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UPI
11-08-2025
- Business
- UPI
Home Plus crisis sparks political backlash against Korea's top private equity firm
A banner hangs at the head office of MBK Partners in Seoul, calling fior the private equity fund to take responsibility for the Home Plus crisis. It was installed by the unioists of the discount chain. Photo by Tae-gyu Kim/UPI SEOUL, Aug. 11 (UPI) -- South Korea's leading private equity company MBK Partners said the troubles of its subsidiary Home Plus, the country's No. 2 discount chain, were not its fault. "The management crisis at Home Plus is due to structural changes in the industry," MBK said in a statement last week, refuting allegations that the excessive loans and asset sales under its ownership resulted in the retailer's decline. Citing a report from Samil PricewaterhouseCoopers, MBK pointed to rising minimum wages, higher rent and the growth of e-commerce companies as key headwinds. In other words, it framed the difficulties of Home Plus as part of a broader industry trend. In response, politicians and Home Plus union leaders flatly dismissed the claims. "Home Plus reduced the number of supermarkets and its debt ratio once topped 1,400%. This is typical of the way MBK conducts business with its acquired companies," Rep. Min Byung-duk of the governing Democratic Party told UPI. "If the adversity of Home Plus was caused by industry-wide challenges, why are its rivals like E-Mart and Lotte Mart still doing well? MBK's comments are not true, and we're preparing for parliamentary hearings on the issue," he said. Indeed, business bellwether E-Mart logged $34 million in operating profit last year and the figure is expected to surpass $360 million this year. No. 3 player Lotte Mart has also been largely profitable in recent years. In 2015, MBK spent $5.1 billion to purchase Home Plus, which struggled to find its feet after the COVID-19 pandemic. It filed for corporate rehabilitation in March. In June, MBK promised to write off its entire $1.8 billion stake in Home Plus to speed up the sales of the troubled company. Yet, politicians and unionists of Home Plus urged it to take further responsibility. Meanwhile, Rep. Kim Nam-geun of the Democratic Party criticized the National Pension Service, which invested $443 million in MBK's acquisition of Home Plus in 2015. The pension fund's losses are believed to be significant. "MBK has a track record of causing more than 10 companies to become insolvent. Nevertheless, the NPS neither investigated MBK's actions nor held it accountable," Kim said in an online message. "If the NPS had adopted a principle of not investing in MBK, the firm could not have created private equity funds in Korea. A clear no-investment policy is necessary for private equity firms, which repeatedly draw public criticisms," he added.
UPI
23-07-2025
- Business
- UPI
Korea's private equity funds facing more regulations
A banner hangs at the head office of MBK Partners in Seoul, criticizing the private equity fund's investment in Home Plus. Unionists of the discount chain made it. Photo by Tae-gyu Kim/UPI July 23 (UPI) -- South Korea plans to strengthen regulations on private equity funds after the controversial investment by MBK Partners in troubled Home Plus, the country's second-largest discount chain. Rep. Min Byung-duk of the governing Democratic Party proposed a bill on Wednesday designed to require private equity companies to disclose information at the same level as publicly offered funds. If the bill is passed, private equity funds will have to unveil quarterly investment reports, submit periodic business reports, disclose material information when necessary, and undergo financial audits. "Concerns over investor losses have been repeatedly raised because of opaque management practices, conflicts of interest, and information asymmetry in private equity funds," Min said in a statement. He works for the National Policy Committee of the Assembly. "The new bill marks a first step toward restoring trust in the capital market by establishing new disclosure standards for private equity funds, addressing information imbalances, and safeguarding investors' right to know," he added. There seems to be a high possibility that the country's unicameral parliament will pass the bill in consideration of the response of the ruling party and the main opposition People Power Party. A total of 15 lawmakers from the Democratic Party took part in drafting and introducing the legislative measure. The People Power Party has also been critical of private equity funds and disapproved MBK over Home Plus issues. "We will review the proposed bill. Basically, we also agree that the country should beef up regulations on private equity funds," Rep. Kang Min-kuk from the People Power Party told UPI. He leads the party at the National Policy Committee. In 2015, MBK took over Home Plus from Tesco for $5.1 billion, using a mix of equity and debt to finance what was the country's largest buyout deal at the time. But its performance deteriorated after the COVID-19 pandemic in the early 2020s. Against this backdrop, Home Plus filed for corporate rehabilitation in March. Last month, MBK came up with a decision to write off its entire stake in Home Plus worth $1.8 billion to help the retailer get back on the right track. However, MBK and its founding Chairman Michael Byungju Kim have been urged to do more. Comments from MBK were not available.
