Mirae Asset Life's IPO raises $306m

High valuation compared to much larger peers pushes pricing below range. Domestic investors made up the bulk of the deal.

Mirae Asset Life Insurance, Korea’s fifth largest life insurer, raised $306.5 million in an initial public offering of its shares, with shares pricing below the marketed range.

The total deal-size consisted of roughly 45.4 million shares — 40 million primary and 5.4 million sold by Mirae’s affiliated investment company, according to a source close to the deal. Shares priced Thursday evening in Hong Kong at W7,500 per unit, well below the initial W8,200 to W10,000 price range initially marketed to investors during the roadshow.

Domestic institutions made up the bulk of the deal, and drove the pricing below the range, the source said. Allocations were still being finalised Thursday evening, but he estimated there were less than 20 international lines in the book.

“There was more demand from the domestic side,” the source told FinanceAsia.  “It was quite heavily [Korean].”

Like Hong Kong and China, Korea’s bellwether index has experienced volatility recently, dropping 6.7% from April 23 up to June 16. Year-to-date, it is up 8.9%.

Prospective investors were most likely put off by the insurer’s high valuation compared to its much larger peers. Mirae Asset Life was marketed at a forward price-to-book of 0.67 times to 0.79 times for the first quarter. This is in line with larger players such as Hanwha Life and Samsung Life Insurance. The two insurers are trading on average at around 0.78 times price-to-book for the first quarter.

“[Mirae was marketed] at a pretty thin discount to its much larger peers. It was a little bit pricy compared to Hanwha and Samsung. Those two are market leaders, while Mirae is more of a mid-market player,” the source said. “People were a bit cautious at first because of the valuation.”

As a result, the international investors were more price sensitive than the domestic players.

Having raised $300 million from its IPO, Mirae Asset Life now has a market capitalisation of about $1 billion.

The selling shareholders, which included Mirare Asset Securities and Mirae Asset Capital, previously owned a combined 68% of the company before the IPO.

Citi, Samsung Securities and Daiwa Securities were the bookrunners on the deal.

Korean ECM market
Despite a fairly meagre pipeline, Korea has had a decent amount of equity capital market activity this year. Korean ECM volume totalled $4.8 billion via 35 deals since the start of the year, compared to $4.1 billion via 41 deals in the same prior year period, and the highest year-to-date total since $7.5 billion in 2011, according to Dealogic data.

In March, the Korea Deposit Insurance Corporation completed a long-anticipated 2% stock divestment from Hanwha Life, raising W133.4 billion ($118 million) in the process. In addition to removing the price overhang from Hanwha Life's stock, the deal was welcomed by the market at the time, as block trades were sparse in the region due to the blackout period.

In May, two Samsung Life shareholders took advantage of a sharp share price rally to divest a $601 million stake in Korea’s largest insurance company by assets.

¬ Haymarket Media Limited. All rights reserved.
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