MBK Partners’ Bid for Korea Zinc Sparks Controversy Over National Asset Leakage

MBK Partners, Northeast Asia’s largest private equity fund, has attempted to take over the management of Korea Zinc, a domestic company, sparking controversy over the leakage of national assets.

Korea Zinc is a leading producer of zinc, gold, silver, and copper, and is the world’s No. 1 non-ferrous metal smelting business.

The company has been run by the Choi family and the Yongpung Group, co-founded by the late Byeong-Hee Jang and Ki-Ho Choi, since its establishment in 1974. However, the relationship between the two families soured when Choi Eun-beom, the third generation, took over as chairman of Korea Zinc two years ago.

Yongpung has since partnered with MBK Partners to secure Korea Zinc’s management rights, sparking controversy over the outflow of national wealth.

MBK Partners: A Private Equity Fund with a Reputation

MBK Partners was founded in 2005 by Korean-American chairman Kim Byung-joo and is the largest private equity fund in Northeast Asia, with 40 trillion won in assets under management.

Chairman Kim has led the acquisition and sale of several companies, including Hanmi Bank, ING Life Insurance, Lotte Card, and HomePlus, and is said to have a wealth exceeding that of Samsung Electronics chairman Lee Jae-young.

Is MBK Partners a Chinese Private Equity Fund?

Politicians in Ulsan, where Korea Zinc is headquartered, have claimed that MBK Partners is a Chinese private equity fund, sparking concerns over the leakage of national assets.

However, it is reported that China Investment Corporation, a Chinese pension fund, has invested only about 500 billion won, or 5%, in MBK Partners’ fund to acquire Korea Zinc.

The Fight Over Management Rights

MBK Partners has claimed that it is attempting to strengthen Korea Zinc’s management rights, while the company has argued that Chinese capital is shaking up the country’s core industries.

Securities analysts have said that it is hard to agree with claims that Korea Zinc is going bankrupt, given its cash holdings of over 2 trillion won and annual operating profit of 800 billion won.

The Investigation

Korea Zinc has filed a complaint against Yongpung Advisor Jang Heung-jin and MBK Partners Vice Chairman Kim Gwang-il for breach of trust, alleging that Yongpung damaged the property of Yongpung Corporation and its shareholders by transferring Korea Zinc stock to MBK Partners at a low price.

Prosecutors have opened an investigation into the matter, which is expected to be closely watched given the new Prosecutor General’s emphasis on corporate investigations.