📊 Homeplus-MBK Partners LBO Failure Case

The Fall of Asia's Largest Leveraged Buyout: A 10-Year Journey from ₩7.2 Trillion Acquisition to Corporate Rehabilitation

₩7.2T

Acquisition Price

1,409%

Debt Ratio (2024)

₩0.59T

Cumulative Operating Loss

10 Years

Time to Failure

💰 Understanding Leverage Effects

📈 Impact of Leverage on Returns

The same investment performance can yield dramatically different returns depending on leverage

Cash Investment

20%
20% value increase

2:1 Leverage

40%
Same increase

Homeplus Level

65%
3:2 leverage

On Decline

-130%
Bankruptcy on 20% decline

🏗️ Acquisition Structure (2015)

📉 Financial Performance Trend

🏢 The Real Estate Valuation Illusion

⚠️ Core Problem

Going Concern Value ₩2.5T < Liquidation Value ₩3.7T

"A company worth more dead than alive"

58% decline from initial valuation of ₩6T (2015) to ₩2.5T (2024)

🛒 Explosive Online Shopping Growth

🌪️ The Failure Spiral Structure

Stage 1: Increased interest burden due to high debt ratio
Stage 2: Rent burden intensified by Sale & Leaseback
Stage 3: Loss of investment capacity for digital transformation
Stage 4: Revenue decline due to decreased competitiveness
Stage 5: Financial structure deterioration from accumulated operating losses
Final: Corporate rehabilitation filing (March 2025)

⚖️ LBO Success vs Failure Cases

✅ Success: Blackstone-Hilton

Investment Period: 2007-2018 (11 years)
Leverage: 78%
Annual Return: 26% IRR
Return Multiple: 2.5x
Success Factor: Operational improvement, franchise conversion

❌ Failure: Homeplus-MBK

Investment Period: 2015-2025 (10 years)
Leverage: 68%
Expected Return: -19~29% IRR
Loss Scale: Most of capital
Failure Factor: Digital transformation failure

📅 Major Events Timeline

Sep 2015
MBK consortium acquires Homeplus for ₩7.2T (Asia's largest LBO)
2015~2024
Asset sales worth ₩4.1T (including Sale & Leaseback)
2021~2023
Cumulative operating loss of ₩0.59T recorded
Feb 2023
Debt ratio reaches 3,212% (extreme financial risk)
Mar 2025
Court rehabilitation filing (de facto bankruptcy)

📚 Data Sources and Verification Materials

🔍 Acquisition Structure Related

📈 Financial Performance Related

🛒 Market Environment Changes

🏢 Real Estate Valuation

💰 Asset Sales and Current Status

📊 Data Verification: All figures have been cross-verified through the latest media reports, court submissions, and accounting firm investigation reports as of June 2025.

🔗 Additional Materials: Detailed financial statements and appraisal reports are available in the Financial Supervisory Service's electronic disclosure system (DART) and Seoul Rehabilitation Court submissions.

📚 Key Lessons

💡 Lessons from MBK Homeplus Case

"Financial engineering alone cannot revive a declining industry"


Excessive leverage can maximize short-term profits,
but in the long run, it can lead both companies and investors to ruin

🎯 Conditions for Successful LBO:

  • Deep understanding of industry future
  • Focus on operational improvement over financial engineering
  • Securing sufficient financial buffers
  • Maintaining sensitivity to regulatory environment changes