Miami Herald
09-07-2025
- Business
- Miami Herald
MBK Partners urged to repay debts owed to individual investors
SEOUL, July 9 (UPI) -- A lawyer whose firm is suing MBK Partners over investor losses has urged the financial company to repay debts owed to those who purchased asset-backed bonds related to Home Plus, South Korea's troubled discount chain. LawVax attorney Jang Jin-seok stated that position during an interview with UPI on Tuesday. The Seoul-based law firm filed a criminal complaint with the prosecutors late last month against senior executives of MBK and Home Plus. Included in them were MBK Chairman Michael Byungju Kim and Home Plus co-CEOs Kim Kwang-il and Joh Joo-yun. The complaint alleges that they issued or helped issue commercial papers and asset-backed, short-term bonds knowing that Home Plus lacked the capacity to repay them, causing investors to lose about $400 million. "Due to mounting losses and deteriorating credit ratings, Home Plus relied on short-term funding to stay afloat, and toward that end, it devised unique asset-based bonds, which attracted individual investors," Jang said. "And all of a sudden, Home Plus filed for corporate rehabilitation in early March, just after its credit ratings downgrade. This indicates that the retail chain had no intention of repaying its debts. At the very least, MBK and Home Plus must address this issue," he said. Home Plus refuted Jang's claims. "Home Plus made every effort to turn the business around to the last minute, as shown by its attempts to reduce debt ratios," a company spokesperson said in a phone interview. "However, these efforts were not fully effective, as the virus pandemic and the rise of e-commerce continued to negatively impact our business," he said. Home Plus noted that its debt ratio improved to 462% as of this January, compared to 1,506% in the same period of 2024. MBK acquired Home Plus from Tesco in 2015 for $5.1 billion. However, the company has been in steady decline, particularly since 2021, posting consecutive annual losses. Its operations suffered due to the COVID-19 pandemic and the rapid rise of online retailers like Coupang, which eroded its traditional brick-and-mortar business model. On Feb. 28, South Korea's credit rating agencies downgraded Home Plus's corporate rating from A3 to A3-. Four days later, it filed for corporate rehabilitation with the Seoul Bankruptcy Court. "It seems that MBK gave up Home Plus last year and dispatched Kim Kwang-il to the company to oversee its exit strategy," Jang said. "And the credit ratings cut may have convinced MBK and Home Plus that short-term funding was no longer viable, so they chose to walk away without caring about the debts owed to individual investors." Kim Kwang-il was appointed co-CEO of Home Plus early last year to lead the corporation with Joh Joo-yun, former chief of McDonald's Korea. Jang criticized Kim for taking on too many roles, noting that he reportedly serves multiple positions for 18 companies, mostly MBK affiliates like Home Plus and Lotte Card. In regard to a potential sale of Home Plus, Jang also was skeptical. MBK is seeking to avoid liquidation by selling the retailer. To do so, the outfit pledged to write off its entire stake in Home Plus worth $1.8 billion. "MBK now claims that Home Plus is an attractive opportunity after cancelling $1.8 billion stake," Jang said. "If that is true, why doesn't MBK take over operations of Home Plus again? In case MBK can revive the supermarket chain, it does not have to give up its stake on Home Plus." In response, Home Plus said that the attempt to sell the company is aimed at saving nearly 20,000 employees, along with numerous suppliers and stakeholders. It added that MBK has made significant sacrifices to support this. Copyright 2025 UPI News Corporation. All Rights Reserved.
