MBK Partners sets Asian record with $1.5bn Fund II

The Seoul-based firm has closed the largest Asia-focused fund to date this year, but fell short of its reported initial target range of $2.5bn to $3bn.

MBK Partners has closed its second fund on $1.5 billion, falling short of targets but still setting records for the region.

It represents the largest Asian fund raised this year, as well as one of the final fundraises by Citi's private funds group before its planned wind-down by year's end.

The North Asia-focused buyout firm raised less capital than it had set out to, a person familiar with the matter said, noting that a number of funds in the market have “moving targets” that have been lowered in the last six to seven months as the fundraising market has grown more difficult.

MBK was targeting commitments of between $2.5 billion and $3 billion when it first entered the market with its second fund, various media reports have stated.

The fund was placed by Citi, which is shutting down its third-party private equity fund placement business by the end of 2009.

The Indiana Public Employees’ Retirement Fund made a $50 million commitment to MBK Partners Fund II. Other limited partners in the fund include Hong Kong-based fund of funds manager Asia Alternatives and three Canadian pension funds including the Canada Pension Plan and Ontario Teachers Pension Plan.

Established in March 2005, MBK closed its debut fund on $1.56 billion in 2006. It has a focus on buyouts in South Korea, Japan and Greater China. MBK makes investments through management-led buyouts, the acquisition of subsidiary businesses of large corporates, public to private transactions and roll-up acquisitions.

In October 2008, MBK entered a strategic partnership with Korea’s National Pension Service (NPS) to explore investment opportunities in Korea. MBK pledged to invest up to $2 billion in the partnership on a deal-by-deal basis. Two sources said that they believed NPS is an investor in MBK’s second fund, but could not confirm the fact.

The two largest Asia-focused funds closed this year include Carlyle Asia Growth Partners IV, which closed on $1.04 billion in June, and India Value Fund Advisors' fourth fund, which closed on $725 million in June as well. Tokyo-based Unison Capital Partners raised ¥120 billion ($1.3 billion; €893 million) for the second close of its third fund in October 2008. That fund is targeting ¥200 billion but has not seen a final close yet.

MBK did not respond to requests for comment by press time.