FDI scrutiny to increase globally in 2024 predicts Hogan Lovells report

FDI scrutiny to increase globally in 2024 predicts Hogan Lovells report

Press releases | 28 February 2024

London and Washington D.C. 28 February 2024 – Government scrutiny of FDI looks set to continue in 2024, according to the 2024 FDI – A Global Perspective report from global law firm Hogan Lovells. With over 35 active FDI regimes already in major economies around the globe, and at least another five expected in Europe alone, dealmakers will need to be cognizant of changing regulations and factor potential FDI risks and review timelines into their transaction planning.

Looking at FDI activity across regions, from Europe to the U.S. and APAC, the report tracks thousands of FDI filings as well as government interventions, ‘Phase 2’ in-depth reviews in addition to the top sources of, and key sectors for, investment in major jurisdictions globally. 

The U.S. led in the number of in-depth ‘Phase 2’ reviews with 162 during the reporting period, followed by the UK with 65. Crucially, the report found key sectors for FDI were sensitive personal data, critical technologies and critical infrastructure in the U.S., and advanced materials (including semiconductors), military/dual-use technology and defense in the UK. It also identified the APAC region led the number mandatory pre-closing filings with 1,460 in Australia, followed closely by Japan on 1,327. The number of government interventions was also highest in Australia at 550, followed by France with 70 and 52 in the U.S. 

Commenting on the findings of the report, Dr. Falk Schöning, Partner in Hogan Lovells’ Global Regulatory practice, said: “The complexity, intricacies, and number of FDI regimes around the world are only set to increase in 2024. As FDI reviews can take several months and as procedures are not harmonized between jurisdictions, it is important for parties to cross-border transactions to proactively assess these risks and reflect them in the deal documents. Working with those who have local knowledge and experience working at the intersection of business and government can help minimize risks and speed up the process ahead of any transaction.”

Anne Salladin, Global Regulatory Partner in Hogan Lovells’ Washington D.C. office, added: “The legal landscape around FDI is ever-changing and, given current geopolitical events, coupled with the proliferation of new technologies such as AI and robotics, we expect FDI concerns to heighten throughout the year. However, we have also seen deals being subject to in-depth scrutiny even if ultimately there are no national security concerns or conditions imposed.  Investors, therefore, must ensure they are getting the right advice to navigate potential risks, especially when multiple jurisdictions are involved.”

A full copy of Hogan Lovells’ 2024 FDI – A Global Perspective report can be found here.