Rumors of write-downs and new infusions by sovereign wealth funds continue to agitate the markets. The upcoming issue of The Deal newsweekly
features an interview with Sullivan & Cromwell LLP's Rodgin Cohen, who has been involved in a number of SWF investments into banks, including both Citigroup Inc. deals. Cohen's take, particularly on the role of the Committee on Foreign Investment in the United States, is fascinating.
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Was the fact that the SWFs didn't demand board seats related to the percentage stakes they took?
It was a combination of both. A number of times I've seen written that there's a safe harbor with CFIUS if you're under 10% -- well, that's just dead wrong. The way CFIUS regs work, you have an exception for noncontrol, and a predicate of noncontrol is under 10%. But it's not the reverse. Just because you're under 10% doesn't mean noncontrol. [In these investments] it was important that none of these other controlling features be there.
Did the atmosphere change at all from the first Citi deal?
Not really. Each deal was somewhat different, but atmospherically, only modestly. This wasn't so much a change, [but an understanding] that if you wanted to go outside the path that had already been beaten, you were urged by the regulators not to do so, because that would complicate their lives.
Would you expect anyone to wander off that path?
Not if they know what's good for them.
There's a lot more. Check it out in the new weekly. - Robert Teitelman
See The Deal newsweekly Q&A with Cohen
