|
Washington: Dubai International Capital (DIC), the private equity arm of Dubai's sovereign wealth fund, has rejected two deals in the past month because they might meet political opposition in the US, managing director Andrew Wright said.
The company, which invests $12 billion, frequently rejects proposed transactions that risk opposition from US lawmakers or would provoke national security concerns, Wright said.
"We have to make very harsh evaluations even before we start the negotiating process," Wright said in an interview yesterday in Washington. He said the company has legal advisers based in Washington to evaluate whether a transaction would face serious opposition.
Wright and executives from Dubai Holdings, the company that controls DIC and Dubai Group, were in Washington this week to meet with members of Congress in an effort to make them more comfortable with the funds' investment strategy.
The effort is a reaction to the unease among US politicians over the growth of sovereign wealth funds, pools of investment capital controlled by foreign governments.
Ports deal
Two years ago, opposition from lawmakers, citing national security concerns, forced a Dubai company to sell control of several US ports it had acquired. Members of Cong-ress also rewrote the rules surrounding foreign purchases of US companies.
Wright said DIC has successfully ushered three transactions through the Treasury-led Committee on Foreign Investment in the US (CFIUS), which reviews deals when foreign entities acquire a controlling stake in a US company.
He said his company stipulates that it will make a CFIUS application in contracts, which can be a sticking point in some deals and costs his company $2 million to $3 million.
New regulations
The US Treasury last month updated the rules for reviewing foreign investments in American companies and assets for national-security concerns.
The process requires that high-ranking administration officials sign off on potentially contentious cases, and provides for a security assessment by the US director of national intelligence. Any transaction that involves a foreign government, which all sovereign wealth funds do, must undergo an investigation lasting 45 days.
Wright said that timeframe can jeopardise potential deals because companies don't want to wait to get their money from a sale, especially with a risk the deal might fall through.
In March, Bain Capital Partners and a Chinese partner, Huawei Technologies, dropped a bid to buy 3Com, after they failed to agree to terms set out by CFIUS.
|
