MBK starts sell-off talks for Homeplus Express

Asia's largest private equity firm MBK Partners is to push for the sale of Homeplus Express, a supermarket unit of Homeplus, according to industry officials Monday.

The firm has kicked off the process by selecting Morgan Stanley as the sales manager for the deal. The details of the sales plan have not been released yet.

Though the market had projected that the equity house would be eyeing an exit on Homeplus soon, the sales plan has been limited to its unit Homeplus Express for the time being.

MBK Partners acquired a 100 percent stake in Homeplus at 7.2 trillion won ($5.23 billion) in 2015. It had raised 4.3 trillion won in loans to finance the acquisition but brought down the outstanding debt to nearly 500 billion won through the sales of Homeplus' real estate properties.

The appointment of MBK Partners Vice Chairman Kim Kwang-il and Joh Ju-yeon, former managing director at McDonald’s Korea, as the co-CEOs of the discount chain earlier this year fueled the prospect that the equity house would head for a sell-off of the retailer.

Though some projected Chinese e-commerce powerhouse Alibaba Group could acquire Homeplus to secure the distribution network system amid AliExpress’ expansion in Korea, both Alibaba Group and MBK Partners denied the rumors.

Homeplus Express is one of the big four express supermarket franchises owned by larger companies here, along with GS The Fresh, E-mart Everyday and Lotte Super. Homeplus Express has around 330 stores nationwide, with over 200 in the greater Seoul area.

Though Homeplus does not release separate figures for the earnings of Homeplus Express, the retailer explained that Homeplus Express' delivery service has been gaining traction, growing by 50 percent in sales on-year. The supermarket chain offers delivery service for orders made near its stores in under an hour.

With the sharp growth of the express supermarket business, Homeplus recorded 6.93 trillion won in sales between March 2023 and February 2024, marking a 5 percent growth on-year. But it posted a 199 billion won operating loss during the period, following the 260 billion won loss in the previous term, the company said Friday.

The retailer explained it was unable to turn a profit due to increased financing costs amid the slowdown in the financial market, but it projected its preemptive investment in both online and offline space to bear fruit in the coming years.

“Several retailers from in and outside Korea have shown interest in Homeplus Express through investment banks,” an official from the local investment industry said.