Losses from the National Pension Service's investment in Homeplus Co. are coming to the fore during the National Assembly's audit. However, it turns out the National Pension Service committed capital to MBK Partners' private equity fund, the majority shareholder of Homeplus Co., and earned more than twice its principal.
According to the investment banking (IB) industry on the 23rd, the National Pension Service invested 177.2 billion won in MBK Partners' "2011 Pan-Asia" fund and has recovered a total of 434.1 billion won. That is a return of about 2.45 times (245%) its principal. From that fund, major investments such as Coway (345%), Japan's Komeda (483%), and Orange Life (296%) each posted triple-digit recovery multiples.
The National Pension Service participated as a limited partner (LP) in MBK Partners' 3-2 blind fund. It has invested a total of 157.5 billion won to date and recovered 340 billion won. That is 2.16 times (216%) its principal.
MBK Partners decided to cancel 2.5 trillion won of common stock without consideration to support a merger and acquisition (M&A) before Homeplus Co.'s rehabilitation plan is approved. As a result, the Homeplus Co. common shares (29.5 billion won) that the National Pension Service invested in are expected to be wiped out. However, recoveries from other portfolio companies in the fund, including Orange Life, Doosan machine tools, and Apex Logistics, are expected to offset this.
The National Pension Service's aggregate committed principal across the two MBK Partners funds is 334.7 billion won, and total recoveries are 774.1 billion won. That is 2.31 times (231%) its principal.
Of the National Pension Service's investment in redeemable convertible preferred shares (RCPS) related to Homeplus Co., which is undergoing corporate rehabilitation, 313.1 billion won out of the 582.6 billion won principal has already been paid in the form of dividends and other distributions. MBK Partners said the unrecovered principal related to the National Pension Service's RCPS investment is 296.9 billion won. The management fee MBK Partners received in the course of the Homeplus Co. investment is about 100 million won.
An industry official said, "The National Pension Service has already recovered more than twice its principal from its investment in MBK Partners," and noted, "This proves that the pension fund's long-term alternative investment strategy is working effectively."