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Byeongju Kim, Chairman of MBK Partners. (Photo=MBK Partners) |
[Alpha Biz= Paul Lee] Korea Ratings Corporation (Korea Ratings) has attributed the financial deterioration and credit downgrade of Homeplus, following its surprise corporate rehabilitation filing in March, to the management and capital recovery strategies employed by its private equity owner, MBK Partners.
The agency highlights that an aggressive leveraged buyout (LBO) and the subsequent disposal of key assets significantly undermined Homeplus’s business fundamentals and competitiveness.
In its recent publication, "Q1 2025 Analysis of Defaulted Companies," Korea Ratings identified MBK’s post-acquisition approach as a central factor in Homeplus’s downfall.
According to the report, MBK’s acquisition of Homeplus in 2015 was funded by over 4 trillion KRW in acquisition debt and 700 billion KRW in redeemable convertible preferred shares. To service this debt, MBK resorted to the sale of core properties, rather than reinvesting in the business.
This led to limited capital expenditure, weakened competitive positioning, and increased rent obligations for previously owned store locations.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
