Korea Zinc's Acquisition of Igneo Holdings Sparks Controversy Over 100x Seller Profits

The largest shareholder alliance of Korea Zinc - MBK Partners and Young Poong - has called on Chairman Choi Yoon-beom to clarify his connections with the sellers of Igneo Holdings, who reportedly gained profits exceeding 100 times their initial investment during the 2022 acquisition.

A representative from MBK Partners said, “Korea Zinc’s acquisition of Igneo Holdings in 2022 was executed at a valuation that defies market norms, granting the sellers extraordinary profits. The absence of thorough due diligence raises significant questions about the rationale for this transaction. Chairman Choi must provide shareholders with a clear explanation of his relationship with the sellers.”

In 2022, Korea Zinc acquired 100% of Igneo Holdings’ shares in two phases - July and November - via Pedal Point, a subsidiary established earlier that year. The total acquisition cost exceeded KRW 580 billion (approximately USD 450 million at the time). Based on disclosures, Korea Zinc paid a staggering 50 times Igneo’s 2021 revenue for the acquisition, despite Igneo reporting negative equity of KRW -1.9 billion at the end of 2021.

Igneo was founded as recently as February 2021, making it less than 18 months old at the time of the first acquisition in July 2022. Remarkably, negotiations for the acquisition began just five months after Igneo's establishment, in July 2021, with a non-disclosure agreement. The agreed acquisition price - over 100 times the company’s initial capital - was highly unusual for an M&A deal.

Igneo's initial capital was approximately $2.75 million (at $27.50 per share). Korea Zinc, however, paid about $300 million for the acquisition of Igneo's existing shares (at per-share prices of $2,466 in July, $2,621 in November, and $2,708.7 for additional shares), far exceeding 100 times the initial capital. For Igneo's founding shareholders, this translated into a return of 100x on their investment within just 18 months.

The primary sellers included MCC NFT, Igneo’s largest shareholder with a 47.5% stake, alongside investment funds such as PCT Igneo Investor LLC (38.2%), Windchime Limited (5%), and The Tarsadia Group LLC (5.7%). For example, PCT Igneo Investor LLC, which invested only USD 1.05 million, realized over USD 101 million—more than a 100x return within 18 months.

MBK Partners and Young Poong have also highlighted concerns about the relationships between MCC NFT, Tarsadia Group, and other investment funds involved. MCC NFT’s largest shareholder is reportedly The Tarsadia Group, a U.S.-based entity that began in the hotel industry and later pivoted to investments. Many of the funds investing in Igneo, including PCT Igneo Investor LLC, are managed by individuals affiliated with Tarsadia. Tarsadia itself held a direct 5% stake in Igneo and participated in the acquisition of Igneo's convertible bonds (CBs) three months after its founding. These bonds delivered over 11x returns within just 14 months.

“Chairman Choi Yoon-beom has denied knowledge of the relationships among the sellers,” said an MBK Partners representative. “However, such a significant transaction involving hundreds of billions of won cannot proceed without verifying the identities and affiliations of all parties involved. The relationships between MCC NFT, Tarsadia, and the funds they operate, along with the identities of the investors behind these funds, must be disclosed to ensure transparency and protect shareholder interests.”

This controversy has raised broader concerns about corporate governance and accountability in Korea Zinc’s decision-making processes, particularly regarding high-stakes acquisitions.

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