South Korea’s National Pension Service’s losses are reportedly about $630 million, as Home Plus has been under court receivership since March. File Photo by Jeon Heon-kyun/EPA
SEOUL, Oct. 21 (UPI) — South Korea’s National Pension Service admitted during a parliamentary hearing that its investment in troubled discount chain Home Plus had failed.
When private equity fund MBK Partners acquired Home Plus in 2015 through a $5.1 billion deal financed by a mix of equity and debt, the pension service also participated. Its losses are reportedly about $630 million, as Home Plus has been under court receivership since March.
“The investment decision made in 2015 was a considerable failure,” Chief Investment Officer Seo Won-joo told lawmakers Monday during the National Assembly audit.
Seo was responding to a request by Rep. Min Byung-deok of the ruling Democratic Party to apologize to people over “the $630 million losses.”
Min claimed that the pension service had proceeded with the investment despite an internal report that MBK focused on real estate trading. Home Plus operates more than 120 hypermarkets and about 300 smaller outlets nationwide.
Rep. Han Ji-ah of the main opposition People Power Party also criticized the pension service for mistakenly paying out $70 million in benefits between 2020 and June. She said the the agency has yet to recover $9 million of that.
Noting that the pension service made more than 100,000 erroneous payments during the past 5 1/2 years, Han urged the state-run fund to fundamentally overhaul its payment and recovery system.
Rep. Kim Nam-geun of the governing Democratic Party called on the pension service to take a more active role in improving the corporate governance at companies in which it holds significant stakes.
According to Seoul-based consultancy Leaders Index, the fund holds more than a 5% stake in 262 Korean corporations.
As the country’s public pension fund, the National Pension Service is the third-largest in the world, managing around $850 billion in assets as of the end of last year.
