South Korean prosecutors have requested an arrest warrant for Michael ByungJu Kim, founder and chairman of MBK Partners, over allegations of financial misconduct tied to private equity transactions. The move has triggered market concern amid growing scrutiny of Korea's private equity sector.
- Prosecutors requested an arrest warrant for Michael ByungJu Kim, MBK Partners founder and chairman
- Allegations include financial misrepresentation in transactions totaling KRW 870 billion ($650 million)
- MBK.PK stock fell 12.3% following the warrant request
- KOSPI index declined 0.8% amid market-wide concern
- Offshore entities and undisclosed ownership structures are under investigation
- Regulators signal possible wider probes into private equity governance
South Korean authorities have formally sought an arrest warrant for Michael ByungJu Kim, the 54-year-old founder and chairman of MBK Partners, a leading private equity firm in East Asia. The request comes after a months-long investigation into alleged manipulation of investment valuations and undisclosed related-party transactions involving portfolio companies under MBK’s management. The Seoul Central Prosecutors' Office cited violations of the Securities Trading Act and the Criminal Act on Corporate Fraud in its petition. The case centers on a series of deals between 2019 and 2023 involving MBK’s investment in technology and consumer sectors, including stakes in firms such as Naver’s fintech arm and a major semiconductor testing startup. According to official filings, approximately KRW 870 billion ($650 million) in transaction values were allegedly misrepresented, with claims that Kim used offshore entities to channel funds and obscure ownership structures. The move has had immediate repercussions in financial markets. MBK Partners’ publicly traded affiliate, MBK.PK, dropped 12.3% in early trading on the Korea Exchange (KRX), while the broader KOSPI index saw a 0.8% decline. The firm’s portfolio companies, particularly those in tech and healthcare, have experienced increased volatility, with several seeing trading volumes rise by over 50% above average levels. Investor confidence in South Korea’s private equity ecosystem is now under strain, with institutional investors signaling caution. The case raises broader questions about corporate governance standards and transparency in high-value private transactions. Regulators have indicated that additional probes may follow, targeting other firms with cross-border investment structures.