Kim Byung-joo "Focusing on Investment Recovery This Year... Personal Responsibility for Homeplus"

Kim Byung-joo Stresses Focus on Investment Recovery in Annual Letter
"Significant Portion of $20 Billion in Assets to Be Liquidated This Year"
Emphasizes Responsibility for Homeplus... Mentions Personal Contributions

Kim Byung-joo, Chairman of MBK Partners, announced that this year he will focus on investment recovery. Regarding Homeplus, which is undergoing corporate rehabilitation procedures, he emphasized that they are doing their best to recover equity value and fulfill related social responsibilities.

According to the investment banking (IB) industry on the 3rd, Chairman Kim expressed this position in an annual letter sent to investors on the 24th of last month. He stated, "Last year, we recovered a total of $1.2 billion (approximately 1.7622 trillion KRW) through partial sales of investment assets and recapitalization (capital structure restructuring), and distributed it to investors," adding, "The fair market value of assets currently under management in the entire portfolio amounts to $20 billion, and we plan to liquidate a significant portion of this in cash this year."

He plans to pay more attention to the distribution to paid-in capital (DPI) indicator compared to the annualized internal rate of return (IRR) and improve it further. This is interpreted as considering the recent trend among institutional investors such as pension funds and mutual aid associations, who prioritize how quickly and how much actual profit can be recovered rather than book returns. Since the COVID-19 pandemic, the high-interest-rate environment has increased liquidity risks, and with the recent uncertain geopolitical situation emerging, there is a need for a more "short-swing investment" approach.

According to the annual letter, MBK currently operates six buyout funds and two special situation funds. Through these, they have invested in 80 cases across Korea, Japan, and China. The total assets under management amount to $31 billion, with remaining unfunded commitments (dry powder) exceeding $5.5 billion.

He also revealed an intention to focus on artificial intelligence (AI) going forward. He said, "I tell our employees that 'all businesses are AI businesses,'" emphasizing, "There is no greater challenge or opportunity for us than the introduction of AI." MBK itself has launched the "Athena Initiative" to incorporate AI into the investment process. This includes automating initial deal screening, applying real-time analysis and rapid due diligence, and real-time detection of abnormal signs in portfolio company performance.

Chairman Kim stated, "MBK's cumulative distributions exceed $20 billion, ranking among the highest for Asia-based private equity firms (GPs)," and pledged, "We will maintain the honor of being the longest-standing and strongest performing firm in Asia and strive further toward the goal of becoming Asia's top private equity firm."

He also addressed the recent controversy surrounding Homeplus. He explained, "Homeplus, one of our oldest and largest investments, filed for corporate rehabilitation procedures in early March," adding, "This was an unavoidable decision due to a credit rating downgrade that tightened working capital liquidity."

Along with this, he emphasized the commitment to social responsibility. He said, "We recognize that there are multiple stakeholders in the rehabilitation process, and some of them may be in a disadvantageous position compared to equity holders," and added, "We have announced measures to consider the welfare of all stakeholders and fulfill social responsibilities, and we are sharing that responsibility through personal contributions (meaning private donations)." Earlier, lawmakers from the Democratic Party, the Innovation Party, and the Social Democratic Party, members of the National Assembly's Political Affairs Committee, urged Chairman Kim to present a repayment plan by the 10th.