South Korea’s National Pension Service clarified that its recent fund management agreement with private equity powerhouse MBK Partners was made under the condition that the firm would not engage in hostile takeovers.
The statement, released Monday evening, comes amid mounting concerns over MBK’s investment practices.
“In July 2024, NPS selected four out of 15 firms through its domestic private equity fund management selection process, with MBK Partners among them,” the NPS said. “In February, we finalized our agreement with MBK, explicitly including a condition prohibiting participation in hostile takeovers.”
According to the statement, the final signing with MBK took longer than usual, as such agreements typically conclude within two to three months of the final selection.
“With MBK, however, concerns persisted that some of its investment strategies, including the controversial attempt at a hostile takeover of Korea Zinc, did not align with NPS’ management principles. In response, we conducted a case review and sought legal counsel on hostile merger and acquisition investments,” NPS said.
The pension fund added that it is considering applying similar conditions to future private equity fund agreements.
MBK, one of Asia’s largest private equity firms, has faced repeated controversies over its operations.
It is currently dealing with significant backlash over its investment in Homeplus, a cash-strapped hypermarket chain that entered court-led rehabilitation proceedings amid potential insolvency. Homeplus has struggled since MBK’s acquisition in 2015, with critics arguing that the 5 trillion won ($3.45 billion) debt involved in the buyout burdened the retailer.
Hence, the timing of NPS’ fund management deal with MBK—reportedly valued at 300 billion won—has raised questions. The final deal signing in February occurred just before MBK filed for Homeplus’ rehabilitation in early March. NPS, which invested in MBK’s buyout of the hypermarket chain in 2015, reportedly has around 600 billion won at stake in connection with the retailer.
As Korea’s largest state fund managing retirement savings, NPS appears to have taken a proactive move with Monday’s statement, aiming to reassure the public that its funds will not support controversial investments.
MBK is also embroiled in an ongoing ownership battle over smelter company Korea Zinc, in which it has formed an alliance with the firm’s major shareholder, Young Poong, against the faction led by Chairman Choi Yun-beom. The industry has criticized MBK’s alliance as an attempt at a hostile takeover.
jwc@heraldcorp.com
