India could block Chinese investment in insurance giant LIC’s IPO: Reuters


New Delhi wants to prevent Chinese investors from buying shares of Indian insurance giant Life Insurance Corp (LIC) which is to be made public, four senior government officials and a banker told Reuters, highlighting tensions between the two countries .

State-owned LIC is considered a strategic asset, controlling over 60% of the Indian life insurance market with assets in excess of $ 500 billion. As the government considers allowing foreign investors to participate in what will likely be the country’s largest IPO with a potential value of $ 12.2 billion, it is wary of Chinese ownership, the officials said. sources.

Political tensions between the countries soared last year after their soldiers clashed at the disputed Himalayan border and since then India has sought to limit Chinese investment in sensitive companies and sectors, has banned a series of Chinese mobile applications and subjected imports of Chinese products to further scrutiny. .

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“With China after the border clashes, this cannot continue as usual. The confidence deficit has widened considerably,” one of the government officials said, adding that Chinese investments in companies like LIC could present risks.

The sources declined to be identified as discussions on how Chinese investments could be blocked are ongoing and no final decision has been made.

India’s finance ministry and LIC did not respond to requests for comment emailed to Reuters. China’s Foreign Ministry and Commerce Ministry did not immediately respond to requests for comment.

Aiming to resolve budget constraints, Prime Minister Narendra Modi’s administration hopes to raise Rs 900 billion by selling 5% to 10% of LIC this fiscal year which ends in March. The government has yet to decide whether it will sell a tranche of shares seeking to raise the full amount or whether it will choose to seek the funds in two tranches, sources said.

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Under current law, no foreign investor can invest in LIC, but the government is considering allowing foreign institutional investors to buy up to 20% of the LIC offering.

Options to prevent Chinese investment in LICs include amending the current foreign direct investment law with an LIC clause or creating a new LIC-specific law, two of the government officials said.

They added that the government was aware of the difficulty of controlling Chinese investments that might come indirectly and would try to craft a policy that would protect India’s security but not deter foreign investors.

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A third option under consideration is to prevent Chinese investors from becoming key investors in the IPO, a government official and the banker said, although this would not prevent Chinese investors from buying shares. in the secondary market.

Ten investment banks including Goldman Sachs, Citigroup and SBI Capital Market were chosen to manage the offer.

($ 1 = 73.8200 Indian rupees) (Reporting by Aftab Ahmed and Manoj Kumar in New Delhi, Nupur Anand in Mumbai; additional reporting by Beijing Newsroom; edited by Sanjeev Miglani and Edwina Gibbs)

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