Private equity fund strives to exit outdoor apparel maker
As far as investing is concerned, even most seasoned professionals are bound to make mistakes. And Korea’s most prominent investors of MBK Partners seems to be no exception.
Although the country’s largest private equity fund, which was founded by Chairman Michael Byung-ju Kim in 2005, has made a number of successful investments, it also made a few blunders over the past 15 years.
Included in its missteps are Young Hwa Engineering, a producer of steel and metal structures, and D’Live, a cable TV operator.
In 2009, MBK spent around 100 billion won ($85 million) to acquire the former, which entered court receivership in 2016. The buyout fund also channeled 2.2 trillion won ($1.8 billion) in 2008 to purchase the latter.
D’Live has struggled to find its feet over the past decade as the cable TV business faltered because of the fierce competition with internet protocol TVs and online-based services.
MBK Partners strive to unload the pay-TV service provider but the price is not likely to be higher than 1 trillion won ($850 million), which means that MBK will be sure to face a big loss.
And NEPA is feared to become the third failure of MBK, which funneled 997 billion won ($85 million) in 2013 to snap up the outdoor apparel manufacturer.
Back then, the market was very good as NEPA chalked up an operating profit of 118.2 billion won ($100 million). As the demand for outdoor apparels went down abruptly, however, NEPA saw its profit plunge to 32.9 billion won ($28 million) in 2017.
The Seoul-based company managed to increase its operating profit to 47.68 billion won ($40 million) last year but only in the expense of its top line _ its sales went down 3.7 percent.
Against this backdrop, observers expect that MBK will try to divest NEPA in the near future in line with its funding schedule. It remains to be seen whether or not MBK will be able to exit NEPA.
It also remains to be seen how much MBK will be able to secure. Depending on the price tag, NEPA will be another success story of MBK or its third failure after Young Hwa and D’Live.
For now, more watchers seem to think that NEPA will be included in the same group as Young Hwa and D’Live. But time will tell.
Comments from MBK representatives were not available.