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By Kim Yoo-chul
Naver and Kakao are looking at investing in a local independent insurance broker as a way to expand their portfolios in the financial sector, according to industry sources, Friday.
Both Naver and Kakao are considering investing up to 10 billion won ($8.9 million) in Aplus Asset, which sells various insurance products in partnerships with life and non-life insurance companies.
"Naver and Kakao are interested in acquiring an up to 5 percent equity stake in Aplus Asset. But it is unclear whether Aplus Asset needs or wants any financial input from either Naver or Kakao," said one source. Aplus Asset has 22.6 million outstanding shares as of Friday.
The insurance broker received a 50 billion won investment from local private equity fund SkyLake back in 2017 as it showed it was able to generate profits in the highly-competitive local market. This funding was used to issue new shares amid an old share buyback to strengthen management's control of the firm.
"What is behind the interest shown by Naver and Kakao is the fact that Aplus Asset has a consistent revenue stream and profit growth after going public ― something it committed to at the time of the SkyLake investment," another source said. Aplus Asset saw sales of 244 billion won in 2020 producing an operating profit of 24.2 billion won, far outperforming its local peers.
The firm sells insurance products created by its 35 life and non-life partner companies, receiving a commission in return. Its overall customer retention rate was around 85 percent, which is considered solid, with the company providing competitive benefits to its partners.
"SkyLake's investment helped Aplus Asset's sales and profits see a meteoric rise. As the company has been listed and is on a growth trajectory, it seems quite unclear whether or not it needs additional funding from either Naver or Kakao," the second source added.
