MBK closes Fund V at $6.5b hard cap

The vehicle was oversubscribed but stuck to the hard cap disclosed last November. Commitments came from over 80 LPs with a re-up rate above 90%, according to a source familiar with the situation. Investors did much of their due diligence work prior to travel restrictions imposed due to the coronavirus outbreak. A first close came at the end of 2019 and a second in the first quarter of 2020, by which point $5.5 billion had been raised.

It is the third final close by a pan-Asian buyout manager since the start of the year. Baring Private Equity Asia completed the fundraising process for its seventh vehicle at the tail-end of 2019, securing $6.5 billion in commitments. CVC Capital Partners closed its fifth fund at $4.5 billion in April. In both cases, most LPs finished their assessments well in advance of COVID-19.

KKR is still in the market, seeking $12.5 billion for its fourth fund, which would be a new record high for Asia. In addition to MBK, Baring and KKR, the managers with funds of $6 billion or more are Hillhouse Capital, The Carlyle Group, Affinity Equity Partners, and PAG Asia Capital.

MBK was established in 2005 by Michael B. Kim (pictured), former president of Carlyle Asia Partners. The firm, which pursues control investments in China, Taiwan, Japan and South Korea, raised $1.56 billion for its debut fund in 2006 and followed up with a second vehicle of $1.6 billion in 2009. Fund III closed at $2.7 billion in 2013 and then Fund IV at $4.1 billion in 2017.

LPs in Fund V include Teachers’ Retirement System of the State of Illinois, Los Angeles County Employees Retirement Association (LACERA), New Jersey State Investment Council, New York State Common Retirement Fund, New York State Teachers’ Retirement System (NYSTRS), San Francisco Employees’ Retirement System, and Virginia Retirement System, according to AVCJ Research.

Previous MBK funds have received significant support from the likes of Ontario Teachers’ Pension Plan (OTPP), Canada Pension Plan Investment Board (CPPIB), Temasek Holdings, and China Investment Corporation (CIC).

MBK claims that all its funds – the four private equity vehicles plus a special situations fund that launched in 2017 and closed at $850 million – had generated a money multiple of 1.9x and an IRR of 18% as of December 2019. Fund I is fully realized with a multiple of 1.5x and an IRR of 7.5%. The other vehicles are still active and have performed as follows: Fund II, 2.9x and 26.2%; Fund III, 2x and 21.1%; Fund IV, 1.5x and 33.8%; Special Situations Fund, 2x and 86.2%.

During 2019, the firm made 12 investments, deploying a record annual total of $2.3 billion. Buyouts accounted for $1.6 billion, with new investments in Godiva in Japan, Lotte Card in Korea, and China-based eHi Car Services, beauty spa operator Siyanli and Wendu Education Group. Accordia Golf and Golfzon made bolt-on acquisitions. Meanwhile, the special situations fund invested $424 million across five deals. The vehicle is now 80% deployed and a successor will launch later this year.

There were also seven distributions totaling $3.5 billion. MBK completed three full exits – water purifier manufacturer Coway was sold to Woongjin Group, Orange Life to Shinhan Financial Holdings, and Daesung Industrial Gases to Macquarie Group – that delivered multiples of 3.3x, 2.7x, and 2.1x, respectively. There were dividend recaps of Daesung (prior to the full exit) and Hong Kong Broadband and then interest distributions from two special situations investments.

As of March, MBK’s total capital under management was $22 billion. It has invested $13.6 billion of equity since inception across 41 companies and generated distributions of $12.1 billion. The firm expects headcount to reach 100 by the end of 2020. There were 18 promotions in 2019, including the elevation of Kyung Lee to partner.

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• Topics
• North Asia
• Fundraising
• Buyout
• GPs
• China
• South Korea
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• MBK Partners