MBK counters China influence concerns after hiring additional US lobbyist

MBK Partners' office in central Seoul (Lim Se-jun/The Korea Herald)

MBK Partners, the South Korean private equity firm engaged in a prolonged control battle over Korea Zinc, has pushed back against concerns over potential Chinese influence following its decision to hire an additional US lobbyist to handle matters related to the US watchdog for foreign investment.

According to US Senate lobbying disclosure filings, MBK’s Tokyo office recently hired The McKeon Group, known for its expertise in defense and national security affairs, to advise on “issues dealing with the Committee on Foreign Investment in the US.”

The appointment follows MBK's hiring of major US law firm Squire Patton Boggs in February through a special purpose company established with Young Poong, Korea Zinc's largest shareholder.

At the time, the lobbying filing cited its purpose as “foreign investment in a critical minerals smelter in Tennessee,” referring to Korea Zinc’s plan to invest $7.4 billion to build a large-scale smelting facility for critical minerals in Clarksville, Tennessee.

Observers say the latest hiring may reflect heightened US scrutiny of foreign investments amid intensifying US-China rivalry, particularly as Korea Zinc's Tennessee project is viewed as strategically important.

Scheduled for completion in 2029, the plant is expected to produce 13 nonferrous and critical minerals, including germanium and gallium, and is widely seen as part of a broader US-led effort to strengthen allied supply chains for strategic materials.

Some observers have suggested MBK and Young Poong’s takeover attempt against Korea Zinc could attract CFIUS scrutiny because of the strategic importance of the Tennessee project and MBK’s ties to the Chinese capital.

China Investment Corp., China's sovereign wealth fund, is known to be among the limited partners in MBK’s sixth fund, reportedly contributing around 400 billion won ($272.9 million) to 500 billion won, or roughly 5 percent of the fund’s committed capital.

CFIUS is an interagency US government body that examines foreign investment for potential national security risks. The committee has authority to review both disclosed and undisclosed transactions and can recommend that the US president block or reverse deals deemed harmful to national security.

MBK, however, denied that its investor structure raises concerns over foreign influence.

MBK reportedly said it had already undergone CFIUS review during its investment in Japanese machine tool maker Makino Milling Machine and received final approval in the first quarter of this year.

“CFIUS approval reflects a comprehensive review of the transaction structure, governance, investor composition and management independence,” MBK was quoted as saying. “The US regulatory authorities recognized MBK as an independent and professional general partner that is not controlled by any specific investor.”

Amid concerns over indirect Chinese influence, MBK said that “It is not reasonable to conclude that a fund manager’s decision-making is subject to the influence of a particular country simply because some investors are from that country.”

The firm reiterated that the CFIUS review confirmed its structure effectively blocks outside influence over investment decisions.

While MBK has stressed that the Chinese capital represents only a limited portion of a globally diversified investor base, concerns have repeatedly surfaced in both the US and South Korea.

During a parliamentary audit in 2024, ruling People Power Party lawmaker Park Sang-woong warned that Korea Zinc’s technologies could be leaked if the company were acquired by a private equity firm tied to Chinese capital.

Democratic Party lawmaker Heo Sung-moo also echoed those concerns at the time, saying many Koreans were alarmed by the fact that Chinese capital accounted for about 5 percent of MBK’s fund.