MBK co-founder meets with Korean CIOs to finance 6th buyout fund

Asia’s private equity giant MBK Partners Ltd. is set to accelerate fundraising for its new fund, which is expected to become the firm’s first buyout vehicle with more than 10 trillion won ($7.6 billion), following discussions with South Korea’s major institutional investors.    

The PE firm’s co-founder and Partner Michael ByungJu Kim has been meeting with chief investment officers (CIOs) and chairpersons of Korean pension funds and mutual aid associations, including Teachers’ Pension (TP) and Public Officials Benefit Association (POBA) until early this week, sources familiar with the matter said on Thursday.

There is also a chance that Kim will meet officials from National Pension Service (NPS), the world’s third-largest pension fund, sources added.

TARGETING CHINA'S DOMESTIC MARKET

Kim is said to have emphasized opportunities in China’s local consumption, particularly in the car rental market, during the meetings.

The North Asia-focused PE firm, managing $25.6 billion in assets, bought a controlling stake in China's top car rental company CAR Inc. for $1.2 billion in 2021. MBK also invested in China's second-largest player eHi Car Services Ltd. in 2020, becoming the second-largest shareholder of the company.

Beauty and spa services provider Shanghai Siyanli Industrial Co. and entertainment real estate Shanghai Haichang Ocean Park are also in its China portfolio.

“China is no longer just the export engine to the world but a domestic consumption giant in its own right. China’s private consumption contribution to GDP has been steadily increasing since 2010, while its exports contribution has been decreasing,” the co-founder said in an annual letter to investors in March of this year.

The PE giant’s China portfolio has been constructed to benefit from the greatest middle-class rise in modern history, Kim noted.

NEW FUND EXPECTED AT MORE THAN $7.6 BILLION 

The new fund is expected to be more than 10 trillion won, given that predecessor MBK Partners Fund V was closed at around $6.5 billion in May 2020, marking Asia’s third-largest buyout fund in history at the time.   

The fifth fund received 50 billion won from TP and 40 billion won from POBA; other investors include Korean Reinsurance Co. and some 50 overseas limited partners such as Teachers' Retirement System of the State of Illinois, Ohio Police and Fire Pension Fund and New Jersey Pension Fund.

MBK Partners Fund V achieved a 19.4% return from March 2021 to the time of the annual newsletter’s release, outperforming the public market’s 10.2% loss. Some 60% of the fund has been deployed in private and listed companies, including fabric products supplier Dongjin Textile Co., 3D dental scanner maker Medit Corp., dental equipment maker Osstem Implant Co. and copper-clad laminates producer NexFlex Co.

Write to Jun-Ho Cha and Jong-Kwan Park at chacha@hankyung.com

Jihyun Kim edited this article.