Photo = FSS

 

 

[Alpha Biz= Kim Jisun] South Korea's financial watchdog has referred MBK Partners to prosecutors for allegedly using undisclosed consulting information in a hostile takeover bid for Korea Zinc. The Financial Supervisory Service (FSS) also uncovered potential stock manipulation during the final day of MBK and Young Poong’s tender offer, marked by large-scale sell-offs that drove Korea Zinc’s stock price downward.

According to industry sources on Wednesday, the FSS submitted the case to prosecutors late last year. MBK Partners is accused of obtaining confidential consulting materials about Korea Zinc’s “Troika Drive” initiative and future business projections. Allegations suggest MBK may have exploited this non-public information in its management dispute with Korea Zinc.

MBK Partners has denied the allegations, arguing that a “Chinese Wall” structure between departments prevented any improper information sharing. However, the FSS reportedly discovered evidence to the contrary, indicating that MBK breached non-disclosure agreements (NDAs) by failing to properly separate information between its investment and management teams.

The investigation also scrutinizes suspicious stock activity on October 14, 2023, the final day of MBK and Young Poong’s public tender offer. On that day, Korea Zinc’s stock price, which was nearing the offer price of ₩830,000, dropped to the mid-₩700,000 range due to unexplained large-scale sell-offs. Korea Zinc suspects this price drop enabled MBK and Young Poong to acquire a larger stake under more favorable conditions.

The allegations, if proven, could have significant implications for MBK Partners, one of Asia’s leading private equity firms, as well as for broader corporate governance practices in South Korea.

 

 

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