Trillion-Won 'Big Deals' Lose Steam as MBK Partners Steps Back

Market Struggles to Absorb Multi-Trillion-Won Deals Without MBK
HPSP, CJ Bio Division, SK Siltron Face Uncertain Prospects

Even though multi-trillion-won assets are coming onto the market, there has been little excitement among investors. This is largely due to MBK Partners, which has traditionally led major transactions in the domestic market, losing momentum following incidents involving Korea Zinc and Homeplus.

According to the investment banking (IB) industry on April 24, the sale of HPSP, which is valued at 2 trillion won, has failed to gain traction. In February, the preliminary bidding saw a rush of major domestic and international private equity funds, including MBK Partners, Blackstone, and Bain Capital, raising expectations for a competitive auction. The stake up for sale is 40.9% held by the largest shareholder, Crescendo Equity Partners.

MBK Partners logo. MBK Partners website

However, over the past few months, HPSP's share price has declined, bringing its market capitalization down to around 2 trillion won. As concerns grew that the asking price might be excessively high, the main bidding process was temporarily halted. A decisive factor was the withdrawal of MBK Partners, previously considered a leading contender, after it was hit hard by the Homeplus incident in March. With the anticipated bidding war failing to materialize, there was no driving force to narrow the gap in price expectations.

The situation is similar for the sale of CJ CheilJedang's bio division. Although the bio division has not been officially put up for sale, MBK had consistently expressed interest in acquiring it since last year, drawing attention in the market. The division is valued at approximately 5 trillion to 6 trillion won, and was expected to be one of the largest deals of the year. However, following the Homeplus incident, MBK is also reported to have withdrawn from this deal.

An IB industry insider explained, "In Korea, the only party capable of negotiating for CJ's bio division, which is valued at several trillion won, is MBK, given its 10 trillion won blind fund. The bio division also has significant overseas businesses and assets, so among private equity funds, only MBK has the capacity to manage and eventually sell these assets."

MBK has also been named as a potential bidder for SK Group's lucrative affiliate, SK Siltron, but active participation appears unlikely. The stake up for sale is 70.6% of SK Siltron, with a valuation of up to 5 trillion won. Currently, four parties have expressed interest in acquiring the stake: MBK, Hahn & Company, IMM Private Equity, and STIC Investments. Among them, IMM and STIC are participating as a consortium. Industry observers expect the competition to effectively come down to a two-way race, excluding MBK.

Market analysts say that with MBK Partners retreating from the market, there is no longer a player capable of leading major deals. An IB industry official commented, "Although MBK continues to be named in connection with 'big deals' even after several incidents, it appears that active involvement will be difficult. The vitality of multi-trillion-won mega-deal transactions has disappeared."