Sovereign funds showdown?

One effect of the financial crisis has been to slow down the private equity industry. While the investment banks are stuffed with debt and equity bridges trading well below the price at which they were issued, they have little appetite for new deals.

by Howard Davies
Last Updated: 31 Aug 2010
So embattled corporate chieftains should be breathing sighs of relief. But that’s not the way it looks. Instead, they are preoccupied by the threat from sovereign funds, in the Middle East and the Far East, whose enthusiasm for western corporate assets is mounting. And they are pointing out to the government that the UK, with its laissez faire approach to foreign takeovers, is uniquely vulnerable. Why do we not have an equivalent of CFIUS, the American legislation which allows an industry to be deemed to be of strategic significance?
 
These corporate rumblings, which are getting louder by the day, are awkward for a government which has nailed its pro-competition colours firmly to the mast, and ridiculed the French approach to national champions. But are they content to see Dubai make off with the Stock Exchange, or the new Chinese state investment agency take controlling stakes in much of the FTSE 100? This will soon be a big test for the new secretary of State for what we don’t now call the DTI but whose name we can’t recall. It will be the big talking point at the upcoming CBI conference, I forecast.

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