Nikkei Asia: In Asia, geopolitics has moved onto the deal sheet
- Jun 5
- 1 min read
Private equity firms can no longer treat government as a regulatory afterthought
Steven Okun and Derek Grossman
Steven Okun is CEO of APAC Advisors, a geostrategic consultancy based in Singapore. Derek Grossman is a professor of political science and international relations at the University of Southern California.
Private equity and venture capital firms operating in Asia had one fewer significant constraint than counterparts in the U.S. -- they didn't need to worry about deals being blocked by governments on national security grounds.
That is until now.
Recently, China and Japan each blocked a deal for such a reason, just as the U.S. has done for nearly a decade.
With a national security lens increasingly being applied to investment in ways not done previously by governments across the region, private capital firms and their investors in Asia will need to incorporate an understanding of geopolitics into their investment process as they have never done before.
Geopolitics has moved from a macro backdrop to deal-level risk.
Foreign investors well understand the growing scrutiny they face in the U.S. While the U.S. created its foreign investment review process, the Committee on Foreign Investment in the United States (CFIUS), more than 50 years ago, for years it had been a narrow screen for defense deals and was rarely used.
Now, the U.S. reviews transactions in many other sectors, including technology, healthcare, artificial intelligence and supply chains.
