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Godfather or nemesis? Korea's richest man stands on a precipice

Published: 19 Mar. 2025, 06:00 Updated: 26 Mar. 2025, 14:08

PARK EUN-JEE
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SHIN HA-NEE
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KIM JU-YEON
[email protected]

Michael ByungJu Kim [JOONGANG ILBO]

Michael ByungJu Kim, better known as Kim Byung-ju in Korea and Michael Kim in the United States, currently has a higher net worth than all of Korea's richest people, according to the Forbes Real-Time Billionaires List, after charting a hugely successful yet controversial path in private equity.

His reputation varies dramatically depending on whom you ask — he is hailed as the “godfather” of dealmaking for pioneering the industry, yet seen as a nemesis by labor unions due to his investment approach.

But backlash against the 61-year-old investor has intensified recently as his company, MBK Partners, finds itself at the center of two of Korea’s most fiercely contested deals involving Korea Zinc and Homeplus.

Michael ByungJu Kim's profile

MBK, one of the largest private equity players in Asia, and its partnered brokerages are undergoing probes by the National Tax Service and Financial Supervisory Service.

Lawmakers across the aisle are holding Kim accountable for the worsening profitability of Homeplus, instigated by the serial selling of the retailer’s properties. They are now threatening to file a complaint against the private equity founder after he declined to show up at a committee hearing of the National Assembly on Tuesday.

Who is Michael ByungJu Kim?

Kim attends a groundbreaking ceremony of a library named after him as he donated 30 billion won ($20.7 million) for the construction in western Seoul on Nov. 14, 2024. [NEWS1]

Though born in 1963 in South Gyeongsang, located along Korea’s southeastern coast, Kim is a U.S. citizen. He reportedly moved to the United States during his preparatory school years, later earning a bachelor’s degree from Haverford College and a master’s degree in business administration from Harvard Business School.

In 2023, Forbes named Kim the richest man in Korea with a net worth of $9.7 billion, surpassing Samsung Electronics Executive Chairman Lee Jae-yong. He then dropped to second place in 2024.

Before founding MBK Partners in 2005, Kim served as president of Carlyle Asia Partners overseeing buyout deals in the region, and a member of Carlyle Group’s management committee.

Kim is pictured during an interview with the JoongAng Ilbo on Feb. 11, 2010. [JOONGANG ILBO]

During his time at Carlyle Group, he spearheaded an acquisition of 36.6 percent of KorAm Bank — which, at the time, was the seventh-largest commercial bank in the country — through a consortium with JP Morgan in 2000. Carlyle sold KorAm Bank to Citibank Korea three years later, bagging more than 700 billion won ($483 million).

The KorAm deal propelled Kim into the spotlight, but his rise to prominence was not without controversy.

The Korean banking law at the time prohibited Carlyle Group from acquiring a major stake in a bank. Carlyle formed a consortium with JP Morgan, which was eligible, as a financial institution, to fulfill the legal requirement, but it later emerged that the consortium actually included a JP Morgan’s subsidiary that did not qualify as a bank. This belatedly spurred criticisms in mid-2000s that Kim and Carlyle had exploited legal loopholes and illicit measures to secure regulatory approval for the initial acquisition.

Kim is known as an avid reader. [MBK PARTNERS]

Regardless, Kim moved on from Carlyle in 2005 to establish MBK Partners, with his initials imprinted on it, which became one of the largest private equity firms in Asia two decades later. Among those with him at conception were Jay H. Bu and Yoon Jong-ha, Kim’s colleagues during his tenure at Carlyle, who were later joined by Kim Kwang-il, a former Kim & Chang lawyer.

Key executives of MBK Partners [SCREEN CAPTURE]

What about MBK Partners?
MBK currently operates multiple offices across the world, mainly focusing on Korea, Japan and the greater China region, with more than $30 billion under management and 52 portfolio companies including Homeplus.

But MBK Partners has constantly faced criticism and controversy, often labeled a corporate raider prioritizing only short-term gains — which has been further fueled by Homeplus’s corporate rehabilitation filing.

Another recurring controversy was whether MBK should be classified as a “foreign capital,” as critics often called it. Ulsan Mayor Kim Doo-gyum, for example, called MBK Partners’ bid to secure a controlling stake in Korea Zinc, the world’s largest nonferrous metal smelter, “foreign capital’s hostile takeover attempt” and described the firm as “a private equity firm backed by Chinese capital.” The chairman’s U.S. nationality is also constantly brought up, raising questions of whether MBK Partners qualifies as a domestic firm if its key decision-makers are foreign nationals.

But MBK has refuted such claims, calling itself “first-generation homegrown Korean private equity.” It claimed in a statement last year that its Chinese capital is supplied by limited partners, which does not engage in management, and accounted for only 5 percent of its buyout fund utilized for the Korea Zinc bid, Fund VI. MBK Partners raised $5 billion for Fund VI as of November last year, and aims to raise up to $7 billion.

The firm disclosed its shareholder composition in a rare move in December last year. Partners Yoon and Kim Kwang-il have 24.7 percent stakes respectively, while its employee stock ownership association owns 17.4 percent stake and founder Kim holds 17 percent.

