MBK Partners will on Friday win control of Nongsusan, a South Korean home shopping channel, in a $900m deal that will establish the Seoul-based private equity fund as a media empire builder in Asia.
With Korea’s National Pension Service, the world’s fourth largest pension fund, MBK will take over 70 per cent of Nongsusan – the country’s fifth largest cable shopping channel – in a landmark deal.
Not only will it become Korea’s biggest non-bank leveraged buy-out but it is taking place in the heavily regulated broadcasting sector, highlighting the advantage that home-grown private equity funds have over foreign investors.
The Financial Times understands that MBK, the private equity fund founded by Michael Kim, former Carlyle Asia head, and the NPS, will each have a half share in Nongsusan in a deal due to be signed today.
The pair will buy all the shares owned by Halim Group and most of the shares owned directly by its chairman, Kim Hong-kuk, giving them about 70 per cent of the total.
Standard Chartered is advising and financing MBK. MBK declined to comment on Thursday and Halim said the deal had not yet been confirmed.
The fund, established two years ago, has a strong interest in media and last year won control of China Network Systems, Taiwan’s second largest cable company by revenue and subscribers, in a $1.6bn deal.
The acquisition of Nongsusan will give MBK a prized asset in South Korea’s TV home shopping industry, which has grown hugely since its establishment a decade ago. It now represents the third largest retail distribution outlet – behind department and discount stores and internet shopping.
Nongsusan is the smallest of the five main players but it is the leading channel for food – its name means “agricultural and fishery products” – and analysts estimate its total annual sales now top $500m.
“This [deal] is about scarcity value more than anything else,” said one banker in Seoul. “There are only five home shopping channels out there but some retailers – like Shinsegae – don’t have one and will want a cable channel sooner or later.”
However, Nongsusan’s broadcasting licence limits it to sell mainly food products.
It is understood that NPS and MBK have been granted pre-approval for a new licence for Nongsusan.