The supply of capital seeking opportunities outside its home market has rarely been larger. The seven largest sovereign wealth funds in the Gulf deployed around US$119 billion in 2025, close to half of all state backed dealmaking worldwide, and between 60 and 70 percent of Middle East allocations are now directed to managers outside the region. Family offices, pension funds and insurers are similarly active across one another's markets. On the demand side, conditions for raising international capital are favourable.
Deploying that capital is a separate and more difficult exercise. A non binding commitment and a completed transaction are separated by a process that must clear a host government, a central bank, two or more tax regimes, and a diligence exercise conducted across an unfamiliar legal system. Any one of these can prevent completion. The interval between a commitment and a funded transaction is where most international raises are lost, and it is the subject of this note.
Where the difficulty sits
The scale of available capital is frequently misread as the central question. For most credible sponsors, willing investors can be found. The difficulty lies in the completion process that follows a commitment, which has lengthened over the past decade as more jurisdictions introduced or tightened investment controls. Cross border activity ran below its ten year average as a share of global M&A in 2025, despite the weight of available capital, because transactions became materially harder to complete once announced.
This friction does not appear in a pitch or a league table. It appears afterward, as legal timelines extend, structures are revised repeatedly, and investor confidence erodes while completion is delayed. Much of the work of raising cross border capital consists of moving a willing investor through the obstacles that stand between an intention and a funded transaction.
Foreign investment screening
The most common reason a cross border raise fails is that the recipient country determines it does not wish to admit a particular investor. Over the past decade most large economies have established or strengthened foreign investment screening regimes. The United States conducts reviews through the Committee on Foreign Investment in the United States, the European Union operates an expanding set of national regimes, India has tightened its treatment of investment from neighbouring countries, and Australia screens through its Foreign Investment Review Board. These bodies assess whether a foreign party may hold a stake in sensitive assets, and they have become considerably more willing to refuse.
Australia provides a recent illustration. In 2020 China Mengniu agreed to acquire Lion Dairy and Drinks from Japan's Kirin for approximately A$600 million. The Treasury and the Review Board privately recommended approval. The Treasurer declined to follow that recommendation, describing the sale as contrary to the national interest, and Mengniu withdrew. The commercial terms were agreed and the buyer was willing. The transaction was stopped at the political level.
The United States has intervened more forcefully where it regards an asset as strategic. In 2018 Broadcom, then domiciled in Singapore, launched an approach for Qualcomm valued at approximately US$117 billion. The concern in Washington was that foreign ownership would reduce Qualcomm's research investment and cede leadership of the 5G standard to Huawei. President Trump prohibited the transaction by executive order, one of only a small number of occasions on which a sitting president has blocked a foreign acquisition outright. Where a government regards the target as strategic, the screening review determines the outcome.
In some cases the investment proceeds, but only on conditions set by the state. Nippon Steel's US$14.9 billion investment in US Steel was blocked by President Biden in early 2025, then reconsidered and approved by President Trump in June, roughly eighteen months after it was first announced. Approval was conditioned on a golden share issued to the United States government, carrying consent rights over the closure of plants and the relocation of the headquarters from Pittsburgh, together with a government appointed director. The acquirer completed the transaction, with the United States government retaining continuing governance rights.
| Measure (CFIUS, calendar 2025) | Figure |
|---|---|
| Covered transactions reviewed | 347 |
| Cleared inside the initial review window | ~67% |
| Notices withdrawn and refiled | 51 |
| Transactions abandoned after a withdrawal | 10 |
| Declarations escalated to a full notice | ~26% |
Source: Committee on Foreign Investment in the United States, Annual Report to Congress for calendar 2025, as summarised by DLA Piper and Diaz Trade Law. The escalation figure of approximately 26% compares with about 15% in 2024. The United States is one of dozens of economies now operating a formal regime of this type.
| Investment | Value | Reviewing jurisdiction | Outcome |
|---|---|---|---|
| China Mengniu into Lion Dairy (2020) | ~A$600m | Australia, national interest | Withdrawn after review |
| Broadcom into Qualcomm (2018) | ~US$117bn | United States, CFIUS and 5G | Prohibited by executive order |
| Nippon Steel into US Steel (2025) | US$14.9bn | United States, CFIUS and politics | Approved with a government golden share |
Sources: ABC News and the South China Morning Post on China Mengniu and Lion Dairy; Dechert, Goodwin and the Harvard Law School Forum on Corporate Governance on Broadcom and Qualcomm; Holland & Knight, CSIS and Weil Gotshal & Manges on Nippon Steel and US Steel.
Repatriation and the after tax return
Clearing the screening process leads to the question a serious foreign investor raises before committing capital, which is whether capital and returns can be repatriated, and at what cost. A meaningful proportion of international raises weaken at this point, because the answer is frequently less favourable than the sponsor has assumed.
