This article was published on March 7, 2025, at 9:55 a.m. on the ChosunBiz MoneyMove site.
MBK Partners, a private equity fund (PEF) management firm, is reported to have reached profitability with its third blind fund utilized for the acquisition of Homeplus. Based on this, MBK seems to have determined that it can proceed with the corporate rehabilitation process for Homeplus.
According to investment banking (IB) industry sources on the 7th, the third blind fund that MBK used as investment financing for Homeplus is reportedly approaching a net internal rate of return (NET IRR) of 12%, even when accounting for the non-recoverable outdoor brand Nepa and Homeplus.
Typically, if a fund managed by a private equity fund (PEF) management firm yields more than 7-8%, it is considered successful. This serves as the basis for performance fees, which, although varying by fund, allow the management firm to retain 15-20% of the excess over the 7-8% benchmark.
The reason MBK's third fund, established in 2013 with a size of 3 trillion won, reached profitability early is due to the sale of its asset, Orange Life (currently Shinhan Life), which generated a profit of nearly 2 trillion won. Doosan Machine Tools (currently DN Solutions), Accordia Next Golf, and Daesung Industrial have also successfully retrieved their investment.
Institutional investors (LPs) who invested in the third fund are also reported to have no particular objections regarding the amortization of Homeplus. Yun Ho-sang, head of the Unicorn Management Economic Research Institute, noted, "There must have been tacit approval from the institutional investors behind MBK's decision on corporate rehabilitation," adding, "Since the fund's revenue rate is satisfactory, it seems they have judged that Homeplus is expendable, which reflects a typical moral hazard."
As a result, if there has been a co-investment in specific assets with MBK, losses appear inevitable due to differing interests. Since private equity fund (PEF) management firms evaluate by fund units, they tend to quickly offload problematic assets if they do not affect the overall revenue rate. Conversely, co-investors who have invested in a single asset must maximize the possibility of recovering their investments.
The case of Homeplus illustrates this situation. Although MBK would benefit from quickly handling Homeplus due to the satisfactory revenue rate of the third fund, investments made through redeemable convertible preferred shares (RCPS) by entities such as the National Pension Service, Saemaul Geumgo, Korea Fisheries Association, and Government Employees Pension Service could result in losses depending on asset evaluation outcomes in the event of Homeplus's liquidation.
In 2015, MBK acquired Homeplus for a corporate value of 7.2 trillion won. Combining MBK's blind fund with co-investor funds, it secured 3.2 trillion won and incurred approximately 4 trillion won in liabilities. After the acquisition, the retail market shifted dramatically from offline to online, leading to recurring performance declines, and this trend solidified post-COVID-19 pandemic, causing difficulties in recovering investments.