International News: Spotlight on Foreign Investment - McDermott Will & Emery

International News: Spotlight on Foreign Investment

|

Overview


In this dynamic global landscape, investors have always been required to make savvy, smart choices. This requires navigating through the intricate web of bilateral treaty protection, exploring the vital role these agreements play in safeguarding investments across borders. An example lies in the Energy sector, as the Energy Charter Treaty shapes international investment strategies.

In our latest issue of International News, we take a look across sectors and issues of concern to investors, exploring carve-outs and their strategic implications, a deep dive into the fascinating world of investing in sports—a realm where financial strategy meets passion and global markets converge. We focus on the burgeoning healthcare sector in Asia, analyzing the opportunities and challenges that come with investing in this rapidly evolving landscape. We address the pressing issues of currency volatility, anti-coercion measures, and the recently enacted Foreign Subsidies Regulation in the European Union. Together, these issues weave a rich tapestry of elements informing investment decisions in an ever-changing global economy.

Articles

A Quick Guide to Bilateral Investment Treaty Protection


Michael Darowski | Romilly Holland

Bilateral Investment Treaties (BITs) contain important protections for foreign investors and should be considered carefully before structuring an investment.

BITs are agreements between two states regarding the treatment of investors from one state (the home state) investing in the other state (the host state). BIT protection is especially important in high-risk jurisdictions These protections include, most critically, the possibility of resolving any disputes that arise between the investor and the host state before a neutral, international arbitral tribunal.

Show More


Cross Border and Multi Jurisdictional Carve-Outs: Perspectives of a Private Equity Buyer and Strategic Seller


Sam Snider | Andrew J. Warmus

Corporate carve-out transactions can be complicated, administratively burdensome, and difficult to execute well. These difficulties become particularly pronounced where a corporate seller without significant experience in PE transactions divests a global business to a PE buyer with a minimal global footprint and limited cross-border experience. As a result, corporate carve-outs have historically been the domain of specialised groups with deep experience in the area.

Show More


Investing in Professional Sport


Thomas P. Conaghan | Greg C. Berson

Professional sports teams are synonymous with prestige, entertainment and, now more than ever, rising valuations. In the United States, there are four dominant professional sports leagues: National Football League (NFL), National Basketball Association (NBA), National Hockey League (NHL), and Major League Baseball (MLB). These leagues are comparable with the economics and stature of other sports leagues across the world, most notably the top football/soccer and baseball leagues such as the English Premier League, Spanish La Liga, and Japanese Nippon Professional Baseball, or cricket’s Indian Premier League.

As the price of, and return on investment in professional sports continues to rise, the investor pool has expanded from individual billionaires to private equity firms, sovereign wealth funds, and other institutional investors looking to cash in on this lucrative, yet scarce, asset class.

Show More


Hedging Currency Volatility Risks in Cross-Border M&A Deals


Vlad Maly

Managing FX fluctuation risk is an important part of the overall considerations that any M&A or investment team need to be familiar with.

Private equity sponsors in particular will be focused on the purchase and sale FX risk. Whenever a buyer or seller are entering into a sale and purchase agreement that is denominated in a currency that is different to the currency in which the sponsor draws on the limited partners commitments, or the currency in which the limited partners need to be repaid, the exchange rate fluctuation between the relevant currency pair can create uncertainty. This is because the amount needed from the limited partners to close the transaction, or the amount ultimately repaid, will depend on the then available FX rate.

A typical example of this situation would be when a US based private equity fund with commitments denominated in US dollars enters into a sale and purchase agreement with respect to a European target where the purchase price is denominated in Euros.

Show More


Strengthening EU Economic Security: The Anti-Coercion Regulation and Outward Investment Control Initiative


Sabine Naugès

After the considerable extension of foreign investment screening in EU Member States, and the recent entering into force of the Foreign Subsidies Regulation, which obliges non-EU companies to declare public subsidies they receive before bidding for public contracts or taking over European companies, several recent announcements made by the European Commission show its willingness to pursue the objective of strengthening the economic security of Member States.

In this context, two new EU legal instruments could have major implications for European and non-European companies and investors operating on the internal market: the Anti-Coercion Regulation (ACR) and the potential outward investment control initiative.

Show More


The Impact of the New EU Foreign Subsidies Regulation


Stéphane Dionnet | Hendrik Viaene

WHAT CONSTITUTES A FOREIGN SUBSIDY

The FSR applies to any company doing business in the European Union. It will be considered to have received a “foreign subsidy” if the following four criteria are satisfied:

  • A financial contribution (such as interest-free loans, unrestricted guarantees, capital injections, preferential tax treatment, tax credits, or grants) is awarded to support the activities of a business entity.
  • The financial contribution is supplied either directly or indirectly by a third country from outside the European Union.
  • The contribution results in a discernible advantage being conferred upon the business entity.
  • This advantage is selective.

Show More