Curious Partners Scores a Solid Return on Homeplus DIP Loan Investment After MBK's Kim Byung-joo Steps In [fn Market Watch]

[Financial News] Private equity fund manager Curious Partners achieved a net internal rate of return (IRR) exceeding 15% through a debtor-in-possession (DIP) loan extended to Homeplus. This was made possible after MBK Partners Chairman Kim Byung-joo, acting as a joint and several guarantor, used his personal funds to repay the loan principal and interest before maturity. The investment was seen as serving the public interest by supporting payment funding for small businesses while also generating returns.
According to investment banking industry sources on the 2nd, Curious Partners received KRW 34.2 billion in advance from Chairman Kim in September, out of the KRW 66.4 billion in principal and interest on the Homeplus DIP loan. The remaining KRW 32.2 billion was scheduled to be repaid on the 8th, but Homeplus accelerated the repayment and recovered 95% of that amount on the 1st.
The loan was executed in May last year with court approval. It had a principal amount of KRW 60 billion, an annual interest rate of 10%, and a three-year maturity. As the loan period was shortened, the recovery process accelerated, pushing the IRR above 15%.
Curious Partners reportedly considered both public interest and profitability when making the investment decision. The loan proceeds were used exclusively to pay small businesses that trade with Homeplus and were not diverted elsewhere. The structure provided annual interest of 10% over two years, which was deemed sufficiently profitable. Since key MBK executives had provided joint and several guarantees, the investment was also considered unlikely to face difficulties in recovery.
The investment had two layers of protection for recovering the receivable.
Under the Debtor Rehabilitation and Bankruptcy Act, operating funds lent with court approval after rehabilitation proceedings begin are classified as common-benefit claims. These claims can be repaid ahead of rehabilitation claims and at any time. The joint and several guarantee provided by management on the controlling shareholder's side further reduced the risk.
The repayment also helps Homeplus's rehabilitation. Chairman Kim agreed not to seek reimbursement from Homeplus for the money he paid on its behalf. This reduced the company's outstanding debt by the same amount. Homeplus's operating funds and funds earmarked for implementing its rehabilitation plan were not used for the repayment. It also showed that the controlling shareholder had fulfilled its social responsibility.
Homeplus filed for rehabilitation proceedings on March 4 of last year, shortly after credit rating agencies downgraded its commercial paper credit rating from A3 to A3- at the end of February. As concerns grew that a short-term liquidity crisis could spread into a chain of defaults among business partners, Curious Partners supplied funds through a blind fund it managed.
Since its establishment in 2016, Curious Partners has focused on special situations (SS) investments. It previously invested in Sungdong Shipbuilding & Marine, now HSG Sungdong Shipbuilding, and Seongun Tank Terminal, among others, while they were undergoing rehabilitation proceedings. An investment banking industry source said, "Lending to companies in rehabilitation is an area where it is difficult to step forward readily because of the reputational risks. This case is meaningful because it carefully structured the guarantee arrangement to support small businesses while generating returns, thereby helping revitalize Korea's DIP financing market."
[email protected] Kang Gu-gwi Reporter