Michael Byung-ju Kim: Raider or rescuer?

Korea Herald

23-03-2025

Michael Byung-ju Kim, founder of private equity firm MBK Partners, who was once hailed as the "godfather of Asian private equity" for landmark deals with his namesake firm, now faces accusations of being a corporate raider, amid mounting criticism of his aggressive tactics.
In 2015, he made global headlines with the acquisition of Korean supermarket chain Homeplus for 7.2 trillion won ($4.92 billion) — the largest private equity-led deal in Asiaat the time.
A decade later, that very deal has come back to haunt him. In 2025, Homeplus' debt woes have forced Kim to pledge his own assets to cover overdue payments, a bruising turn for the industry veteran who built his fortune on bold, successful buyouts.
'While private equity firms expect both gains and losses, Kim's pledge signals MBK's acknowledgment of failure in its Homeplus strategy," Lee Jeong-hwan, an associate professor at Hanyang University's College of Economics and Finance.
Kim began his finance career at Goldman Sachs in 1986 before moving to Salomon Smith Barney, where he served as regional managing director, leading investments in Asia. In 1999, he joined Carlyle, becoming Asia president and driving the private equity giant's regional expansion.
One landmark deal that brought Lee into the industry spotlight was Carlyle's 2000 acquisition of KorAm Bank, where Carlyle and JPMorgan jointly acquired a 36 percent stake for $430 million, later selling it to Citigroup for $2.7 billion in a successful exit.
Building on this success, Kim left Carlyle in 2005 to found MBK Partners, a private equity firm named after himself. In the same year Korea had introduced regulatory frameworks for private equity, with Kim playing a key role in shaping the sector's growth.
With MBK now the largest buyout firm in Northeast Asia, managing over $30 billion in assets, Kim is among Korea's wealthiest individuals. In 2024, Forbes ranked him as the country's second-richest man, with a net worth of $9.7 billion, following Samsung Chairman Lee Jae-yong.
Kim has long emphasized improving corporate governance as one of his investment goals, particularly within Korea's "chaebol" system.
In a 2024 interview with a Hong Kong news outlet, he described "corporate governance as a leading theme" in his Korean investments, citing the "structural hurdles" posed by family-run conglomerates. He also expressed his criticism of the system in a 2022 interview about his novel, "Offerings," where he said frustration with greed on Wall Street and corruption in Korea's chaebol inspired the book.
In line with this, MBK has cited governance improvement as its rationale for involvement in high-profile, controversial ownership disputes within Korean conglomerates.
In 2023, MBK partnered with a member of Hankook Tire & Technology's estranged founding family for a tender offer, but the bid failed due to insufficient shares. More recently, MBK has been in an ongoing ownership feud against Korea Zinc's Choi family, aligning with the zinc smelter's largest shareholder, Young Poong.
While such aggressive ownership moves are more common in Western markets, industry insiders argue they clash with Korea's investment culture.
"The private equity system was introduced to support (not challenge) local industry. That is why government policies and funds have backed it," a domestic private equity official said. "And challenging ownership structures without clear rationale carries significant risk."
Despite controversies over failed investments and ownership disputes, professor Lee doesn't view them as failures of MBK's strategy.
"While MBK may not have made the best investments, the lack of profitability in these companies is largely due to poor management, not MBK," he said. "There are always ups and downs — what matters is investor confidence."
The investment strategies employed by MBK could damage its standing in Korea's investment environment, where public perception impacts fund raising.
"In Korea, the largest investors are state pension funds managing public money," an official at a private equity firm said, noting that public reputation is a key factor these funds evaluate when reviewing partners. "While such aggressive strategies may be acceptable globally, decisions that severely damage its reputation are undesirable."
Indeed, the National Pension Service, Korea's largest public fund, has distanced itself from MBK and its controversies, disclosing that its latest investment in MBK was conditioned on the company not getting involved in hostile takeovers. The NPS is considering applying this rule to future contracts with private equity firms.
Further tarnishing MBK's reputation, the Korean-American entrepreneur faces personal controversies, including tax evasion allegations and concerns over funds being funneled abroad. The local tax agency, which reportedly imposed a 40 billion won tax liability on Kim in 2022, is now conducting a similar investigation.