MBK Partners closes $4.1 bn fund, above funding target; NPS opts out

Asia’s biggest private equity firm, MBK Partners, has raised $4.1 billion for its fourth fund, exceeding the target of $3.5 billion and more than 1.5 times the size of its third fund raised three years ago, according to investment banking sources on Dec. 6.

The fourth fund had originally attracted over $7 billion from about 50 pension funds, including Canada’s CPPIB, Singapore’s GIC, and financial services companies around the world. But South Korea’s National Pension Service (NPS) opted out of the fund, after the world’s No.3 pension scheme was reportedly in dispute with MBK over investment losses in a troubled local cable TV operator, D’Live Co. . NPS had participated in all the three prior funds of MBK.

An MBK source played down speculations about the reason for NPS not participating in the new fund, saying: “It was just because our schedule didn’t fit for NPS’ selection of private equity firms.”

In July, however, a senior NPS source was quoted as saying by news outlet MoneyToday that the investment losses in D’Live will be one of consideration factors for its future selection of private equity houses. NPS had invested in the cable TV provider through MBK’s first fund and also provided loans, part of which was swapped into equity later on.

The Asia-focused PEF kicked off the fundraising process in September, and reached its upper ceiling set for the fundraising. It was completed in the shortest period of time in Asia, and marked the largest single fund in South Korea.

MBK’s three prior funds raised $1 billion in 2005, $1.5 billion in 2008 and $2.67 billion in 2013, respectively, and invested in a variety of sectors ranging from manufacturing to financial services, media and retail business.

Despite delayed exits for Korean assets, including ING Life Insurance Korea Co. Ltd., the private equity house pitched strong performance of two prior funds, appealing to global investors hungry for sizeable Asian deals. Its second and third funds posted over 25% of internal rate of returns and generated proceeds of more than 2.8 times the amount of original investments. Further, the two funds had redeemed a total of 3.94 trillion won ($3.4 billion) between the second half of 2014 and the first half of 2016.

With the new fundraising, MBK’s asset under management will expand to $15 billion, compared with the $8 billion AUM of Asia’s No. 2 PEF, Affinity Equity Partners.

Late in November, MBK announced a public tender offer to buy Japan’s top golf course operator, Accordia Golf Co. Ltd., from the Tokyo stock market for 150 billion yen ($1.3 billion). The planned deal, to be financed by its third fund, is poised to mark the biggest acquisition of a Japanese firm by a South Korea-based company.

By Chang Jae Yoo

yoocool@hankyung.com