Germans to SWFs: keep your hands off our companies
With sovereign wealth funds (SWFs) trolling the world for decent places to park their overflowing coffers of cash, the Germans have decided to stop them before they start.
The German government has approved legislation that would enable it to prevent foreign buyers from taking big stakes in key domestic companies.
The measure applies to investments of 25% or more by buyers outside the EU or European Free Trade Association.
Designed to protect national champions from the hands of sovereign wealth funds, it is likely to be criticised for being protectionist.
The legislation requires approval by parliament before it can become law.
Germany is keen to prevent sovereign wealth funds, which are government-controlled investment funds, from taking control of the country’s strategic assets
Last time I looked, no major announcements of Sovereign Wealth Funds about to take over Lufthansa, Deutsche Bank, or BMW had been made. What gives here? Are the Germans just making sure that German Banks don’t try the same type of SWF-funded bailout that UK, Swiss and U.S. banks have been forced into?
It’s only a matter of time before we see the same type of protections in the U.S. or the UK. After all, many a pundit was appalled when even those sneaky Belgians got their hands on Anheuser-Busch. I’m surprised we haven’t seen calls of this nature in the U.S. already. If an obviously capitalist company like InBev’s purchase of a brew house can raise protectionist hackles, a state-owned investment fund from Asia or the Middle East would be seen as that much more sinister.
Protectionism is clearly on the rise.