Tesco has confirmed the sale of its South Korean business for £4.2bn as the troubled supermarket chain seeks to restore its balance sheet. 

Homeplus is being bought by a consortium of buyers led by MBK Partners, North Asia‘s biggest buyout firm.  

The Asian private equity firm has partnered with the Canadian Pension Plan Investment Board and Singapore‘s Temasek Holdings for the takeover. 

Dave Lewis, Chief Executive of Tesco, said: “This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet. 

I would like to thank all of our Homeplus colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of a great business.  I am confident that the agreement we have reached with MBK Partners presents an exciting opportunity for their continued success.” 

Proceeds from the sale, which was led by HSBC, will be used to pay down Tesco‘s debt and help revitalise its UK business. 

The deal will see Tesco’s total debt pile reduced from £21.7bn at the end of February to around £17.5bn. 

The sale of Homeplus follows part of a restructuring operation to turnaround the supermarket, after it reported an annual loss of £6.4bn in April, the biggest corporate loss in UK history, and a £326m accounting scandal. 

Charlotte Brown