Members of Homeplus's labor union shout slogans demanding that MBK Partners, Homeplus's majority stakeholder, normalize the supermarket chain's operations at a meeting in Mapo District, western Seoul, on March 18. [YONHAP]

Support and skepticism
Regardless of the controversy, Kim remains a key figure in Korea’s private equity market and a highly successful self-made entrepreneur in the country’s chaebol-dominated economy. Often described as having a “Midas Touch,” he grew one of Korea's first private equity firms into a major player in Asia.

Forbes named Kim not only the second-richest person in Korea, but also one of 15 Asia’s Heroes of Philanthropy in 2021, 2022 and 2024. He donated $25 million to Haverford College, his alma mater, to establish the Institute for Ethical Inquiry and Leadership last April. Kim also donated 30 billion won to Seoul to build a public library, the construction of which began last November.

However, MBK Partners has been accused of employing a short-term profit approach to acquisition and management and of lacking expertise in the industries it enters through its mergers — a standard criticism of private equity in general. While the firms may exit deals unscathed, or even make money off of the process, the acquisitions can negatively impact the acquired firm’s workers' livelihoods, not to mention those of its investors and partners.

Homeplus's labor union has accused the private equity firm of prioritizing paying off creditors over looking out for the retail chain in the long term. The union says this is evident from Homeplus's sales of properties including major branches and a logistics center detrimental to its business as well as its utilization of a sale-leaseback agreement, in which MBK Partners made money from selling real estate assets that the branches were then required to rent back.

MBK Partners pocketed around 1.86 trillion won in a sale-leaseback agreement from 2016 to 2020, according to data submitted to People Power Party Rep. Kim Jae-sup.

Homeplus made around 4.11 trillion won by selling 28 branches and storage centers between 2016 to 2024, which the chain said it would use on operations and debt. But its reliance on borrowings only grew from 2020, and it has accumulated around 2.5 trillion won in liabilities as of March. Homeplus averaged 200 billion won in losses over the three consecutive years since 2021.

The labor union says its property sales also demonstrate MBK Partners’ failure to understand the retailer’s brick-and-mortar, business-to-consumer model, which deals with a supply chain involving small- and medium-sized enterprises. The firm had mostly acquired business-to-business companies so far.

Investors demand that the bonds they purchased from Homeplus be treated as accounts receivable in front of the supermarket chain's headquarters in Gangseo District, western Seoul, on March 14. [YONHAP]

It’s not just Homeplus; MBK has a history of leaving businesses empty husks of what they previously were.

Critics of MBK Partners — such as shareholders of Korea Zinc, with which MBK Partners is currently embroiled in a management feud — frequently cite Younghwa Engineering, Nepa and D’Live among the equity firm’s failed businesses.

Younghwa Engineering was a prominent steel and metal structure manufacturer at the time it was acquired by MBK Partners in 2009. After five years under the private equity firm’s management, the company entered corporate workout and laid off 70 percent of its employees, signed up for court-led rehabilitation in 2016 and was eventually sold off in 2017 at far below purchase price.

Athleisure brand Nepa had also been profitable when it was acquired by MBK Partners in 2013. It was saddled with debt and fell into the red in 2023.

Modern House, acquired in 2017, faced a similar fate. It paid up to 290 billion won in acquisition financing at the time; MBK Partners then increased its debts through recapitalization — a tactic to pull investment by increasing borrowings without selling shares, then repaying the debt when selling the company — in 2021. The restructuring gave a 100 billion won handout to MBK Partners' investors.

Korea Zinc's labor union, including chairman Moon Byung-guk, oppose Young Poong and MBK Partners' takeover bid for Korea Zinc in a protest in front of the Grand Hyatt Seoul Hotel in Yongsan District, central Seoul, on Jan. 23, where a shareholder meeting was taking place. [NEWS1]

What challenges lie ahead?
Kim and his company face both legal and financial risks. He has to shell out a significant amount of money to keep his promise of using private funds to compensate the small businesses supplying goods to Homeplus. The business owner never detailed the size or time of the payment. Given that industry insiders predict that at least 1 trillion won will be necessary to normalize the supermarket chain's business, his decision could be disregarded as a token gesture unless he contributes substantial funding.

MBK Partners is tasked with surviving the ongoing tax audit, which was launched earlier this month. The firm played down the significance of the audit, but TV Chosun reported that the bureau in charge of the MBK probe is notorious for thorough, heavy-handed investigation.

The company's push to take over Korea Zinc is also in limbo as the steel smelter's management stands firm to block the attempt. An annual general meeting of Korea Zinc, which is set for March 28, is expected to be a watershed event.

MBK's latest bid to acquire CJ Group's bio business faces murky prospects due to multiple disputes and increasingly negative perceptions of the buyout company that could affect the regulator's decision.

CJ confirmed earlier this month that MBK proposed buying the business segment, a deal that could fetch up to 6 trillion won.

BY PARK EUN-JEE, SHIN HA-NEE, KIM JU-YEON [[email protected]]