MBK Partners' founder projects continual strong growth in Northeast Asia

The Korea Times

The Korea Times

Finance

Thu, December 7, 2023 | 08:32

Companies

MBK Partners' founder projects continued strong growth in Northeast Asia

Posted : 2023-04-04 17:05

Updated : 2023-04-05 10:56

MBK Partners Founder and Chairman Michael ByungJu Kim / Courtesy of MBK Partners

PE legend stresses health care and elderly care investment in Northeast Asia

By Anna J. Park

Michael ByungJu Kim, the founder and chairman of MBK Partners, one of the largest private equity firms in Asia, stressed that he believes in the continued strong development of Northeast Asia's private equity markets. He also stressed the importance of taking a patient, long-term view to witness further growth in the region.

In his annual letter to institutional investors of the private equity firm, Kim said the global economy has entered a new phase where investment exits have become more challenging with the plunges in asset prices globally. But he highlighted that this also provides more investment opportunities.

"We believe in the continued strong development of the North Asian private markets, despite recent bumps in the road, especially in China. This approach requires patience," Kim wrote in the letter. "The Asian private equity markets cannot be expected to grow in a leap to the West's penetration level without messiness and some disruptions along the way. They will develop the way markets invariably develop, with some growing pains. But make no mistake: over the medium and long term, the Asian markets will grow and develop. And we are here to be both agent of change and beneficiary of its fruits. Patience will be rewarded."

Convinced of Northeast Asian markets' further growth potential, MBK Partners has been one of the most active participants in various deals. In Korea alone, the firm finalized three major transactions announced in the last two quarters.

"We completed the acquisitions of Medit, the largest intraoral scanner provider globally, for $883 million in equity, and Osstem Implant (first tranche), the second-largest dental implant manufacturer, for $609 million. We signed to acquire Nexflex, a leading manufacturer of flexible copper-clad laminates, a key component of smartphones and display panels, for $250 million in equity. Earlier in the year, we acquired Dongjin Textile, one of the world's top three footwear textile suppliers, for $344 million in equity, and Korea Center (renamed Connect Wave), the largest comparison-shopping platform in Korea, for $400 million," the letter reads.

Besides the Korean market, Kim is sure of the further growth of the Chinese market.

"China is no longer just the export engine to the world, but a domestic consumption giant in its own right. (…) From CAR Inc. to eHi and Siyanli to Haihean, our China portfolio has been constructed to benefit from the greatest middle-class rise in modern history. Our consumer thesis in China may be crystallized with a pair of statistics from the rental car industry: there are 460 million driver's licenses in China but only 280 million license plates. Unmet demand for 180 million cars is why we are owners of the largest and second-largest car rental operators in the country," Kim's letter continued.

The founder and chairman stressed that health care and elderly care will be key thematic trends shaping Asia's further growth.

"Demographics really is destiny. We play domestic consumption because of the huge and growing consumer base in our region. Within this broad theme, we recognize the salience of having the two most rapidly graying societies in the world in Japan and Korea. Hence our increasing emphasis on health care, especially elderly care, in investments like Tsukui, Unimat and Osstem," his letter said.

Currently, MBK Partners manages over $26 billion in capital across five buyouts and two special situations funds. Since the private equity firm's founding in 2005, the company has made 68 investments across China, Japan and Korea, with over $4 billion left in dry powder. The company has so far distributed $18.3 billion in proceeds to investors, which is one of the highest totals in North Asia.

annajpark@koreatimes.co.kr