[비즈한국] Authorities have launched an all-out pressure campaign regarding the corporate rehabilitation of Homeplus. MBK Partners Chairman Michael Kim attempted to diffuse the situation on the 16th by announcing a plan to contribute his own funds, but it is doubtful whether this will quell the controversy, as both the authorities and the political sphere view the background and process of the Homeplus rehabilitation filing with deep skepticism.
Authorities angered by irresponsible corporate rehabilitation filing
Michael Kim, Chairman of MBK Partners, sparked a "hit-and-run" controversy by filing for corporate rehabilitation for Homeplus without any meaningful self-rescue efforts. On the 16th, Chairman Kim finally expressed his intention to contribute personal funds. In a statement, MBK Partners, the private equity fund (PEF) manager and largest shareholder of Homeplus, said, "We will fulfill our social responsibilities related to the Homeplus rehabilitation process," and added, "As part of this, Chairman Michael Kim will provide financial support to ensure swift payments to small business partners who are expected to face particular difficulties."
In the business world, many believe this measure was taken only after the authorities began to point their blades at MBK Partners. On March 11, the National Tax Service (NTS) launched a tax investigation into MBK through the Seoul Regional Tax Office's Investigation Bureau 4, which is known as the "grim reaper of the business world." While MBK stated it was a "regular investigation conducted every 4-5 years," reactions from within and outside the NTS suggest otherwise, noting that "while Investigation Bureaus 1 or 2 might be routine, Investigation Bureau 4 is far from a regular investigation." The interpretation is that since Investigation Bureau 4 typically conducts "special tax investigations to uncover problems" when specific issues arise, it likely felt like significant pressure to MBK Partners.
The Financial Supervisory Service (FSS) has also launched an inspection. To examine related allegations, it began inspections of Shinyoung Securities, Korea Ratings, and Korea Investors Service on March 13. It plans to launch an inspection of MBK Partners in the near future. This would be the first instance of a domestic private equity fund being inspected by the FSS due to a specific incident.
Political circles also target 'private equity funds'
As of the end of 2023, the ranking of domestic private equity funds by committed capital was: 1st place Hahn & Company (13.6 trillion won), 2nd place MBK Partners (11.8 trillion won), and 3rd place STIC Investments (6.4 trillion won).
As the scale of committed capital has grown, the number of domestic listed companies where a private equity fund is the largest shareholder has more than doubled in the last 10 years. According to corporate data research firm CEO Score, as of last August, out of 2,597 domestic listed companies (including KOSPI, KOSDAQ, and KONEX), 58 had private equity funds as their largest shareholder, a 2.8-fold jump from 21 in 2014. Companies such as Hanon Systems, Hanssem009240, Lotte Insurance000400, ConnectWave, Hana Tour039320, LocknLock115390, Namyang Dairy Products003920, and SK Securities have been acquired by private equity funds like Hahn & Company and MBK Partners.
Consequently, political circles have also taken action. The National Assembly's National Policy Committee scheduled an emergency questioning session regarding the Homeplus situation for March 18 and summoned related figures, including MBK's Chairman Michael Kim and Vice Chairman Kim Kwang-il, as witnesses. A consensus has formed across party lines that the MBK Partners and Homeplus rehabilitation filing illustrates the problems that can arise when the owner (private equity fund) becomes obsessed with "profit" as the number of domestic listed companies with private equity funds as their largest shareholder surges.
An official from the investigative authorities cautiously predicted, "It is still early in the controversy, so we don't know how it will unfold, but it is very rare for the prosecution not to get involved when both the National Tax Service and the FSS have stepped in. In particular, this is the first time a problem has occurred at a company where a private equity fund is the largest shareholder, so it remains to be seen whether it will be interpreted and approached as an 'owner' issue."
Some interpret the "impeachment of the president" as a potential variable. A legal expert familiar with the FSS explained, "With the possibility of an early presidential election recently emerging, there is talk of a lame duck status for the FSS Governor, and many predict that the approach to major cases will change depending on who is appointed in the event of a regime change," adding, "How MBK Partners and Chairman Michael Kim respond amidst various variables is also something to watch."