The Government Employees Pension Service will not commit capital to MBK Partners' blind fund. The move is seen as fallout from the Korea Zinc control dispute and Homeplus Co.'s surprise court receivership filing. This is the first time a major domestic pension fund or mutual aid association has canceled after formally selecting an external manager through a contest.
According to the investment banking (IB) industry on the 25th, the Government Employees Pension Service finalized MBK Partners in July last year through the selection process for entrusted managers in the domestic private alternative investment institutional sector but did not proceed with follow-up steps such as issuing a letter of commitment (LOC) and signing the fund's articles.
At the time, the Government Employees Pension Service selected IMM Private Equity (PE), Premier Partners, and Praxis Capital, along with MBK Partners, as entrusted managers. The pension fund participated in the subsequent procedures for forming funds managed by firms other than MBK Partners.
The Government Employees Pension Service included in the selection notice that it could cancel the selection if a reason arose that would have a material impact by the time of the commitment agreement. A pension official said, "It is true we selected them as an entrusted manager, but we did not proceed with the follow-up procedures," and added, "Due to recent developments, the selection is effectively canceled."
MBK Partners said at its annual meeting on the 18th that it formed its sixth blind fund, launched at the end of 2023, at $5.5 billion (about 8 trillion won). The original target size for Fund VI was known to be $7 billion (about 10 trillion won), but withdrawals by some limited partners (LPs) led to results short of expectations.
The industry is watching the National Pension Service's choice. That is because the Financial Supervisory Service gave MBK Partners prior notice of heavy sanctions, including "suspension of duties," on the 21st in connection with the Homeplus Co. case. The National Pension Service has previously told the National Assembly that it can suspend or cancel the selection process for an entrusted manager (GP) that receives institutional warnings or higher sanctions for legal violations.