Go to contents

Samsung Life Breaks IPO Investment Record

Posted May. 05, 2010 10:04,   


Samsung Life Insurance said Tuesday that it drew 19.8 trillion won (17.7 billion U.S. dollars) in its initial public offering, a new high in the Korean stock market.

The competition for stocks in Samsung Life’s IPO was 40.60 to one. The company is now the country’s fifth largest by market capitalization (based on an IPO worth 22 trillion won or 19.7 billion dollars), and has helped its parent Samsung Group erase debt owed by Samsung Motors.

Samsung Life will become one of Korea’s leading financial institutions from May 12, when its shares will be traded on the stock market. Along with Korea Life Insurance and Tong Yang Life Insurance, Samsung Life will create the business category “life insurance” on the stock market and should help the market grow further.

○ Record IPO

The previous IPO record in Korea by a state-run company was the 11.5 trillion won (10.3 billion dollars) raised by KT&G in September 1999. The company’s stocks could be bought even at banks back in 1999.

Among private companies, Samsung Card had the highest IPO of 5.96 trillion won (5.4 billion dollars). Also attracting massive IPOs were Mirae Asset Securities (5.82 trillion won or 5.3 billion dollars), Lotte Shopping (5.3 trillion won or 4.7 billion dollars) and Korea Life Insurance (4.22 trillion won or 3.7 billion dollars).

Samsung Life’s record is partly due to the growth potential of the insurer, investor trust in its parent group, and excess liquidity of 600 trillion won (537.3 billion dollars). Experts also say unconditional and speculative investment also played a role.

The long-term prospects of Samsung Life’s stocks have received mixed reviews, however. Leading Investment & Securities researcher Kim Ho-yeong said, “Samsung Life’s IPO price is set at 110,000 won (98.52 dollars), only 23 percent larger than the company’s intrinsic value reflecting the future value created by subscribers to long-term insurance policies.”

“Accordingly, Samsung Life’s initial offering price is far smaller than that of Asian life insurers, whose IPO price is 2.25 times larger than intrinsic value on average. Samsung Life has grown three to four percent per year, so its stock price could reach 130,000 won (116.44 dollars).”

Daishin Securities research fellow Kang Seung-geon begged to differ, saying, “Samsung Life has not grown rapidly. Its IPO price is higher than those of other life insurers.”

artemes@donga.com hyejin@donga.com