Kim Byung-joo, MBK Chairman: "Companies Must Trim Excess... Management Control Is Essential"

Interview Featured in Newly Released Book "Completion of Wealth"
Focus on Population Aging in Northeast Asia... Rising Potential in the Chinese Market

"In the private equity fund (PEF) industry, the 'holy grail of investment' is value creation, and to achieve this, companies must reduce costs and grow sales."

According to industry sources on the 16th, Kim Byung-joo, Chairman of MBK Partners, articulated this investment philosophy through the book "The Holy Grail of Investing" (domestic title "Completion of Wealth"), which was published in Korea on the 10th. He discussed his investment perspective and the sectors he is focusing on in the future during an interview with American psychologist Tony Robbins, the author. Since founding MBK in 2005, Chairman Kim has rarely made public appearances and is known as a "reclusive businessman." Apart from his annual investment letters, he seldom speaks out directly.

Chairman Kim views the most important mission of buyout PEFs like MBK?acquiring and then selling corporate management rights?as value creation. The primary tool he uses for this is cost reduction. He stated, "Many companies have excess fat, and in the past, I used wage cuts as a method," adding, "In Korea, layoffs are prohibited, and in Japan, workforce reductions are seen as a failure in management." Since MBK mainly operates in the Northeast Asian region, where cultural taboos and some legal restrictions exist, he explained that alternative methods such as improving procurement and integrating support departments must be sought.

Alongside this, Chairman Kim emphasized control over the company's CEO as an essential element of value creation. He said, "It is necessary to have the flexibility to hire the top CEO in the field and the authority to replace the CEO if they perform poorly," stressing, "By controlling the CEO, top management, and the board of directors, and having authority over business plans, dividend policies, capital expenditure policies, capital raising, and mergers and acquisitions, true value creation can be achieved."

He mentioned that the current trend MBK is focusing on is "population aging." He is paying attention to the increasing proportion of elderly populations in North Asian countries such as China, Japan, and Korea, even as their economies grow. Chairman Kim explained, "Japan has the highest proportion of elderly population in the world, Korea is second, and China is rapidly catching up," adding, "Considering the significant economic scale and aging populations of these three countries, we are shifting our business areas from leisure and entertainment to healthcare, especially elderly health management." In fact, MBK acquired Hitowa Holdings, Japan's largest elderly care franchise company, for about 820 billion won. Domestically, MBK also owns Osstem Implant, the world's largest dental implant supplier.

Chairman Kim particularly sees many opportunities in China. He believes that even if the Chinese economy slows somewhat, there is still ample room for growth. He stated, "China has successfully conducted an experiment for 20 years combining the communist political system with the U.S. free market system," and assessed, "Even if China takes a step back and its trajectory is not linear, I expect it to return to the path of success." He added, "Once the door to market liberalization is opened, it cannot be closed, and ultimately the economy will take precedence over politics," forecasting, "Chinese President Xi Jinping and the Chinese leadership will resume efforts toward economic prosperity and financial liberalization."