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Gallium and CFIUS: Key cases in wake of China’s new export controls
China just announced export restrictions on critical metals used in the manufacturing of semiconductor chips, such as gallium and germanium. So we decided to look at actions CFIUS has taken on related transactions. Our findings? CFIUS has rarely signed off on deals that involve gallium.
Bill wants CFIUS to presume “non-resolvability” in certain transactions
Congressional leaders have just proposed a bill that would include a “presumption of non-resolvability” by CFIUS related to real estate transactions by foreign adversaries near sensitive sites. In other words, the Committee would have to assume that any national security concerns cannot be resolved.
An E.O. on outbound is the wrong approach. Here’s another option.
In our latest episode of “Ten With Tom,” former Treasury Department Assistant Secretary for Investment Security Thomas Feddo — now founder of The Rubicon Advisors — discusses why an Executive Order is the wrong approach, and explores some alternatives to an E.O.
Would Moderna’s $1B deal in China have triggered outbound scrutiny?
We’ve got a live outbound case study, folks. Last week, Moderna inked a deal to invest $1 billion in mRNA research and development in China. So, would that deal have triggered outbound scrutiny — and increased deal friction — were an outbound review regime in place? Expert insights inside.
Try “CFIUS GPT,” a GenAI tool for nat’l security & foreign investment
Foreign Investment Watch is excited to unveil the first “generative artificial intelligence” application built specifically for the intersection of national security and foreign investment. Code-named “CFIUS GPT,” the tool is currently in best testing mode. Subscribers can try it now.
Report: 17% of investment deals in Chinese AI cos. include U.S. VC
A new report out of Georgetown University may be the first to analyze data on outgoing U.S. investment into Chinese artificial intelligence companies. The report includes a wealth of data, and may offer much-needed context for a possible outbound regime. Details and the report are inside.
Flurry of new bills on Chinese land purchases, greenfield investments
Several legislative proposals were floated by Congressional leaders last week related to foreign ownership of farmland, one of which would expand an existing tax on foreign land sales by 400%, and another that would address Chinese investments in greenfield initiatives. Details inside.
Compliance reminder: Commerce finalizes and publishes ICTS rule
The Commerce Department has published its final version of the “Securing the Information and Communications Technology Supply Chain” rule, which was proposed back in 2021. The final rule tweaks some definitions, and clarifies what transactions Commerce can evaluate. Details inside.
Exclusive: We talk to CFIUS head Paul Rosen on his 1st anniversary
Hard to believe, but Paul Rosen just celebrated his one-year anniversary as head of CFIUS. We sat down with Rosen for an exclusive interview to discuss his first year on the job, and covered everything from penalties to guidance. According to Rosen, CFIUS is “always working to improve.”
Florida is the latest state to restrict foreign ownership of real estate
As we’ve covered extensively, several U.S. states have taken action to regulate foreign investment within their borders. Florida is the latest to place restrictions on entities or individuals from certain “countries of concern,” including China, Russia, Iran and others. Details and other state actions inside.
IAA provision would extend CFIUS jurisdiction to labs, intelligence sites
A proposed provision in the bipartisan Intelligence Authorization Act would extend CFIUS’s real-estate jurisdiction beyond military bases. The proposal would add foreign real-estate transactions in close proximity to “sensitive sites,” such as intelligence agencies and national labs. Details inside.
DoJ: Link between corporate crime and national security now a priority
The U.S. Department of Justice has started to emphasize a renewed focus on the intersection of corporate crime and national security. According to one DoJ official, corporate crime “increasingly, now almost routinely,” intersects with national security concerns. Details and implications inside.
Is Sequoia’s split from China venture the start of a broader industry trend?
As was widely reported last week, venture capital firm Sequoia Capital is spinning out its Chinese unit into an independent company. And at least one other fund has disclosed it is diversifying its LP base beyond China. Details, Sequoia’s LP letter, and the broader industry impact are inside.
At Senate hearing, head of CFIUS talks outbound, LP scrutiny, more
Last week, the U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on “Countering China,” which featured testimony from CFIUS head Paul Rosen and others. Inside is a summary of relevant testimony, key insights, question-and-answer highlights, and more.
Congressional leaders propose a “made in China” label for app stores
Three U.S. Senators have unveiled a bill that would prominently display in app stores the country where the apps are developed and owned. The bill would also require the Treasury and Commerce departments to catalog adversarial governments that may have access to user data. Details inside.
Latest CFIUS reports from CRS may hint at future Congressional actions
The Congressional Research Service has published its latest briefings on CFIUS for elected officials. The two-page reports are generally uncontroversial summaries of recent developments, but they do include “considerations for Congress,” which may act as an early-warning system on future actions.
Biden to declare national emergency when issuing the outbound regime?
Last week, Patrick McHenry (R-NC) sent a letter to U.S. Treasury Secretary Janet Yellen questioning the merits of an Executive Order on outbound investment. The letter made two references to “the White House’s interest in declaring a national emergency” to justify the move. Details inside.
CFIUS clarifies that it may request details on LPs in investment funds
New guidance from CFIUS has clarified that the Committee may request follow-up information on all foreign investors that are parties to a particular transaction, whether they’re involved directly or indirectly. That includes limited partners in venture capital or private equity funds. Details are inside.
CFIUS says “springing rights” may not be allowed in mandatory filings
The latest FAQ from CFIUS provides some details on “springing rights,” such as information rights that might only become effective after CFIUS approves a transaction. According to the Committee, those provisions may no longer be okay for mandatory filings. Details and the actual guidance are inside.
G7 acknowledges that outbound “could be important”; still no E.O.
In a joint statement, the G7 said it recognized that “appropriate measures designed to address risks from outbound investment could be important to complement existing tools” like export controls, but we’re still waiting for a formal Executive Order from the Biden Administration. Details inside.