MBK Partners closed its first buyout fund on July 12 with commitments totaling $1.56 billion.
Simultaneously, MBK Partners announced it had closed two investments in Korea: a $92.7 million acquisition of Hanmi Capital, a leasing company; and a $126 million acquisition (pending regulatory approval) of HK Mutual Savings Bank, the second largest mutual savings bank in Korea. These two transactions follow the investment in Beijing Bowei Airport Support, a leading airport maintenance service provider in China, made in October 2005.
MBK Partners was established in 2005. One of the most prominent names associated with the fund's launch is Michael Kim, who was a president of Carlyle in Asia and widely acclaimed for some of the firm's most successful investments in Korea including Carlyle's $450 million investment in Koram Bank in 1999 which it sold to Citigroup for $2.7 billion in 2004.
Other founder partners of MBK Partners are Jay H Bu, Kuo-Chuan Kung, Kensuke Shizunaga and Jong-Ha James Yoon, all former executives at Carlyle Asia Partners and Carlyle Japan Partners.
MBK Partners has offices in Seoul, Tokyo and Shanghai.
MBK Partners will focus on large and mid-sized companies across sectors, including telecommunications/media, financial services, heavy industrials, consumer goods, logistics and business services, in Korea, Japan and China. The strategy is driven by buyouts or control acquisitions.
Kim comment: "The support we have received from a world-class base of investors, including many leading Asian institutional investors, is a strong endorsement of the investment potential in the North Asian markets as well as our distinctive investment strategy. We are committed to contributing to the further development of the local economies and financial systems in our markets."
MBK Partners is one of a host of domestic private equity funds which mushroomed in Korea lately. It is estimated that between 1998 and 2005 more then 75 buyout transactions were closed in Korea, the highest in any Asian market. As investors bought in very cheap after the crisis many of them managed to invest in very sweet deals.
The backlash against foreign funds earning supernormal returns such as Carlyle's investment in Koram Bank and Newbridge's investment in Korea First Bank led to tax audits of many of the funds and a general tightening of the environment in which the foreign funds operate. Large domestic private equity funds have been launched by the likes of Woori Bank.
Kim alluded to the strength most of the domestic funds hope to use to their advantage vis-a-vis the foreign funds saying ôour competitive advantage is our local relationships in each of our target markets, which allows us to secure proprietary dealflow to do privately negotiated transactions and to find locally customised ways to create value in our companiesö. Hopefully the relationships will stand MBK Partners in good stead because another reality of Korea today is the good deals are few and far between û whether you are an international or domestic fund.
