이 기사는 2019년 12월 17일 08:00 thebell 에 표출된 기사입니다.

As befitted its high reputation, South Korea’s largest private equity firm MBK Partners had an outstanding year of achievements in all three areas of the private equity business: exits, investments, and fundraising.

Exits: Two trillion-won-size exits made with double-digit IRR

MBK Partners got a fresh start this year, exiting its investment in Orange Life Insurance (formerly ING Life Insurance) in February. After inquiring the entire stake in the company in 2013, the private equity firm made a partial exit through two rounds of recapitalization and an initial public offering throughout its five-year investment horizon. Then, it successfully sold the remaining stake of 59.19 percent to Shinhan Financial Group for nearly 2.3 trillion won (about $2 billion) this year, delivering an internal rate (IRR) of return of 27 percent.

MBK Partners inked another trillion-won-size exit, selling water and air purifier maker Woongjin Coway back to its original owner Woonjin Group. During the last five to six years since the private equity firm bought the company in 2013, revenue of Coway rose 1.3 times to more than two trillion won, with its operating income and net income increasing twice and three times, respectively.

Before selling the remaining stake in the company to Woonjing Group, MBK Partners also sold a partial stake in Coway through three rounds of recapitalization as well as two block trades in order to lock in gains. The internal rate of return over the investment period was 26 percent.

Investments: Active deal-making across the East Asia region

MBK Partners’ biggest investment this year was the $1.2 billion acquisition of Lotte Card from Lotte Group. Initially Lotte Group had chosen private equity firm Hahn & Company as the preferred bidder, though tax evasion allegations against Hahn & Company’s CEO botched the deal, resulting in an unexpected chance for MBK Partners.

Lotte Group, which needed to close the deal without delay, ended up changing its mind, granting the preferred bidder status to MBK Partners. The two parties completed the transaction in October.

MBK Partners has been active in making deals not only in Korea but also in Japan and China this year. In June, its Japanese entity succeeded in snapping up the Asia-Pacific assets of premium chocolatier Godiva Chocolatier for about 1.1 trillion won ($1 billion), beating other contenders including Marunouchi Capital, Baring Private Equity Asia and CVC Capital Partners.

Also earlier this year, MBK Partners’ Chinese entity bought eHi Car Service, the second largest car rental company and the largest car services provider in China, by forming a consortium with global leading industry players. The buyout firm plans to raise the company’s value by helping the company enter overseas markets and expand its presence in the travel services sector.

Apart from buyout deals, MBK Partners also made several investments through its first special situations fund formed last year with commitments of $850 million. Among them were the mezzanine investment in fried chicken restaurant franchisor BHC sold back to its founder by The Rohatyn Group (TRG), the investment in Chinese medical data solution company LinkDoc and the investment in a minority stake in movie theaters giant CJ CGV’s units in China, Vietnam and Indonesia.

Fundraising: MBK aims to raise $6 billion for its Fund V

With more than 80 percent of capital in its Fund VI used up, MBK Partners is currently working on raising money for its Fund V. The private equity firm seeks to raise about $6 billion, nearly $2 billion more than Fund IV’s size at $4.1 billion. Despite a big increase in the amount, fundraising goal is expected to be met around early next year, with the buyout firm already pooling in $4.2 billion this year.

MBK Partners is certainly in its golden days, but series of challenges are still ahead. Among others, the private equity firm is currently in negotiations to exit its investments in Daesung Industrial Gases and Doosan Machine Tools, among which talks on the sale of Daesung Industrial Gases to Macquarie Korea Opportunities Investment (Macquarie PE) are in the late stages.

MBK Partners is also making ongoing efforts to transform some of its loss-making portfolio companies, including NEPA and Homeplus, into profit-making ones. Outdoor clothing brand NEPA, which the buyout firm bought six years ago, finally made a turnaround, posting 11.2 billion won ($9.6 million) of 12-month net income as of the end of last year on a consolidated basis. Its earnings before interest, taxes, depreciation and amortization (EBITDA) exceeded 60 billion won ($55 million) for the first time in three years. NEPA currently has the second largest market share in the domestic outdoor clothing market.

Meanwhile, hypermarket chain operator Homeplus is still mired in a slowdown in the retail sector. Its revenue was at 7.65 trillion won ($6.5 billion) as of February in 2019, down by about 3.5 percent compared to two years ago. EBITDA also decreased from 625.5 billion won ($533 million) to 402.5 billion won ($343 million) during the same period.

(By reporter Han Hee-yeon)