The first consideration is the movement of capital across the border. A number of jurisdictions restrict the amount of capital that may leave and the timing of its departure, through formal controls or extended approval processes. A business that generates strong local cash flows is worth considerably less to a foreign investor where those cash flows cannot be remitted. The second is taxation. Withholding tax on distributions to an offshore investor, the network of double tax treaties, and transfer pricing rules can reduce the annual return by several percentage points, which is why institutional structures frequently employ feeder vehicles in treaty favourable jurisdictions. Currency exposure applies across the whole structure, since a return generated in one currency and distributed in another is subject to the movement in the exchange rate between investment and exit.
These are ordinary features of investing across borders, and they belong in the investor's return model from the outset, assessed alongside the asset itself. Where they are treated instead as a closing mechanic, the realised return commonly falls short of the figure presented when the opportunity was first discussed.
Fragmented fundraising rules
The act of marketing a transaction to foreign investors is itself constrained. A fund or transaction seeking capital from investors in several countries encounters a different regulatory framework in each. European investors fall under the AIFMD marketing regime, Japanese investors under the Financial Instruments and Exchange Act, and Gulf sovereign funds under their own governance requirements, and each requires distinct documentation, investor qualification standards and reporting. A single generic offering document and a United States style subscription agreement will require substantial redrafting for each market, and may breach local marketing rules.
Less experienced sponsors frequently underestimate this. Even where investor appetite is strong and the expected returns are attractive, the process routinely takes several times longer than an equivalent domestic raise, because each additional jurisdiction introduces a separate body of law that must be addressed on its own terms.
Trust and the limits of diligence
The final constraint is the least tangible and, in our experience, among the most significant. A foreign investor is assessing a market in which it does not operate, through accounts prepared to an unfamiliar standard and audited by a firm it does not know, in a commercial culture whose conventions differ from its own. Data localisation requirements increasingly restrict the transfer of information across borders, so the diligence materials available to a foreign investor may be more limited than those available to a domestic one. The investor is therefore relying to some degree on the sponsor's representations, and the usual protection, enforceable warranties, is weaker where the capital, the asset and the relevant courts are located in different countries.
For these reasons cross border capital tends to follow established relationships and verifiable track records, which are built over a period of years. Sovereign and family office capital in particular is directed through long standing relationships, and an unsolicited approach supported only by a strong model rarely succeeds on its own. The sponsors who raise international capital successfully generally hold genuine standing in the investor's home market, and are known to the investor directly or through parties the investor already trusts.
What to assess before committing
The resulting discipline is straightforward to state. The regulatory and structural path should be assessed and priced with the same rigour applied to the asset, and before any commitment is made.
- Screening exposure. Determine at the outset whether the asset falls within a sector the host government protects, and whether the investor's nationality is itself a concern. Assume the review governs the transaction timetable.
- Repatriation and structure. Model the cost of remitting returns, the applicable withholding tax, and the currency exposure before a price is quoted, and design the holding structure accordingly.
- Jurisdiction specific marketing. Confirm the documentation and investor qualification requirements for each target market before marketing begins.
- Diligence and risk allocation. Assume the investor cannot verify everything independently, provide credible local verification, and determine in advance how the residual gap is allocated, whether through warranties or insurance.
- Standing in the market. Recognise that cross border capital follows established relationships, and that credibility in the investor's market contributes more to completion than the quality of the materials.
In our experience the regulatory and sovereign dimension of a cross border raise warrants as much attention as the commercial case, because it accounts for the majority of failed transactions. A sound asset and a willing investor are not sufficient on their own. Capital can still fail to arrive, delayed or prevented by a screening review, by exchange controls, or by a holding structure addressed too late in the process. We therefore assess these questions early, design the investor's exit before a price is agreed, and advise clients that international capital typically requires more time and carries more execution risk than capital raised domestically. A commitment is not a funded transaction, and the interval between the two is where the majority of the work lies.
An indication of interest is the least demanding stage of an international raise. Whether the capital is ultimately deployed is determined later, by regulators, central banks and tax structures outside the sponsor's control, and that is where the outcome is decided.
This article is produced by Brenton Financial Research for informational and educational purposes only. It discusses completed and terminated transactions using publicly available information and reflects the research team's analysis, which is open to debate. Figures are drawn from the third party sources cited, vary by methodology, and are approximate. Nothing here constitutes financial, investment, legal, or tax advice, or a recommendation regarding any company, fund, or transaction. Brenton Financial Pty Ltd (ABN 21 696 298 227). Past performance is not indicative of future results.
Sources
- Dakota, on Gulf sovereign wealth fund deployment in 2025, and China Daily reporting of Invesco survey data on sovereign allocation.
- Committee on Foreign Investment in the United States, Annual Report to Congress for calendar 2025, as summarised by DLA Piper and Diaz Trade Law.
- ABC News and the South China Morning Post, on China Mengniu and Lion Dairy and Drinks, 2020.
- Dechert, Goodwin and the Harvard Law School Forum on Corporate Governance, on Broadcom and Qualcomm, 2018.
- Holland & Knight, CSIS and Weil Gotshal & Manges, on Nippon Steel and US Steel, 2025. ABF Journal, on marketing and documentation across investor jurisdictions.
