SEOUL, August 27 (AJP) - South Korean financial regulators raided the Seoul headquarters of MBK Partners on Wednesday, intensifying a long-running inquiry into the private equity firm’s role in the financial troubles of Homeplus, one of the country’s largest discount retailers.
Dozens of inspectors from the Financial Services Commission and the Financial Supervisory Service were dispatched to MBK’s Gwanghwamun office, officials said, as part of a joint probe into whether the firm engaged in unfair trading practices during and after its 2015 acquisition of Homeplus.
The move comes amid mounting political scrutiny and labor unrest. Homeplus announced earlier this month that it would shutter 15 of its 68 leased stores, sparking renewed criticism from employees and lawmakers, who argue that MBK’s debt-fueled takeover saddled the retailer with unsustainable costs.
“The massive financial expenses incurred during the M&A, including loan interest payments, fell on Homeplus, significantly deteriorating the company’s operation,” the Homeplus labor union said in a statement in March.
Regulators have been examining whether MBK concealed financial distress at Homeplus while issuing short-term bonds, and whether it had already anticipated a credit downgrade and a potential corporate rehabilitation filing.
Officials said Wednesday they had secured evidence that preparations for such a filing were underway even as the bonds were sold. Some individuals tied to the case have already been referred to prosecutors, according to the authorities.
The latest phase of the investigation is expected to widen the focus to MBK’s fundraising process for the Homeplus buyout, including how it recruited limited partners and whether the deal’s leveraged structure imposed excessive strain on the retailer’s balance sheet. Sanctions for unfair trading and internal control violations are reportedly under consideration.
The case has also become a political flashpoint.
Lawmakers from the ruling Democratic Party, which controls the National Assembly, have called for a hearing into MBK’s role. Lee Chan-jin, the new head of the Financial Supervisory Service, has long been a critic of the firm. Last year, as a civic activist, he warned that public investment in MBK would amount to “a breach of duty” for the National Pension Service.
Kim Byoung-hwan, chairman of the Financial Services Commission, told lawmakers on Aug. 21 that regulators would “review whether there are areas where supervisory authorities can take appropriate action against MBK Partners.”
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