MBK Finalizes $5.5 Billion Asia Fund as Probe Weighs on Investor Appetite

MBK Partners Ltd. has finalized its latest Asia-focused buyout fund, raising $5.5 billion, 20% below its original $7 billion target. The firm, a major player in the South Korean private equity market, faced headwinds during fundraising amid a high-profile investigation into its supermarket chain holding, Homeplus Co. A person familiar with the matter said the firm secured 80% of its major North American and Middle Eastern investors for the new vehicle.

The fund, named Buyout VI, is expected to target investments primarily in Japan and South Korea, each accounting for nearly half of the portfolio. The remaining capital will be allocated to China. The firm had launched the fund in the fall of 2023 and reached a first close of $3.5 billion by year-end, but fundraising slowed the following year amid broader industry struggles.

Industry-wide, Asian private equity fundraising hit a decade low in 2025, with only $74 billion raised globally, according to Bain & Co. The downturn was attributed to weakened investor appetite and regulatory scrutiny in key markets. MBK, co-founded by billionaire Michael Kim, has returned $2.4 billion to investors so far this year after exiting stakes in companies like Japanese jeweler Tasaki & Co. and Shanghai Siyanli Industrial Co.

Risks to the Outlook

The Homeplus probe has cast a shadow over MBK's fundraising efforts, as prosecutors examine whether the supermarket chain issued short-term debt while aware of a potential credit downgrade. MBK has denied any wrongdoing, but the ongoing investigation has likely affected investor confidence. The firm has also faced broader market challenges, including a declining appetite for Asian private equity as global capital flows shift.

Despite these hurdles, MBK has managed to secure commitments from key institutional investors. Among them are the California Public Employees Retirement System (CalPERS), which committed $250 million in November 2023, and the California State Teachers' Retirement System (CalSTRS), which re-upped with a $125 million commitment in July 2024.

What This Means for Investors

The completion of MBK's new fund highlights the challenges private equity firms face in maintaining investor trust amid regulatory scrutiny and economic uncertainty. While the firm has returned $2.4 billion to investors this year, the reduced fund size raises questions about its ability to execute large-scale deals in Japan and South Korea, which remain its core focus.

Meanwhile, KKR is moving in the opposite direction, launching a $15 billion fundraising drive for its fifth Asia private equity fund. The firm has previously managed to raise $15 billion for its fourth Asia fund in 2021 and is now leveraging strong returns from past funds-some with over 20% gross internal rates of return-to attract new capital.

KKR's latest effort comes after a mixed performance from its Asian funds. The firm recently announced it would claw back $350 million in fees from its second Asia fund due to underperformance. However, its third and fourth funds have returned 19% and 19.2%, respectively, providing a more optimistic backdrop for the new fundraising.

A Broader Trend in Asia Fundraising

Both MBK and KKR reflect broader trends in Asian private equity. As capital markets warm, private equity firms are increasingly relying on exits via IPOs and strategic sales to return value to investors. Markets such as Japan and India have become particularly attractive, with firms like KKR shifting focus away from China due to geopolitical and economic uncertainties according to business reports.

The competition between top-tier firms to secure capital in Asia is intensifying. KKR, in particular, has emphasized its long-standing presence in the region, with co-CEO Joe Bae having launched the firm's Asian operations in 2005. The firm's recent quarterly board meeting in Tokyo underscores its continued commitment to the region.

As the private equity landscape evolves, investor behavior is also shifting. Firms with strong track records and clear strategies for navigating regulatory and market risks are more likely to attract capital. For now, MBK's latest fund, while smaller than initially planned, marks a significant step in its continued efforts to maintain its position in Asia's competitive buyout market.