SWF Radar LegislationAndRegulation

The WSJ’s Deal Journal blog writes that, “China is creating a merger law to protect its national security–setting up a review process similar to the Committee on Foreign Investment in the U.S., or CFIUS.”

Thomson Reuters reports that, “Germany’s cabinet agreed on Wednesday to bring in rules to protect domestic firms from foreign buyers, notably sovereign wealth funds (SWFs), who could exert political influence, a German government official said.”

The Telegraph writes that, “Germany’s cabinet is expected to approve a far-reaching new law this week to stop ‘giant locust funds’ from Russia, China and the Middle East from launching takeover raids on the country’s prized industries.”

The article adds that, “Stephen Jen, currency chief at Morgan Stanley, said Britain’s open-door policy means that the City would be the chief beneficiary of the German plan. ‘The funds can use operations listed in London,’ he said.”

Thomson Financial reports that, “Russian billionaire Alexander Lebedev, who is seeking to buy tour operator Oeger Tours, has warned Germany against investments by Russian sovereign wealth funds because of corruption he says exists in the country’s bureaucracy. In an interview with Welt am Sonntag, Lebedev also expressed sympathy with the German government’s aim to control investments by sovereign wealth funds in industries that affect its national security.”

The Wall Street Journal reports (subscription required) that, “The German government’s cabinet is scheduled on August 20 to vote on a draft bill that would give the Economics Ministry the power to block unwanted foreign takeovers of German companies – a step that some people from the German industrial sector warn could deter investment.”

The article says that the threshold for ownership will be 25 percent ownership and that, if passed, parliament is expected to approve the bill in the fall, leading to its becoming law in January.

The Financial Times reports that, “Germany’s plan to shield its corporate sector from foreign investors would fall foul of European Union legislation if adopted in its current form, lawyers warned on Monday.”

livemint.com writes that, “Four months after it set out to find whether foreign sovereign wealth funds (SWFs) pose a threat to India’s interests, [India’s] finance ministry has decided that they don’t and, consequently, that there is no need to restrict their investments [in India].”

The Age reports that, “[Australian treasurer] Wayne Swan has signalled his readiness to block acquisitions of controlling stakes in Australian resource companies by Australia’s resource customers, a move that comes amid an unprecedented run of foreign investment applications from Chinese state-owned companies.”

The Australian writes that, “The Rudd Government is understood to be preparing a new foreign investment regime that would limit state-owned [Chinese] corporations from taking technical control of Australian companies.”

The Guardian writes that, “The [German draft] legislation [to give ministers the right to veto non-EU investment of more than 25 percent in certain types of German firm, much like CFIUS in the US,] is squarely aimed at state-owned sovereign wealth funds (SWFs) which control an estimated $3trillion (£1.5trillion) - a drop in the ocean compared with the funds of institutional investors but swollen now by soaring commodity prices and trade surpluses. For many Germans, they are the new ‘locusts’ - and twice as large as the reviled hedge funds they are replacing in popular demonology.”