37 Asian Legal Business | January-February 2025 impacting funds with exposure to these jurisdictions,” Srivastava explains. “To address these, firms are leveraging local expertise, adopting tailored deal structures, and proactively engaging with regulators to ensure compliance and mitigate risks,” she adds. Slow litigation and arbitration outcomes and uncertainty over enforcement of exit mechanisms remain concerns. The National Company Law Tribunal allots only one out of six working days to M&A approvals, significantly slowing dealmaking. While regulatory reforms, including increased bench strength address these bottlenecks, investors remain cautious about entry and exit timelines. The country’s new merger control guidelines, upcoming data regulations and heightened scrutiny over the financial technology and banking space threaten to elongate timelines for investment and increase compliance costs, but an increased emphasis on transparency and global ESG alignment give comfort to global capital looking to make India its new home. Looking ahead to 2025, India’s PE market is expected to gain further momentum. Sectors such as AI, blockchain, cryptocurrency, pharma and healthcare, renewable energy, and EV infrastructure are projected to attract substantial investments. “Investors should watch out for easing of FDI norms, including clarity on PN3, 100 percent FDI under automatic route in insurance,” Srivastava says. Vietnam: The next frontier Vietnam’s emergence as an investment destination presents a nuanced picture. The country surpassed all socioeconomic targets set by the National Assembly for 2024, with GDP growth exceeding 7 percent. HSBC economists predict that Vietnam will achieve the highest GDP growth among the six largest Southeast Asian economies in 2025. The government’s focus on digitalisation and energy transition is attracting global attention from conglomerates and fund managers alike, priming the country for a busy year of private equity investments and dealmaking. “Compared to other Southeast Asian markets, Vietnamese equities are considered cheaper than those in neighbouring countries, offering investors an attractive entry point,” explains Nguyen Van Hai, a partner at Vietnamese law firm YKVN. “Remarkable deals have been observed in education, healthcare, and consumer goods, as Vietnamese consumers increasingly spend more on these services and products. Additionally, the ‘China Plus One’ strategy has made industrial real estate an attractive sector for capital deployment,” Hai adds. But some experts say this rapid growth is yet to transform into promised results. “While global funds have increased their focus on Vietnam, actual investments remain relatively limited,” says Ngoc Anh Bui, the managing partner of Vietnamese law firm VILAF’s Hanoi office. Key reasons for this slow pace are the country’s well-established capital controls and restrictions on foreign ownerships. The capital control or foreign exchange risk has still been the issue affecting the investment decisions as the investment is required in Vietnamese dong, both at the beginning and exit, Bui explains, adding that this should be categorised as a hurdle rather than a risk as it has always been easy to exchange dong with the U.S. dollar in the country. In terms of market access, Vietnam still enforces foreign ownership limits in several business segments, such as telecommunications and logistics, which can hinder control acquisitions by foreign investors, Hai notes. Another key challenge is the lengthy approval process for investments, which is typical of an emerging market. “Obtaining inbound investment approvals remains time-consuming, often taking up to a month for unregulated business sectors,” notes Hai. While problems persist, the Vietnamese authorities have demonstrated strong commitment to reform, enacting new laws to remove legal obstacles for investments. The recent passage of laws amending multiple existing regulations, along with new Land Law and Electricity Law, signals a positive shift in the investment climate. Proposals for projects like the North-South high-speed railway and nuclear power plants further underscore the government’s support. PE investors should also anticipate enhanced regulations related to data localisation, cybersecurity, and the crossborder transfer of data in 2025. “These regulations may impose stricter requirements on data storage, processing, and protection, potentially impacting the operations of portfolio companies, especially in technology, e-commerce, and fintech sectors,” Hai warns. The government is also likely to prioritise further infrastructure development and attract high-quality investments, including those in technology sectors such as data centres and ESGcompliant industries. “To succeed in Vietnam’s evolving ESG landscape, PE investors must proactively integrate ESG factors into their investment strategies and portfolio company engagement,” Hai notes. PE/VC “India is increasingly establishing itself as a standout destination in Asia’s PE landscape. We are seeing global funds increasingly adopting India-specific strategies to capitalise on its long-term growth story.” — Harshita Srivastava, Nishith Desai Associates
RkJQdWJsaXNoZXIy MjA0NzE4Mw==