Democratic Party Financial Services Committee members held a meeting on the morning of the 21st at the National Assembly to discuss the Homeplus crisis, unanimously criticizing it as a predictable situation caused by inadequate private equity fund regulations and supervisory failures. The lawmakers examined Homeplus recovery measures and scrutinized MBK Partners' management practices. The crisis stems from MBK's 7.2 trillion won leveraged buyout of Homeplus over a decade ago, with lawmakers arguing the retailer deteriorated as MBK paid interest on acquisition debt and sold off assets.
Lawmakers Criticize MBK Partners' Leveraged Buyout Practices
Representative Kim Hyun-jung stated that despite MBK becoming a top asset holder by growing assets worth trillions of won over more than 10 years, such problems are not new. Kim questioned whether Homeplus became insolvent because MBK purchased it for 7.2 trillion won using the LBO method, paid interest, and sold assets. The lawmaker described this as a pattern repeatedly occurring not only at Homeplus but at all MBK acquisition sites. Kim criticized authorities for failing to properly regulate and supervise, noting that when a bill was proposed to reduce LBO borrowing ratios, the Financial Services Commission responded negatively.
Democratic Party Demands Capital Markets Act Revision and PEF Guidelines
Representative Park Hong-bae stated that the conclusion from preparations discussed during the audit should be the revision of the Capital Markets Act and the establishment of PEF consignment operation guidelines. Park noted that the Capital Markets Act issue would be partially resolved once passed by the National Assembly, but questioned why the PEF consignment operation guidelines are taking so long. When Financial Services Commission Vice Chairman Kwon Dae-young responded that final coordination procedures are underway, Park expressed skepticism about the FSC's willingness, pointing out that nearly a year has passed since the last audit, and urged faster progress.
Committee Chairman Representative Yoo Dong-soo referenced the UK's licensing system for key industries and asked whether such a system is under review. Yoo stated that leaving national key industries like Korea Zinc to be autonomously managed after being handed over to private equity appears problematic, requesting deeper research before subcommittee deliberations.
Korea Zinc Management Dispute Raised as National Concern
Representative Kim Hyun-jung raised concerns about Korea Zinc, asking whether it is not a national key industry. Kim warned that if MBK participates in management as with Homeplus, significant national losses are anticipated, urging close monitoring and emphasizing the need to strengthen private equity funds' social responsibility.
Policy Financing and Administrator Replacement Proposed for Homeplus Recovery
Representative Park Hong-bae asked whether the Financial Services Commission and the Korea Development Bank would be willing to coordinate and supply policy funds if a company with acquisition intentions for Homeplus lacks sufficient capital. Vice Chairman Kwon Dae-young responded affirmatively, stating that normalization should occur through coordination, though he noted difficulty discussing specific bank acquisition funding, but expressed understanding of the lawmaker's point.
Representative Min Byung-deok stated that DIP funds must be injected by the government for management normalization before sale. Min described these as priority repayment funds that can be recovered first, arguing that if operations are running well but slightly short, the government should provide them. Min questioned whether current administrator Kim Kwang-il can develop an offline differentiation strategy, suggesting that someone with different intentions such as from KAMCO should be appointed, urging the government to consider installing a proper administrator rather than treating it as not their responsibility.
FAQ
What did Democratic Party lawmakers criticize on the 21st regarding Homeplus?
Democratic Party Financial Services Committee members criticized the Homeplus crisis as a predictable situation caused by inadequate private equity fund regulations and supervisory failures, focusing on MBK Partners' leveraged buyout practices and asset sales that allegedly led to the retailer's deterioration.
What legislative changes are lawmakers demanding for private equity fund regulation?
Lawmakers are demanding revision of the Capital Markets Act and establishment of PEF consignment operation guidelines, with Representative Park Hong-bae questioning why the guidelines are delayed nearly a year after being discussed during the audit.
