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[Interview] Philanthropy

MBK chair says philanthropy, writing are equally important in his life

Kim extends his philanthropic efforts in Korea by donating $26 million to build a public library in Seoul

By Aug 08, 2021 (Gmt+09:00)

MBK Partners founder and chairman Michael ByungJu Kim (right) with Seoul Mayor Oh Se-hoon
MBK Partners founder and chairman Michael ByungJu Kim (right) with Seoul Mayor Oh Se-hoon

Michael ByungJu Kim, founder and chairman of Korea’s largest private equity firm MBK Partners, will donate 30 billion won ($26 million) to the Seoul Metropolitan Government to build a public library, which will be named in his honor.

Chairman Kim and Seoul Mayor Oh Se-hoon on Aug. 6 held an agreement ceremony at the Seoul City Hall to honor the landmark donation. Seoul will use the donated funds for the construction of the Seoul Public Kim ByungJu Library to be located in the Seodaemun District of the city.

Seoul city officials attending the event said that the Kim library will be the first public library in the capital city to be built solely from private funds. The city will commission the design of the library through an open bidding process later this year with plans to kick off construction in June 2023 and begin operation in October 2025.

“I would like to thank Mayor Oh and other Seoul city officials for giving me the opportunity to make this meaningful donation. My lifelong love of books inspired me to help create a communal space where people can gather to read. I wish that the new library becomes a place where the citizens of Seoul can enjoy reading, develop knowledge and exchange ideas for the benefit of the community,” said the chairman of MBK Partners.

Chairman Kim, often referred to as the “Godfather of Asian private equity,” has been a leading philanthropist. His previous social contributions include the foundation of the MBK Scholarship Foundation in 2007 to provide full-ride university scholarships to students in financial need. MBK said that a total of 155 students to date have received its scholarships.

Previously, Kim also made gifts to build a student dormitory at his alma mater Haverford College, the Ki Yong Kim Hall named after his own father, and a professorship endowment at another alma mater Harvard Business School, the Michael B. Kim Professor of International Business. MBK added that Kim is a board member and an active supporter of the Metropolitan Museum of Art and Carnegie Hall in New York City.    

“We are deeply thankful to Chairman Michael ByungJu Kim for his very generous donation for the construction of a library. We will endeavor to build a good library for the people of Seoul to honor his wishes. He is an exemplar for other self-made businesspeople to make donations from their own pockets and is expected to encourage many Koreans to give back more to society,” said Mayor Oh Se-hoon at the ceremony.

Seoul city said that the Kim library will be built in the Seodaemun District taking Chairman Kim’s own wishes into account. The city added that Kim had spent his early childhood in the district prior to his immigration to the US. Many decades later, in 2005 Kim founded MBK Partners, which has grown into one of the largest private equity firms in Asia with $24.5 billion in capital under management.

The Korea Economic Daily conducted an interview with Chairman Kim following his historic donation, on his views on investment and philanthropy. The following is a transcript of the interview:

▲ You must be honored to put your own name on a public library of our capital city, the first case in history.

“Well, I feel more honored about the fact that I had the opportunity to be involved in every stage of the library construction project including the planning part. I am also honored to help the community engage in serious reading.”

▲ What was your motive in establishing yourself as a philanthropist and building such a library?

“I was in my sixth grade when I first got to New York. Its culture, environment and especially language were all foreign to me. I had no exposure to the English language while I was in Seoul. Even in the US, there was no such thing as a private English tutor. I attended a school in New Jersey and had to study the language on my own.”

“My dad told me to read English books, which he thought was the best way to learn the language. After school every day, I read out loud from American novels for at least three hours. I learned the American language and culture through books. Such teenage memories planted a dream to build a library that can act as a gathering place for the community.”

▲ Tell us briefly about your book, Offerings: A Novel, which has become a best-seller in the US.

“The book is a bridge that facilitates the communication and understanding between the East and the West. At the same time, it’s essentially a book about identity-searching. The book covers the story of an American investment banker named Dae Joon who returns to his mother country Korea. One of my favorite phrases by Dae Joon is ‘Finance is what I do. Finance is not who I am.’ This is what I wanted to talk about in the book – I am a finance person, a family man, a dad as well as a son.

“One interesting thing to note is that in Asia, people call you by your title, as if your title is equivalent to your own identity. Manager Kim, Director Kim, Chairman Kim and so on. That was really strange to me when I first started my banking career in Hong Kong back in 1993. But the funny thing is, I am not fully American either. When I go to the US and meet really young professionals who call me by my first name, Michael, it sometimes feels awkward. I keep moving forward by balancing my Asian and Western identities.”  

▲Talking about titles, is there any other title you would like to add for yourself, other than banker or philanthropist?

