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UPI
5 days ago
- 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.
