Kim Byoung-hwan, chairman of the Financial Services Commission, speaks during a press conference at Government Complex Seoul, Wednesday. Yonhap

The country's top financial regulator will review the need for private equity fund (PEF) reforms amid the ongoing controversy over MBK Partners, which has been criticized for irresponsibly placing Homeplus into corporate rehabilitation a decade after acquiring the retailer through a leveraged buyout, Financial Services Commission (FSC) Chairman Kim Byoung-hwan said Wednesday.

Kim revealed that the FSC had officially commissioned the Korea Institute of Finance to conduct a study to analyze the influence of financial capital on the control of industrial capital.

"The MBK case has sparked discussions about the issues surrounding PEFs," Kim said during a press conference. "As it has been about 20 years since PEFs were introduced in the country, we will take a closer look at both their achievements and shortcomings, assessing their positive effects as well as the problems currently being raised."

He added, "We also plan to examine how PEF regulations have evolved in different countries over the years and compare them with our own regulatory framework to identify any gaps or areas in need of improvement."

Since Homeplus abruptly filed for corporate rehabilitation with the Seoul Bankruptcy Court on March 4, MBK has faced criticism for not fully supporting the country's No. 2 supermarket chain as its largest shareholder following its acquisition from Tesco of the United Kingdom in 2015.

The acquisition, valued at about 6 trillion won ($4 billion), was largely financed through 2.7 trillion won in bank loans, nearly half of the total cost. This debt burden has weighed heavily on Homeplus, prompting MBK to sell off stores.

The controversy has intensified as the rehabilitation process increases the likelihood of a moratorium on debt repayments, putting retail investors with short-term financial bonds at risk of losing their principal.

Investors, who purchased Homeplus short-term bonds and now face losses, hold a press conference in front of Homeplus' headquarters in Gangseo District, Seoul, Tuesday, urging MBK Partners Chairman Michael Byungju Kim to contribute personal funds for the struggling retailer. Yonhap

Kim stated, "This is a highly publicized case with many victims involved. We will conduct a thorough and swift investigation and take appropriate action."

In related developments, the Financial Supervisory Service (FSS), the financial watchdog, formed a task force and began an investigation into MBK on March 19. The probe covers unfair trading related to the issuance and sale of corporate paper and short-term bonds.

An investigation into Shinyoung Securities, which issued the Homeplus asset-backed short-term bonds (ABSTB), and two credit rating agencies has also been underway since March 13.

According to Rep. Kang Min-kuk of the ruling People Power Party, the total outstanding amount of short-term bonds issued by the retailer is 594.9 billion won, of which 207.5 billion won was sold to individual retail investors.

FSS Governor Lee Bok-hyun pointed out earlier in the day that MBK's claim of fully guaranteeing the 400-billion-won principal of the ABSTB seems like a "lie."

"Once the rehabilitation process begins, creditors will have to fight over limited resources, and even if MBK, among others, makes rosy promises, repayment is simply not possible without shared pain," Lee said during his appearance on an MBC radio program.

"MBK has never stated when they will repay, and I believe that if they cannot make a clear promise or statement on when and how repayment will happen, it shows they are hiding things. In that sense, it is essentially close to a lie," he said.