North Asia-focused buyout firm MBK Partners has set a target of USD 7bn for its sixth flagship fund, according to three sources familiar with the situation.

A data room for the fund has been launched recently and the manager has started formal marketing activities, one of the sources said. The target represents a modest uptick on the previous vintage.

MBK is in discussions with potential anchor LPs, with Korean investors and global pension funds among those expressing interest, a second source said. The source added that a tentative timeline has been drawn up, including a first close towards the end of this year.

MBK closed Fund V at the hard cap of USD 6.5bn in May 2020, with most LPs completing their due diligence work prior to the introduction of pandemic-related travel restrictions, sister title AVCJ reported. 

The Fund VI launch comes at a challenging time for Asian private equity. Industry participants have noted that many Western investors are either overallocated to the asset class and unable to make new commitments or in risk-off mode and therefore reluctant to allocate to Asia.

Managers in the region have raised USD 24.3bn so far this year, excluding renminbi-denominated funds. The 12-month totals for 2021 and 2022 were USD 95.9bn and USD 106.4bn, respectively. Pan-regional funds accounted for approximately 40% of the total in 2021 and 2022. For 2023 to date, it is 22%, according to AVCJ data.

MBK announced a flurry of deals in late 2022 and early 2023, including acquisitions of dental scanner maker Medit and flexible copper-clad laminate supplier Nexflex, and the dental implant specialist Osstem Implant in South Korea. Other 2022 investments included e-commerce services provider Korea Center, South Korean footwear textile supplier Dongjin Textile, and aged care player Unimat Retirement Community in Japan.

It has also been seeking to exit from several portfolio companies including Golfzon County and Lotte Card in South Korea.

The golf resort operator and credit card company have Likely To Exit (LTE) scores* of 86 and 62 out of 100, the two highest among its portfolio companies, according to Mergermarket’s predictive algorithm. Tsukui Holdings, a Japan-based nursing care operator, has the third-highest score of 51.

MBK was established in 2005 by Michael B. Kim, formerly president of Carlyle Asia Partners. The firm had more than USD 24bn in assets under management – across buyout and credit strategies – as of January 2022, when Dyal Capital Partners acquired a 12% stake in the management entity for about USD 1bn.

MBK raised USD 1.56bn for its debut fund in 2006 and followed up with a second vehicle of USD 1.6bn in 2009. Fund III closed at USD 2.7bn in 2013 and then Fund IV at USD 4.1bn in 2017. Historically, the firm has enjoyed strong support from the likes of the Ontario Teachers’ Pension Plan (OTPP), Canada Pension Plan Investment Board (CPPIB), Temasek, and China Investment Corporation (CIC), AVCJ reported.

As of March 31, 2023, Fund V was marked at 1.6x multiple on invested capital with a gross IRR of 64.7%. Fund IV was on 2.0x and 21.9% and Fund III was on 2.3x and 17.8%. Fund II was fully liquidated in the past year, achieving 2.9x and 26%, a fourth source familiar said citing data shared with LPs.

MBK declined to comment on the story.

* Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.