UPI
09-07-2025
- Business
- UPI
MBK Partners urged to repay debts owed to individual investors
A criminal complaint filed with South Korean prosecutors alleged that MBK Partners issued or helped issue commercial papers and asset-backed, short-term bonds knowing that Home Plus lacked the capacity to repay them, causing investors to lose about $400 million. File Photo by Jeon Heon-Kyun/EPA SEOUL, July 9 (UPI) -- A lawyer whose firm is suing MBK Partners over investor losses has urged the financial company to repay debts owed to those who purchased asset-backed bonds related to Home Plus, South Korea's troubled discount chain. LawVax attorney Jang Jin-seok stated that position during an interview with UPI on Tuesday. The Seoul-based law firm filed a criminal complaint with the prosecutors late last month against senior executives of MBK and Home Plus. Included in them were MBK Chairman Michael Byungju Kim and Home Plus co-CEOs Kim Kwang-il and Joh Joo-yun. The complaint alleges that they issued or helped issue commercial papers and asset-backed, short-term bonds knowing that Home Plus lacked the capacity to repay them, causing investors to lose about $400 million. "Due to mounting losses and deteriorating credit ratings, Home Plus relied on short-term funding to stay afloat, and toward that end, it devised unique asset-based bonds, which attracted individual investors," Jang said. "And all of a sudden, Home Plus filed for corporate rehabilitation in early March, just after its credit ratings downgrade. This indicates that the retail chain had no intention of repaying its debts. At the very least, MBK and Home Plus must address this issue," he said. Home Plus refuted Jang's claims. "Home Plus made every effort to turn the business around to the last minute, as shown by its attempts to reduce debt ratios," a company spokesperson said in a phone interview. "However, these efforts were not fully effective, as the virus pandemic and the rise of e-commerce continued to negatively impact our business," he said. Home Plus noted that its debt ratio improved to 462% as of this January, compared to 1,506% in the same period of 2024. MBK acquired Home Plus from Tesco in 2015 for $5.1 billion. However, the company has been in steady decline, particularly since 2021, posting consecutive annual losses. Its operations suffered due to the COVID-19 pandemic and the rapid rise of online retailers like Coupang, which eroded its traditional brick-and-mortar business model. On Feb. 28, South Korea's credit rating agencies downgraded Home Plus's corporate rating from A3 to A3-. Four days later, it filed for corporate rehabilitation with the Seoul Bankruptcy Court. "It seems that MBK gave up Home Plus last year and dispatched Kim Kwang-il to the company to oversee its exit strategy," Jang said. "And the credit ratings cut may have convinced MBK and Home Plus that short-term funding was no longer viable, so they chose to walk away without caring about the debts owed to individual investors." Kim Kwang-il was appointed co-CEO of Home Plus early last year to lead the corporation with Joh Joo-yun, former chief of McDonald's Korea. Jang criticized Kim for taking on too many roles, noting that he reportedly serves multiple positions for 18 companies, mostly MBK affiliates like Home Plus and Lotte Card. In regard to a potential sale of Home Plus, Jang also was skeptical. MBK is seeking to avoid liquidation by selling the retailer. To do so, the outfit pledged to write off its entire stake in Home Plus worth $1.8 billion. "MBK now claims that Home Plus is an attractive opportunity after cancelling $1.8 billion stake," Jang said. "If that is true, why doesn't MBK take over operations of Home Plus again? In case MBK can revive the supermarket chain, it does not have to give up its stake on Home Plus." In response, Home Plus said that the attempt to sell the company is aimed at saving nearly 20,000 employees, along with numerous suppliers and stakeholders. It added that MBK has made significant sacrifices to support this.
