Home > Business > Industry

FSS proposes heavy sanctions against MBK Partners over investor fund violations in Homeplus case

Published: 23 Nov. 2025, 16:22 Updated: 23 Nov. 2025, 16:59

A Homeplus supermarket in Seoul on Oct. 31 [NEWS1]

The Financial Supervisory Service (FSS) has issued a preliminary notice of heavy disciplinary action against MBK Partners in relation to its acquisition of retailer Homeplus. It marks the first time that authorities have moved to impose a severe sanction on a general partner (GP) managing institutional-investor-only private equity.

The FSS notified MBK on Friday of a proposed sanction that includes a suspension from duties, according to insiders on Sunday. The notice comes roughly three months after the FSS sent MBK an auditor’s opinion following an additional on-site inspection into the Homeplus case in August, as the FSS speeds up the process under Gov. Lee Chan-jin. Under the Capital Markets Act, disciplinary levels for GPs range from a caution, a warning and a suspension of up to six months to a dismissal recommendation, depending on the severity of the violation.

The FSS reportedly identified unsound business practices and internal control violations committed by MBK in its role as GP during the inspection. In its audit findings sent in August, the FSS pointed to damages suffered by institutional investors, including the National Pension Service (NPS), arising from the transfer of redeemable convertible preferred shares (RCPS) issued in connection with MBK’s acquisition of Homeplus. RCPS are a type of stock that gives holders the right to redeem the investment like a bond at maturity under certain conditions, and to convert the shares into common stock.

The NPS invested approximately 600 billion won ($408 million) in RCPS issued by the special purpose company Korea Retail Investment when MBK acquired Homeplus in 2015. In February this year, just before Homeplus’s credit rating was downgraded, the redemption rights to the RCPS were transferred to Homeplus, and the shares were reclassified as capital, raising concerns that the NPS might face reduced recovery of its investment.

Typically, the FSS’s sanctions review committee convenes within a month of a preliminary notice being issued, and the Financial Services Commission issues a final decision. If MBK receives a significant penalty, such as a warning or higher, it could face consequences, including the NPS and other institutional investors terminating MBK’s mandate as an asset manager. Under the current NPS policy, any manager receiving a warning or higher can be disqualified.

MBK responded on Sunday, stating that the changes to RCPS redemption conditions did not harm the NPS. “We will sincerely explain our position during the sanctions review process,” the company said in a statement. “The changes were made to prevent a sudden credit rating downgrade at Homeplus and to preserve the company’s enterprise value. It was a managerial decision and a natural duty of a GP to protect the interests of all investors, including the NPS.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY YEOM JI-HYEON [[email protected]]