Seoul: The country's financial watchdog has initiated an investigation into MBK Partners Ltd., scrutinizing potential irregularities in the private equity fund's acquisition of the troubled retailer Homeplus Co. On Wednesday, officials from the Financial Supervisory Service (FSS) visited MBK Partners' office to conduct an on-site probe focused on the takeover process.
According to Yonhap News Agency, MBK Partners acquired Homeplus in 2015 from British retailer Tesco Plc for a substantial sum of 7.2 trillion won (US$5.2 billion). The FSS is now expanding its inquiry to examine the specifics of MBK Partners' acquisition, such as the methods used for fundraising. This move follows the FSS's referral of MBK Partners to the prosecution for further investigation into the debacle surrounding Homeplus' debt sale.
The FSS has leveled accusations against Homeplus, alleging the company sold short-term debts while being aware of an impending rating downgrade. Additionally, the financial watchdog claims that the equity fund had long planned a court rehabilitation scheme without making efforts for self-recovery, despite the retailer's deteriorating financial state. Homeplus entered court-led rehabilitation proceedings in March.
In response to the situation, MBK Partners' chair, Kim Byung-ju, has pledged to use his personal assets to support suppliers affected by the rehabilitation process linked to the major discount store chain. The FSS's current investigation aligns with Homeplus' recent announcement to close 15 out of its 125 outlets in response to a challenging business environment. This decision has drawn criticism from political circles and civic organizations.
The investigation also coincides with the recent appointment of Lee Chan-jin as the new chief of the FSS, who took office earlier this month.