MBK launches sixth North Asia fund, targets $7b

A data room for the fund has already been launched and the manager has started formal marketing activities, one of the sources said. The target represents a modest uptick on the previous vintage. MBK closed Fund V at the hard cap of USD 6.5bn in May 2020.

The firm is currently in discussions with potential anchor LPs, with Korean investors and global pension funds among those expressing interest, a second source said. The source added that a tentative timeline has been drawn up, including a first close towards the end of this year.

The Fund VI launch comes at a challenging time for Asian private equity. Industry participants have noted that many Western investors are either overallocated to the asset class and unable to make new commitments or in risk-off mode and therefore reluctant to allocate to Asia.

Managers in the region have raised USD 24.3bn so far this year, excluding renminbi-denominated funds. The 12-month totals for 2021 and 2022 were USD 95.9bn and USD 106.4bn, respectively. Pan-regional funds accounted for approximately 40% of the total in 2021 and 2022. For 2023 to date, it is 22%, according to AVCJ Research.

Other pan-regional players currently in the market include CVC Capital Partners, The Carlyle Group, TPG Capital, and PAG. All apart from Carlyle have disclosed first closes. PAG set out with a target of USD 9bn but had raised only USD 2.2bn as of March. The firm subsequently cut back its target to USD 6bn.

MBK was established in 2005 by Michael B. Kim, formerly president of Carlyle Asia Partners. It focuses on South Korea, Japan, and Greater China. The firm had more than USD 24bn in assets under management – across buyout and credit strategies – as of January 2022, when Dyal Capital Partners acquired a 12% stake in the management entity for about USD 1bn.

A flurry of Korean deals came in late 2022 and early 2023, including acquisitions of dental scanner maker Medit and flexible copper clad laminate supplier Nexflex as well as a tender offer for dental implant specialist Osstem Implant. Other 2022 investments included e-commerce services provider Korea Center, Korean footwear textile supplier Dongjin Textile, and Japanese aged care player Unimat Retirement Community.

Overall deployment from the private equity funds reached USD 3.9bn, while USD 2.9bn was generated in realisations, Kim said in his end-of-year letter to investors. There were two full exits: Doosan Machine Tools, which delivered a 5.7x return; and Accordia New Golf, which returned 2.6x for Fund III and 1.9x for Fund IV. There were also dividend recaps as part of debt refinancings for three companies.

MBK raised USD 1.56bn for its debut fund in 2006 and followed up with a second vehicle of USD 1.6bn in 2009. Fund III closed on USD 2.7bn in 2013 and then Fund IV at USD 4.1bn in 2017. Historically, the firm has enjoyed strong support from the likes of Ontario Teachers’ Pension Plan (OTPP), Canada Pension Plan Investment Board (CPPIB), Temasek Holdings, and China Investment Corporation (CIC).

As of December 2022, Fund V was marked at a 1.2x multiple on invested capital with a gross IRR of 17.8%. Fund IV was on 1.6x and 17.1% and Fund III was on 2.1x and 15.9%. Fund II was fully liquidated in the past year, achieving 2.9x and 26%.

As of March 2023, Fund V was marked at a 1.6x multiple on invested capital with a gross IRR of 64.7%. Fund IV was on 2x and 21.9% and Fund III was on 2.3x and 17.8%. Fund II was fully liquidated in the past year, achieving 2.9x and 26%, said a fourth source, citing data shared with LPs.

MBK declined to comment.

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