New Delhi: The Indian government wants to block Chinese investors from the purchase of shares in the Life Insurance Giant Insurance Corp.
(LIC) who will go public, four senior government officials and a banker told Reuters, underlining tensions between the two countries.
LIC state property is considered a strategic asset, ordered more than 60% of the Indian life insurance market with assets of more than $ 500 billion.
While the government plans to allow foreign investors to participate in what will be the largest IPO in the country has a potential value of $ 12.2 billion, it is Chinese ownership, said source.
Read Alsogovt can let foreign investors buy up to 20% in LIC IPO: Sourcethe listing of LICs is regulated as the largest initial public offering in India, with the government aiming to increase up to 900 billion rupees ($ 12.2 billion) from the sale of its shares.
Political tensions between the countries skyrocketed last year after their army clashed at the disputed Himalayan border and since then, India has tried to limit China’s investment in companies and sensitive sectors, prohibit rafts of Chinese mobile applications and oversee Chinese goods to supervision addition.
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“With China after the border clashes cannot be business as usual.
The deficit of the trust has significantly widened (ED),” said one government official, added that Chinese investment in companies such as risk.
Sources refused to be identified as a discussion about how Chinese investment could be blocked and because there was no final decision made.
Read the Alsolic IPO can affect work, social expenditure, the United expenditure warns to the general Mega Public Offering supported by the largest state in India can lead to work losses and have an impact on the planned expenditure of corporate social infrastructure, according to one of the biggest trade unions.
Life Insurance Corp.
“was formed to provide insurance to the Ministry of Rural and Social and Economic Finance and LIC did not respond to Reuters email requests for comments.
The Ministry of Foreign Affairs and the Ministry of Trade China did not immediately respond to a comment request.
Aiming to solve budget constraints, administration of Prime Minister Narendra Modi Hoping to increase 900 billion rupees through sales of 5% to 10% of the Financial LIC which ended in March.
The government has not yet decided whether it will sell a stock stage that wants to raise the full amount or choose to find funds in two stages, the source said.
In the current law, there are no foreign investors who can invest in LIC but the government is considering enabling foreign institutional investors to buy up to 20% of Lic offers.
Options to prevent Chinese investment in LIC include changing current laws Foreign investment directly with the clause related to LIC or creating a new law specifically for LIC, said two government officials.
They added that the government was aware of the difficulties in examining Chinese investments that could come indirectly and would try to make policies that would protect Indian security but did not prevent foreign investors.
The third option explored was the limitation of Chinese investors into a foundation investor in the IPO, said a government official and banker, even though it would not prevent Chinese investors buy shares in the secondary market.
Ten investment banks including Goldman Sachs, Citigroup and the SBI capital market have been selected to deal with offerings.
‘India is likely to block Chinese investment on the IPO LAC’
