MBK Partners seeks buyer for troubled South Korean chain Homeplus

The retailer has lost over $1b in the past five years.

South Korean retailer Homeplus has been reportedly put up for sale as private equity owner MBK Partners looks to avoid liquidating the company, following a review that revealed its liquidation value now exceeds its value as a going concern, Bloomberg reported.

The private equity firm said it will cancel $1.8 b (2.5 trillion won) worth of Homeplus shares it holds without compensation if a buyer is found before the retailer’s court-led rehabilitation process is completed. The process was launched in March after years of declining earnings.

The move follows a recommendation from court-appointed auditor PwC and marks a sharp reversal for MBK, which acquired Homeplus from Tesco in 2015 for $6.1b—the largest leveraged buyout in Asia at the time, the report said.

Homeplus has lost over $1b in the past five years as it struggled with online competition and the fallout from the pandemic. Despite this, MBK said the company’s assets exceed its liabilities by about 3.9 trillion won, thanks to its real estate holdings.

In February, the retailer tapped the bond market to raise cash, sparking concerns over its financial health. Prosecutors are now investigating whether Homeplus, with MBK’s knowledge, issued short-term debt knowing a credit downgrade was likely. MBK has denied any wrongdoing.

Proceeds from a sale will go toward repaying the company’s revolving debt, the firm said.