Miami Herald
20-06-2025
- Business
- Miami Herald
Analysis: Business model of Asia's top private equity fund questioned
SEOUL, June 20 (UPI) -- Michael Byungju Kim, who worked at Goldman Sachs and the Carlyle Group, founded MBK Partners in 2005. Over the next two decades, he built it into one of Asia's leading private equity funds through aggressive mergers and acquisitions. It now manages up to $30 billion in assets. However, Chairman Kim and MBK face challenges, because of its major investments in Home Plus, South Korea's No. 2 discount chain, and Lotte Card, the country's fifth-largest card issuer. This prompts experts to question the business model of the buyout fund. Late last week, MBK vowed to write off its entire stake in Home Plus to facilitate the company's corporate rehabilitation process. The firm stated that "All $1.8 billion worth of common shares held by MBK in Home Plus will be canceled without compensation." This means that MBK is ready to walk away from the Home Plus investment empty-handed, although it poured billions of dollars to take over the supermarket chain. In 2015, MBK acquired Home Plus from Tesco in a $5.1 billion deal financed through a combination of equity and debt. But the rise of e-commerce and the impact of the COVID-19 pandemic severely undermined its performance. Since 2021, Home Plus has reported losses for four consecutive years, and its debt-to-equity ratio surged to nearly 500% this year. It filed for corporate rehabilitation in March, and MBK eventually decided to relinquish all management rights and claims while receiving nothing in return. Yet, MBK is under pressure to do more, as the National Assembly Speaker Woo Won-shik noted during his visit to a Home Plus outlet in Seoul on Wednesday. He accused MBK of showing an irresponsible stance. "The livelihoods of some 100,000 people, who are directly and indirectly employed by Home Plus, are now at risk. The damage is already severe," Woo wrote on social media. "Even after initiating rehabilitation procedures, MBK failed to assume responsibility, instead shifting the burden to workers and merchants through delayed payments, asset sales, and store closures," he added. Woo hinted at potential legislative action, including a parliamentary hearing and new regulations targeting private equity funds. Lotte Card up for grabs There are other crucial tasks for MBK and its Chairman Kim, particularly regarding Lotte Card. In 2019, MBK partnered with Woori Bank to channel $1 billion for a 79.8% interest on Lotte Card. MBK holds 59.8% and Woori has the remaining 20%. MBK tried to sell its stake in Lotte Card in 2023, but failed. The fund strives to divest its stake once again by reportedly sending teaser letters to multiple potential bidders, including Hana Financial Group, last month. UBS is managing the sales, with preliminary bids expected to open as early as mid-July. It remains to be seen whether MBK will be able to dispose of Lotte Card this time. But the sale price is predicted to go down due to the recent setbacks of the company. Lotte Card's net profit for 2024 more than halved to $100 million compared to $269 million in 2023. During the first quarter of 2025, it netted $10 million in profit, down 42.4% from a year before. Two years ago, MBK reportedly hoped to secure at least $2.2 billion for its stake, but the price is feared to decrease substantially now, which may significantly reduce MBK's potential profit. "MBK's business model has been very successful over the past 20 years as shown by the fact that its founder Kim has become the wealthiest man in the country," Seoul-based consultancy Leaders Index CEO Park Ju-gun told UPI. "But, its business model is now being put to the test. The company would have to worry about its damaged reputation and growing political momentum for regulating private equity funds," he added. In the 2025 Forbes billionaire list, Kim was second to none among South Koreans with $9.5 billion in wealth, surpassing $8.2 billion of Samsung Electronics Chairman Lee Jae-yong. Park expected that the country's unicameral parliament might introduce an act curbing highly leveraged buyouts and banning private equity funds from directly managing companies after acquisition. Seo Yong-gu, a professor of business administration at Sookmyung Women's University, echoed the concerns, although he opposed excessive regulations. "MBK has played a key role in developing Korea's capital market. But buyout funds have often been criticized for seeking short-term gains at the cost of long-term growth for a fast exit. We may need a reform," he said in a phone interview. "Highly leveraged acquisitions are also problematic. Still, I am against the idea of prohibiting private equity funds from managing their portfolio firms. It would fundamentally deny the very essence of the business," he said. Copyright 2025 UPI News Corporation. All Rights Reserved.
