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The Korea Herald
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THE INVESTOR
July 16, 2024

Economy

MBK starts sell-off talks for Homeplus Express

  • PUBLISHED :June 03, 2024 - 16:53
  • UPDATED :June 03, 2024 - 16:53
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Homeplus Express renovated its store in Mok-dong, western Seoul, in May. (Homeplus)

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.

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

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 eye for an exit on the portfolio company soon.

Though some projected Chinese e-commerce powerhouse Ali Express could acquire the chain store to secure the distribution network system amid its expansion in Korea, both Alibaba Group and MBK Partners have 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. With around 330 stores nationwide, Homeplus Express has over 200 stores in the greater Seoul area.

With the 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, the company said Friday.

Its earnings before interest, taxes, depreciation and amortization, or EBITDA, a gauge for business value, stood at 272 billion won, up 23 percent on-year. However, it posted a 199 billion won operating loss during the period, following the 260 billion won loss in the previous term.

Though separate figures for the earnings of Homeplus Express were not released, 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.

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.

By Im Eun-byel (silverstar@heraldcorp.com)

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