[2025 Audit] National Pension Service Chairman Kim Taehyun: "Sorry for Investment Loss... Will Strengthen Review When Selecting Fund Managers"

"Questions Raised Over Investment Recovery Through Asset Sales"
"Reevaluating Funding for LBO-Based Asset Managers"

On October 24, Kim Taehyun, Chairman of the National Pension Service, acknowledged responsibility for the investment loss in Homeplus during the National Assembly Health and Welfare Committee's audit. He stated that the National Pension Service would strengthen its review process regarding the management methods of private equity fund (PEF) managers during selection.

Yonhap News Agency

During the audit held at the National Pension Service office in Jeonju, North Jeolla Province, ruling party lawmakers raised numerous concerns about the National Pension Service's investment loss in Homeplus. Assemblywoman Baek Hyeryeon of the Democratic Party of Korea pointed out, "The predatory leveraged buyout (LBO) strategy, in which MBK Partners acquired Homeplus using its assets as collateral and repaid the debt with the company's own assets and profits, led to the company's rehabilitation. This has caused significant hardship for customers and has resulted in the collapse of local businesses." She continued, "It is highly inappropriate for the National Pension Service to provide funding to private equity funds that use LBO strategies like MBK, and such investments do not meet ESG (Environmental, Social, and Governance) standards."

She argued that the National Pension Service should restrict its funding to private equity funds that utilize LBO strategies. Assemblywoman Baek said, "As a leading institutional investor, the National Pension Service should establish a principle not to invest in predatory private equity funds. This will set a standard for other institutional investors to follow."

In response, Chairman Kim stated, "We expect the fund managers who receive our (the National Pension Service's) money to grow the companies they acquire and increase their value so that we can recover our investment. I am skeptical of managers who simply plan to recover the investment by selling off the acquired company's assets." He added, "I believe that the National Pension Service should refrain from providing funds to such managers." He further explained, "We have guidelines that do not highly evaluate fund managers who generate returns by selling assets. Going forward, we will thoroughly review management methods and avoid allocating funds to managers whose main strategy is to generate returns through asset sales."

Regarding the recovery of the Homeplus investment, he said, "We have recovered a total of 313.1 billion won, including both the principal and profits, but based on fair value, we still have about 900 billion won outstanding. The prospects for recovery are uncertain, and under current conditions, there is a high possibility of a loss." The National Pension Service invested a total of 612.1 billion won when MBK acquired Homeplus in 2015.

Chairman Kim also accepted responsibility for the Homeplus situation. In response to a question from Assemblyman Kim Yoon of the Democratic Party of Korea, asking whether he acknowledged responsibility for the National Pension Service's investment despite being aware of MBK's investment strategy, Kim replied, "I sincerely apologize for the increased investment loss and the burden this has placed on many employees and partner companies."