IMM to buy Samsung Life stake once owned by Jay Y. Lee's sister

IMM Private Equity is set to acquire a 1.73 percent stake in Samsung Life Insurance Co., according to investment banking sources on Jan. 27. The stakes were once owned by Lee Seo-hyun, chair of the Samsung Welfare Foundation and sister of Samsung Vice Chairman Jay Y. Lee, according to the sources.

Lee Seo-hyun inherited a 3.46 percent stake in Samsung Life from her late father Lee Kun-hee, after the death of the former Samsung Group chairman in 2020. She sold half of the shares, or a 1.73 percent stake, through a block deal to an institutional investor last October. The equity sale reached 219 billion won ($182 million), at 625,000 won per share including a 4.5 percent premium.

By dumping the shares, Lee Seo-hyun could finance her inheritance tax as well as avoid Korea's regulations on intra-group transactions. Through the stake sale, the Samsung Life shareholdings of the late Lee Kun-hee’s family declined to 19.09 percent, under the regulation threshold of 20 percent. The shareholding reduction exempted Samsung Life’s subsidiaries, including Samsung Card Co., Samsung Asset Management Co., Samsung SRA Asset Management Co., from the regulations as well.

IMM PE, the South Korean private equity firm, is in talks with the institutional investor to acquire the 1.73 percent stake. The deal size has not been confirmed yet.

The PE firm plans to make the acquisition through its long-term fund. Targeting five-year or longer investments, the fund bets on safe stocks with steady growth. IMM Credit Solution, IMM PE’s subsidiary, will create the fund targeting 500 billion won. Multiple Korean limited partners, including Shinhan Financial Group, are reviewing investment plans. The fund aims to close at the end-February this year.

IMM PE is slated to acquire the equities for simple investment. The PE firm expects equity value increases and high dividend yields as the stock's price-book ratio (PBR) is as undervalued as 0.3 times. Samsung Life has had a 30 to 40 percent dividend payout ratio for the past years. The Korean insurer aims to gradually increase the ratio to as high as 50 percent.

Once clinched, the deal will become IMM PE's third investment in a financial firm. In November 2016, the PE company invested 450 billion won to acquire a 5.57 percent stake in Korea’s Woori Finance Holdings. In February 2019, IMM PE bought a 4 percent stake in Korea’s Shinhan Financial Group for 270 billion won.