MBK denies allegations of using confidential info in Korea Zinc bid

The logo of Korea Zinc is pictured during a press conference in Seoul, Oct. 22. Reuters-Yonhap

MBK Partners, one of the largest private equity firms in Asia, denied allegations, Tuesday, that it used confidential internal documents belonging to Korea Zinc in its attempt to take over the world’s largest zinc smelter. The documents had been provided two years ago for a new investment initiative.

The allegations were raised by the zinc smelter, which has been engaged in a monthslong battle with an alliance of its biggest shareholder, Young Poong, and the private equity firm over its management rights.

“The claims raised by Korea Zinc are out of touch with reality,” an MBK official said.

According to the private equity firm, an aide to Korea Zinc Chairman Choi Yun-beom approached one of its investment management divisions, Special Situations, in May 2022, requesting an investment.

At that time, MBK received and reviewed materials related to Korea Zinc’s "Troika Drive" initiative, but ultimately, the investment was not pursued. The two sides had signed a non-disclosure agreement, which expired in May of this year.

“The investment management divisions of MBK are divided into two main areas, the Buy Out section, which focuses on acquiring management rights, and the Special Situations section, which deals with minority investments, private placements and other related areas,” the MBK official said.

“These two sections are practically separated, with an information barrier in place to prevent the exchange of internal information, and strict controls enforced through compliance measures.”

The firm highlighted that the division responsible for conducting the tender offer for Korea Zinc in September, along with Young Poong, was its Buy Out division, which is unrelated to the investment proposal made by Choi’s aide in 2022.

“The Buy Out division was not aware of the investment proposal from Choi’s aide until before news articles on the allegations from Korea Zinc were published. It also had no knowledge of what materials the Special Situations team had received,” the official said.

The official added that Korea Zinc’s claim that MBK’s Buy Out division may have used the Troika Drive prospectus in its recent tender offer, aimed at acquiring a controlling state in the zinc smelter, is nothing more than baseless speculation and a misguided assertion born out of a lack of understanding of MBK.