MBK Partners Ltd has initiated a sale process for South Korean retail chain Homeplus Co, as the firm seeks to avoid liquidation of the embattled grocer. The decision follows a strategic review that found the company’s liquidation value now exceeds its value as a going concern, according to a statement released by MBK Partners on Friday.
Should a buyer be secured before the finalisation of the rehabilitation process—announced in March—MBK Partners will cancel its 2.5 trillion won (approximately RM7.77 billion) in Homeplus common shares without compensation. The move underscores a significant shift for the private equity firm, which acquired Homeplus in 2015 from UK-based Tesco plc for around US$6.1 billion (RM25.76 billion). At the time, the transaction represented the largest leveraged buyout in Asia.
The latest development marks a sobering reversal for MBK Partners and its founder, billionaire Michael ByungJu Kim, highlighting the mounting operational and financial pressures in South Korea’s traditional retail sector. A successful sale could also help stabilise local credit markets, which were unsettled by MBK’s recent restructuring announcement.
According to a Yonhap News report, the decision aligns with a recommendation from court-appointed accounting firm PricewaterhouseCoopers, which advised pursuing a sale as part of the rehabilitation process. MBK confirmed that proceeds from any transaction would be used to repay revolving debt.
Despite the operational difficulties faced by Homeplus, MBK stated that the company’s assets still exceed liabilities by approximately 3.9 trillion won, supported largely by valuable real estate holdings. These assets have contributed to the retailer’s higher liquidation value.
Homeplus has struggled in recent years to keep pace with shifts in consumer behaviour, particularly the rapid migration to online shopping and the impact of the Covid-19 pandemic. Over the past five years, the company has incurred losses exceeding US$1 billion, underscoring the deep structural challenges it faces.
In a move that drew scrutiny, the company tapped the bond market in February to reinforce liquidity. This raised concerns among market analysts already wary of its deteriorating financial position. Authorities are currently investigating whether Homeplus, with MBK Partners’ awareness, issued short-term debt despite the prospect of a credit downgrade. MBK Partners has firmly denied any allegations of misconduct.
-Bloomberg
