2025-03-07
(The Chosun Daily, Mar. 7, 2025)
South Korea’s second-largest hypermarket chain, Homeplus, has entered corporate rehabilitation proceedings, leading to criticism of its major shareholder, private equity firm MBK Partners, for significant managerial missteps.
While Homeplus claims the filing is a “preemptive measure,” the move has unexpectedly resulted in suppliers halting deliveries and consumers being unable to use Homeplus gift certificates at affiliated outlets, amplifying the fallout.
Established in 2005, MBK Partners manages approximately $31 billion, making it East Asia’s largest private equity firm. Its core growth strategy has been ‘buyouts,’ acquiring companies with potential, enhancing their value, and then reselling them for profit.
Notable examples include the 2013 acquisition of ING Life, which was sold six years later for a profit of about 2 trillion won ($1.3 billion) , and the re-sale of Coway, yielding approximately $691 million. These deals have helped MBK Chairman Kim Byung-ju build a reputation as a skilled dealmaker in mergers and acquisitions.
However, Homeplus’s troubles have put a spotlight on MBK’s difficulties in recovering its investments over long periods, raising questions about the sustainability of its approach.
As artificial intelligence, online platforms, and other IT-driven innovations accelerate change, MBK’s focus on acquiring a wide range of businesses has increasingly exposed a lack of sector-specific expertise.
Some analysts warn that if more MBK-owned firms face similar struggles, the broader business landscape in S. Korea could feel the ripple effects. Critics argue that MBK’s preference for short-term profits led it to acquire companies through heavy borrowing, prioritizing debt repayment and cost-cutting over long-term investment in competitiveness.
In fact, Homeplus is not the first MBK-backed company to enter rehabilitation. In 2009, MBK acquired plant manufacturer Younghwa Con & Eng for about $69.1 million, but following financial struggles, the company entered court receivership in 2016 and was sold to UAMCO in early 2017 for around $34.5 million.
There are also cases where MBK’s investments have been tied up for more than a decade. Many observers point out that MBK financed its acquisitions not only with external investment but also through substantial loans, and after taking over these companies, it prioritized debt repayment over long-term investment. As a result, these businesses struggled to enhance their competitiveness.
Cable TV provider D’Live (formerly C&M) was acquired by MBK and Macquarie in 2008 for $1.5 billion, but after failing to meet its debt obligations, control was handed over to creditors in 2016. Outdoor apparel brand Nepa was purchased in 2013 for about $691 million but remains unsold after 12 years. Similarly, Homeplus itself was bought in 2015 for $4.9 billion, with $1.8 billion in borrowed funds.
MBK is facing particularly strong criticism over Homeplus’s struggles. Of the seven registered executives at Homeplus, excluding outside directors, five are from MBK. Industry sources say that while MBK and Homeplus have pointed to factors like minimum wage increases and regulations on large retailers as key challenges, many observers argue that the bigger misstep was selling off profitable stores while failing to invest sufficiently in new, high-performing locations.
Analysts also highlight MBK’s broad investment portfolio as a possible weakness, citing its lack of industry-specific expertise. The firm currently holds stakes in over 20 S. Korean companies across more than 10 industries, including D’Live, Nepa, Golfzon County (golf courses), Lotte Card (finance), Dining Brands Group (restaurant franchises), and MH&Co (home furnishings).
In recent years, MBK has expanded into the technology sector, investing in Megazone Cloud (software) in 2022 and Medit (medical devices) in 2023. Since September last year, the firm has also been involved in a management dispute over Korea Zinc, signaling its interest in the smelting and secondary battery sectors.
※ Please refer to the article: Homeplus bankruptcy puts MBK Partners under fire for management failures
