Michael ByungJu Kim, co-founder, partner and chairman of Northeast Asia-focused private equity firm MBK Partners Ltd., is expected to leverage personal wealth to pay suppliers to Homeplus Co., South Korea’s major retailer under court protection.
“Chairman Kim will come up with a financial support plan to pay small and medium-sized (Homeplus) suppliers without delay,” read a statement released by MBK on Sunday, adding that the PEF is currently evaluating the total payment amount to determine the payment size and methods.
The statement comes as payments to Homeplus suppliers, who provided the retailer merchants and services between Jan. 1 and Feb. 11, have been delayed.
MBK, which owns Homeplus wholly, estimated 458.4 billion won ($316.1 million) as priority debts Homeplus owed to small and medium-sized merchants and has paid back about 340 billion won.
The remaining 120 billion won will likely be paid with MBK Chairman Kim’s funds, in what would be the first case in Korea that a private equity firm’s management has ever leveraged personal wealth to support a company in which it has invested.
GROWING PRESSURE TO SHARE BURDEN
Earlier this month, Homeplus filed for corporate rehabilitation with a Seoul court amid growing market concerns about the retailer’s financial crunch.
The move, which came as a surprise, met a backlash from the market as Homeplus had actively sold short-term debts in the capital market until the very last minute before filing for the court protection without notifying investors of the retailer’s financial difficulties.
MBK attributed the sudden decision to a series of credit rating downgrades of Homeplus, including a rating cut of Homeplus’ corporate bonds to A3 minus from A3 by Korea Investors Service Inc., a Moody’s affiliate, in late February.
If MBK and Homeplus were found to be aware of the possibility of court receivership before the retailer’s last-minute sales of short-term debts, they could be accused of fraudulent bond sales, according to the legal community.
Korea’s financial authorities and political circle have also ratcheted up pressure on MBK to hold the PEF accountable for the Homeplus upheaval.
Chairman Kim has been summoned to an emergency parliament hearing on Tuesday as a witness to discuss the Homeplus fiasco.
Last week, Seoul Regional Tax Office also embarked on a special tax probe into MBK.
Such high societal pressure, which is suspected to have led the MBK chairman to leverage personal wealth to bear financial burden, is somewhat justified, whereas some people argued that it is not necessary to drive the asset manager operating funds of limited partners to the wall beyond legal responsibility.
INFLUENTIAL FIGURE IN THE CAPITAL MARKET
MBK Chairman Kim was named one of the most influential figures in Korea’s capital market last year.
He has seen his clout over the capital market throughout Asia grow considerably in recent years.
Kim co-founded MBK in Seoul in 2005 after leaving Carlyle Asia Partners. The North Asia-focused PE firm manages more than $30 billion in assets and has commitments from about 150 global institutional investors, including Korea’s NPS, Singapore’s sovereign wealth fund GIC, and the Canada Pension Plan Investment Board.
His wealth is estimated at about 14 trillion won as of 2024.
Forbes named him as Korea’s second richest person after Samsung Electronics Co. Chairman Jay Y. Lee in 2024, down one notch from 2023.
MBK was reportedly paid 363.0 billion won for managing the fund, which invested in Homeplus, plus 769.5 billion won in carried interest as of the end of last September.
By Jun-Ho Cha
chacha@hankyung.com
Sookyung Seo edited this article.
