The price of the much hyped initial public offering (IPO) of ING Life Insurance Korea was set at 33,000 won ($29.26), near the lower end of the guidance range, but the fifth largest life insurer is expected to do well on the market as it promises high dividend payouts.

After book building between April 6 and 21, the company on Thursday raised 1.1 trillion won upon pricing IPO at 33,000 won per share, the lower end of the desired pricing band of between 31,500 won and 40,000 won.

Market watchers however predict the stock market value could more than double due to dividend appeal. The insurer, owned by private equity fund MBK Partners LP, has paid out relatively higher dividends compared with its peers and is expected to continue to offer high dividend on sound earnings.

Its full-year net profit over the past three years averaged 300 billion with net income jumping from 223.5 billion in 2014 to 304.7 billion won in 2015. Last year, its net income retreated to 240.7 billion won, but given one-off cost of 84 billion won last year set to pay out death claims for subscribers who committed suicide, it has managed to maintain its earnings solid.

The company’s dividend payout ratio this year is expected to near last year’s 58 percent, which much generous than listed insurers Samsung Life Insurance Co. and Hanwha Life Insurance Co. which paid 23 percent and 19.1 percent of their net profit, respectively, last year. When the company is assumed to earn about 300 billion won in net income, its dividend rate would reach 5 percent based on the IPO price.

ING Life also boasts of high risk-based capital (RBC) that stands at 319 percent, highest among the nation’s top 10 domestic life insurers. RBC is a key measure of insurers’ ability to pay policyholders.

ING Life said in a regulatory filing last month it would offer a 40.9 percent stake held by its owner MBK Partners to the market in 33.5 million existing shares. Of the offering, 6.7 million shares will be made available to the public on Thursday and Friday.

MBK Partners chose to redeem a part of its investment through the IPO after failing to sell ING Life last year because the interested Chinese companies pulled out its bid over tensions between China and Korea caused by Korea’s decision to deploy the U.S. anti-missile system Terminal High Altitude Area Defense (THAAD).

Samsung Securities and Morgan Stanley are the lead underwriters, while KB securities, Mirae Asset Daewoo Securities, and Goldman Sachs also advise on the IPO. Given its net assets of 4.15 trillion won as of the end of 2016, its market capitalization is estimated to reach around 2.7 trillion won after it joins the nation’s main Kospi market on May 11.

By Hong Jang-won

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]