MBK Partners, a private equity firm primarily operating in Northeast Asia, recently announced plans to sell its struggling South Korean supermarket chain, Homeplus. This move aims to prevent the retailer from going under.
In an attempt to keep the firm afloat amidst the ongoing pandemic and intensified competition from e-commerce platforms, MBK Partners initiated court-led restructuring of Homeplus, South Korea’s second-largest grocery retailer, back in March.
MBK Partners revealed that a court-commissioned assessment showed that the firm’s liquidation value surpasses its going concern value. Therefore, the decision to sell seems to be a strategic move to salvage as much value as possible.
The retail company is planning to issue new shares and find a buyer for them. In contrast, MBK Partners is considering cancelling the shares it currently holds, which are valued at 2.5 trillion Korean won (equivalent to US$1.83 billion).
MBK Partners originally purchased Homeplus in 2015, buying it from British multinational company Tesco for a hefty sum of 4 billion pounds.
Legal challenges have surfaced as South Korean prosecutors are investigating whether MBK Partners authorized Homeplus’s debt issue in 2025, despite having prior knowledge of the retailer’s potential credit downgrade. MBK has refuted these accusations.
The investigation led to a foreign travel ban in May for MBK Partners Chairman, Kim Byung-ju.
Why is MBK Partners selling Homeplus?
MBK Partners is planning to sell Homeplus to avoid its liquidation. The decision came after a court-commissioned review showed the company’s liquidation value to be higher than its going concern value.
What legal challenges is MBK Partners currently facing?
South Korean prosecutors are investigating if MBK Partners approved Homeplus’s debt issue in 2025, despite being aware of a possible credit downgrade. MBK has denied these allegations.
What actions are being taken against the chairman of MBK Partners?
As part of the ongoing investigation, a foreign travel ban was imposed on the chairman of MBK Partners, Kim Byung-ju, in May.
