Entering restricted markets

Indian pro-liberalization advocates frequently bemoan the slow pace at which many of India’s industrial sectors are opening up to foreign direct investment (FDI). To its credit, India has made positive strides on the FDI front recently. Its relaxed retail policy, for example, has attracted interest from companies such as Walmart, IKEA and fashion retailer H&M, although political and other concerns have so far prevented some retailers from moving in.

Given the recurrent focus on FDI restrictions within the country, the difficulties Indian acquirers face outside India are often overlooked. In this article we address some issues we have encountered as lead transactional counsel on M&A deals in the Asia Pacific region. Many acquirers are tapping opportunities in this region and we have guided some of them through complex, multi-jurisdictional, cross-border acquisitions in Asian jurisdictions, many of which have idiosyncratic restrictions on foreign investment.

In addition to the legal restrictions, acquiring a business in Asia Pacific involves operational and execution challenges. These sometimes relate to the level of sophistication of some targets, which may affect the availability of “kosher” financials, the negotiation process, and the execution of an M&A deal in general. It is, therefore, important for legal counsel to find practical solutions to issues while protecting the interests of clients and achieving commercial objectives.

Sidharth Bhasin is a partner at Shearman & Sterling where Denise Ho and Sriram Kilapakkam are associates. This article does not contain a full analysis of the matters presented and should not be relied on as legal advice. Shearman & Sterling does not practise Indian law. This is a summary that we believe may be of general interest to readers for purposes of information and is based on our professional experience as international counsel on cross-border M&A transactions.