MBK’s 10-year pledge for Korea Zinc faces industry skepticism

MBK Partners failed to keep its promise made after acquiring Orange Life (formerly ING Life Insurance) in 2013, stating it would hold the company for more than 10 years and ensure job security./Yonhap News

MBK Partners has promised to invest in Korea Zinc for at least 10 years, without plans for selling the company or cutting jobs if it gains control. However, industry experts are questioning the pledge, citing past instances where private equity firms failed to follow through on similar commitments.

Private equity firms, including MBK, have previously made long-term investment promises but often ended up selling companies in just a few years. In some cases, they have also turned profitable companies into loss-making enterprises.

In 2013, MBK acquired ING Life Insurance, pledging to hold it for over 10 years and protect jobs. But within six months, the firm cut more than half of its executive team and offered voluntary retirement to 30% of employees. Two years later, MBK began negotiations to sell a 40% stake to China’s Anbang Insurance Group. By 2018, MBK had sold the remaining shares to Shinhan Financial Group, making a 2 trillion won profit in just five years.

A similar situation occurred in 2017 when Hong Kong-based Affinity Equity Partners acquired Lock & Lock, a profitable food storage container company. Last year, the company reported an operating loss of 21 billion won on sales of 484.8 billion won, its first loss since 2005.

In another case, U.S.-based private equity firm KKR bought RJR Nabisco, a U.S. food and tobacco company, for $25 billion in 1988, a record amount at the time. The high acquisition cost forced KKR to sell off various divisions of the company, and the overall value of RJR Nabisco did not improve. Additionally, factory closures led to economic decline in affected areas, sparking public criticism.