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Miami Herald
10 hours ago
- 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.
UPI
10 hours ago
- Business
- UPI
Analysis: Business model of Asia's top private equity fund questioned
Kim Yeong-hee works at a Homeplus Geumcheon branch. Late last week, MBK vowed to write off its entire stake in Home Plus to facilitate the company's corporate rehabilitation photo by Jeon Heoo-Kyun/EPA-EFE 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.
Hype Malaysia
12-06-2025
- Hype Malaysia
Netizens Criticise Kuantan City Council (MBK) For Renaming Cherating To Cerating
If you've never been to Kuantan's scenic beach resort town of Cherating, then you've probably been living under a rock! With scenic views, white sand beaches and a whole lot of sun and fun, Cherating is the place to be for summer – and it's getting an upgrade we might not need. On Tuesday (10th June 2025), the Kuantan City Council (MBK) announced that they would be officially renaming Cherating to Cerating. Yes, you saw that right. The decision to eliminate the letter 'H' in the name had not been clarified by the city council, but Malaysians were left baffled over the simple and quite unnecessary change. The announcement posted on MBK's socials has since sparked criticism towards the Kuantan city council, with some arguing that the name change could disrupt tourism campaigns and promotional efforts ahead of the upcoming 'Visit Malaysia 2026'. Kampung Cherating Village Development and Security Committee chairman, Ahmad Nizam Abdul Ghani, mentioned that the change felt awkward and that the name Cherating was a well-established brand name for the town. Netizens agreed with the sentiment, with the comment section of socials flooding with users relating the name change to different towns and districts in Malaysia and how it would sound without an unnecessary letter. Other users, however, called out the name change, noting the city council's poor decision to unnecessarily change the name rather than to upgrade infrastructure around the town. Facebook user @/Mizs Mira Babydiey commented, 'The city council is busy with things that are not important. Please change the street lights that are not working'. Another user quipped, pairing the name change with government efforts. Twitter user @/adnin63690080 comments, 'Apart from [the] rename, MBK and the state government should add value to the name. Such as [to] work closely with Tourism Malaysia to promote it internationally and keep the beach clean and attractive to tourists'. With the growing dissatisfaction of people who call for the state government to rethink their decision, MBK has yet to release a statement on the situation. Which is better for you: Cherating or Cerating? Sources: New Straits Times, Facebook, Twitter Alyssa Gabrielle contributed to this article. What's your Reaction? +1 0 +1 0 +1 0 +1 0 +1 0 +1 0
Miami Herald
19-05-2025
- Business
- Miami Herald
Top Asian private equity fund chief hit with foreign travel ban: reports
SEOUL, May 19 (UPI) -- South Korean prosecutors have reportedly banned MBK Partners Chairman Michael Byungju Kim from leaving the country as part of an investigation into the so-called Home Plus bond scandal. MBK is one of Asia's top private equity funds, and Home Plus is South Korea's No. 2 discount chain. Multiple local media outlets reported Monday that the Seoul Central District Prosecutors' Office requested the U.S. Ministry of Justice to impose a foreign travel ban on Kim and obtained approval. He is a U.S. citizen. The measure follows an earlier move by the prosecution Saturday when Kim returned to Seoul from London. Authorities executed a search and seizure warrant upon his arrival in Korea, confiscating his mobile phone and other digital devices as evidence, according to reports. Observers expect that Kim will be summoned along with his close aides for formal questioning in the near future. "In South Korea, the seizure of mobile phones and a travel ban typically means that a summons is imminent. Kim is highly likely to meet prosecutors face-to-face soon," business tracker Leaders Index CEO Park Ju-gun told UPI. "If top executives of Home Plus or MBK Partners decided to issue bonds while having prior knowledge of a credit cut, they might be in legal trouble," he added. The ongoing probe centers around allegations that executives from Home Plus and its parent firm MBK issued a large volume of bonds Feb. 25 while already aware of an impending downgrade in Home Plus's credit rating, which occurred Feb. 28. Issuing bonds while knowing a credit downgrade could constitute fraud against investors. Home Plus has denied the allegations, but the Financial Supervisory Service countered that the financial regulator secured concrete evidence to the contrary. In addition to the prosecution's investigation, the FSS announced last March that it would look into MBK. The results of that inquiry are also expected in the near future. MBK acquired Home Plus in 2015 from Tesco for $5.1 billion. However, the chain, which runs hundreds of stores across the country, has suffered losses since 2021 due to the impact on business of COVID-19 and rising competition from online retailers. Comments from MBK were not available. Copyright 2025 UPI News Corporation. All Rights Reserved.
Korea Herald
19-05-2025
- Business
- Korea Herald
MBK chief barred from leaving Korea in Homeplus fraud case
South Korean prosecutors have imposed a foreign travel ban on Michael Byung-ju Kim, chairman of Seoul-based private equity giant MBK Partners, as part of an investigation into fraud allegations related to the short-term debt issuance by supermarket chain Homeplus. The Seoul Central District Prosecutors' Office reportedly requested the Justice Ministry to place an exit ban on Kim. Prosecutors sought the travel restriction out of concern that Kim might not cooperate with the ongoing probe if allowed to leave the country. He also failed to appear at a National Assembly audit concerning the matter. On Saturday, prosecutors conducted a raid on Kim at Incheon Airport upon his return from London. During the operation, they retrieved a mobile phone used by Kim. MBK and its portfolio company Homeplus are accused of issuing asset-backed short-term bonds while allegedly anticipating a credit rating downgrade that was publicly disclosed on Feb. 28. Homeplus filed for court-led rehabilitation on March 4. The prosecution has been intensifying its investigation into MBK's top management. In late April, it raided the headquarters of both Homeplus and MBK Partners, as well as the residences of Kim; Kim Kwang-il, a partner at MBK and co-CEO of Homeplus; and Joh Joo-yun, also a co-CEO of Homeplus. Kim founded MBK in 2005. The firm, recognized as the largest buyout firm in Northeast Asia, manages over $30 billion in assets. Kim is among South Korea's wealthiest individuals, with a net worth of $9.7 billion as of 2024. In 2015, MBK acquired Homeplus for approximately $5 billion, marking the largest private equity-led deal in Asia at the time.