“A writer. I would like to keep writing. And also a good dad. Also important is being a good husband. A good son, too. I am actually off to the US tomorrow to see my mother, whose birthday is on Aug. 8, before her hospital treatment. I think being a good son is extremely difficult. A central theme in my book is also a father-son relationship, centering around the main character Dae Joon.”

▲ You spent a great deal of your career at the Carlyle Group. Then you set up your own firm with a focus on Asia. Why is the focus primarily on Asia?

“Simply because it’s my home. I wrote in my book too – home is where we started from. I started in South Korea. I started in Seoul. I started in the Sinchon area of the Seodaemun District. I believe it was the right thing to do to come back to my hometown.”

▲ Let’s talk about your views on investment. Your annual letter this year was remarkable in that it highlighted the importance of tech deals.

“Yes, you’re right. We at MBK last year started to think that we must transform our way of thinking. So we highlight ‘every deal is a tech deal,’ a phrase I used in my annual letter, in our internal meetings. I am not saying that MBK should more invest in so-called pure tech deals. I am saying that the tech aspect is getting more important. Look at our investment in China’s top car rental firm Car Inc., Japan’s golf company Accordia Golf or our acquisition of Godiva’s business in the Asia-Pacific region. They’re basically all retail businesses, with a focus on the domestic markets. But it doesn’t mean that the tech aspect of these firms and their industries are not important.

“Look at the retail giant Homeplus. It’s true that its offline business is being threatened by the online giant Coupang. Some say that the business model of Homeplus, which thrived 10 years ago, is now outdated. My view is that the offline business needs to be tightly integrated into the online part. I call it an omni-line model, incorporating the benefits of both offline and online areas. Amazon is a leader in this concept. The US firm, which virtually pushed independent booksellers out of business, is now building offline book stores.”

▲ What’s your view on the high valuation multiples that the online platforms are now enjoying?

“I believe that the valuation now in the stock markets, not only in Korea but also in Europe and the US, has moved up a bit too quickly, especially compared to the times of SARS or the Lehman crisis. I believe the high asking prices of the sellers, and the prices the potential buyers want, have some discrepancies now. We had also participated in many biddings last year but decided to pull out from some cases due to price discrepancies.”

▲ Is there any sector or industry that you have been paying particular attention to lately?

“I love all sectors with good cash flow. I don’t discriminate. I often say ‘cash is king,’ but I would like to add that ‘cash flow is king’ as well.”

▲ What are your views on the recent risk posed by the Chinese government in a number of sectors, including gaming and private education?

“We welcome such disruptions in the market. Such disruptions drive up the level of volatility, which in turn impacts the pricing. I believe MBK has a better ability than any other firm in pricing. If the market moves away from the right pricing, we can make the move into the market. Last week and this week, we saw a lot of new investment opportunities rising from such disruption. But we believe the door will close sooner than our expectations, with the market trying to normalize itself quickly.”

▲ Can you share some more views on China?

“The rise of the Chinese middle class, in its scale, is unprecedented in the world’s history. The consulting firm McKinsey forecasted several years ago that China will have more than one billion people in the middle class. I agree that the rise of the middle class will be the key theme in China in the next 10 years, at a rate faster than our imagination.”

▲ And your views on Japan and Korea?

“Korea is noted by its dynamism. Korea is truly dynamic. I made a speech in Singapore saying that Japan is like IBM in the 1980s and Korea is like Google and Facebook in the 21st century.”

▲ Any comments you would like to share with new private equity firms?

“We are pretty young too with only 16 years of experience. But one thing I stress all the time is the importance of due diligence. The key difference between a good PE firm and a not-so-stellar PE firm lies in their due diligence capabilities. You must dig deep, much deeper than your initial thoughts. That’s how you can see both the strengths and the weaknesses of the firms that you would like to acquire. We primarily focus on the due diligence part when we train the new joiners to our firm as well.”

▲ What’s your view on the fast-growing metaverse or NFT sectors?

“I haven’t reviewed any investment options in those segments yet. I don’t have deep knowledge in those areas. I am curious about these sectors, but don’t quite understand the overall investor hype in them yet.”

▲ MBK has 38 Korean firms under its portfolio, a size at par with the country’s major conglomerates. Any business advice to the Korean companies in general?

“Corporate governance, value creation and transparent management are important. The firms must align their interests with the shareholders. The firms must also create value together with their stakeholders – for instance, MBK must create values together with the GPs.

“Profit is another important keyword. In Korea, we tend to look at the rankings of the firms by their total assets. I believe that the more important thing is ranking the companies by EBITDA and also by operating profit. Profit is the key. The size doesn’t matter that much. Look at our world-class archery team. The archers have different heights and weights. The important thing for them is hitting the right target. The story is the same for firms. Profitability is the key.”

Write to Chae-yeon Kim at why29@hankyung.com

Daniel Cho edited this article.

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