November 6, 2019 / 5:08 AM / 11 days ago

MBK plans to raise $6 billion buyout fund for North Asian deals: sources

HONG KONG (Reuters) - North Asia-focused private-equity firm MBK Partners is targeting as much as $6 billion for its fifth buyout fund, said two people with direct knowledge of the matter, adding to a list of buyout firms chasing capital for investing in the region.

The firm, set up in 2005 by former Carlyle Group Asia executives, is in talks with prospective investors to raise between $5 billion and $6 billion, said the people. It plans to reach the first close by the end of November and the final close by the second half of next year, said one of them.

Like MBK’s previous buyout funds, the latest fund, which is dollar-denominated, will seek deals that give it control, with a focus on industries underpinned by domestic consumption growth, such as consumer, tech and financial services in South Korea, China and Japan, said the sources.

MBK, which is headquartered in Seoul, declined to comment.

The fundraising comes as investors in private equity are tightening their purse strings and closely scrutinizing the performance of funds before making new commitments amid Sino-U.S. trade tensions and a slowdown in global economic growth.

While the private equity industry in Asia has grown fast over the past few years, the fundraising pace there has slowed with funds raising a combined $42.3 billion in the first 10 months of this year, compared with $50 billion over the same period last year, according to data provider Preqin.

Earlier this year, U.S.-based TPG Capital [TPG.UL] closed its seventh Asia-focused private-equity fund with over $4.6 billion in commitments. Its Chinese peer CITIC Capital raised $2.8 billion in its fourth China buyout fund.

Founded by former Carlyle Group’s Asia President Michael Kim and other executives, MBK is one of the most active buyout funds in Asia.

In 2019, it acquired part of Belgian chocolate maker Godiva’s Asia-Pacific business. It was also among bidders shortlisted to buy a controlling stake in the parent of South Korean gaming firm Nexon - a deal later scrapped by Nexon’s founder.

Its first four buyout funds, raised between 2005 and 2016, made a 2.5 times multiple of cash on capital contributed (MoC), generating an 18.4% gross internal rate of return (IRR) on 21 investments from which it fully or partially exited as of the end of March, said one of the people.

MBK Partners currently has over $15 billion in capital under management and about 60 investment professionals in offices including in Seoul, Tokyo and Shanghai.

Reporting by Julie Zhu; Editing by Muralikumar Anantharaman

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