.5 billion won through the IPO. KDIC now holds approximately 83.85 percent stake in SGI.
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