Key facts
- The Financial Supervisory Service (FSS) has decided to penalize MBK Partners.
- The penalty could include suspension from duties.
- MBK Partners acquired Homeplus in 2015 for 7.2 trillion won.
- Homeplus entered court-led rehabilitation proceedings in March.
- The FSS investigation found signs of improper business practices and control violations.
South Korea's financial watchdog, the Financial Supervisory Service (FSS), has reportedly decided to discipline MBK Partners over its management of Homeplus Co., a struggling retailer wholly owned by the private equity firm. Sources indicate the penalty may include suspension from duties, marking a significant disciplinary action against a general partner of an institutional private equity fund.
MBK Partners acquired a 100 percent stake in Homeplus from British retailer Tesco Plc in 2015 for 7.2 trillion won (US$4.9 billion). However, the retailer has faced challenges due to a broader slump in the discount retail industry and entered court-led rehabilitation proceedings in March.
The FSS investigation reportedly uncovered evidence of improper business practices and violations of internal control obligations. The proposed penalty must still receive approval from the Financial Services Commission before it can be finalized. This decision comes just before the Seoul Bankruptcy Court's deadline for approving Homeplus' rehabilitation plan.