MBK Partners considering joining K bank's fund raising campaign

K bank CEO Suh Ho-sung, left, and MBK Partners' co-founder and partner Kim Byung-ju

By Anna J. Park

K bank, the country's first internet-only bank launched back in 2016, is currently proceeding with a new round of capital increase to raise 600 billion won ($542 million), and private equity firm (PEF) MBK Partners is reviewing the possibility of joining the deal.

According to industry sources Thursday, Asia-focused PEF MBK Partners is in the process of reviewing K bank's valuation and conducting an inspection to decide whether to join the capital increase.

If the PEF decides to invest in the deal, MBK Partners is expected to put up around 200 billion won, a third of the total 600 billion won that K bank aims to generate through the current round of fund raising. As BC Card, a major shareholder of K bank, is expected to pay 200 billion won, a financial investor (FI) other than MBK Partners could join the capital increase deal.

MBK Partners told The Korea Times that it cannot provide any official confirmation or comment on the matter, but analysts expect it will take more time for the deal to be finalized, as potential financial investors currently have their own plans to conduct a thorough review and inspection of the bank's business models before deciding to join the deal.

K bank's pre-money value or valuation prior to funding is estimated at around 1.2 trillion won, which will raise the internet-only bank's value to 1.8 trillion won once the capital increase is finalized.

As an incentive for new investors, K bank is said to be offering various forms of downside protection, including a drag-along right that enables minority shareholders to join along with a major shareholder when it comes to the sale of a company ― in case the internet-only bank fails to go public within the next five years after the investment.

Established in 2016 with an initial capital of 250 billion won, K bank has recently been raising money through seven rounds of capital increase. Its capital stands at over 900 billion won.

BC Card holds a 34 percent stake in K bank, followed by Woori Bank with 26.2 percent and NH Investment & Securities owning 10 percent. Due to securities regulations that blocked telecommunications provider KT from becoming K bank's major shareholder, BC Card, a subsidiary of KT which holds a 70 percent stake, became the majority shareholder of the internet-only bank last July.

After BC Card became the largest shareholder, K bank has been enjoying steady growth. Particularly due to its partnership with Korea's largest cryptocurrency exchange, Upbit, K bank has seen a surge in the number of new clients lately. The number of newly-opened accounts exceeded one million in April alone.