INSUBCONTINENT EXCLUSIVE:
LIC is considered a strategic asset, commanding more than 60% of India's life insurance market.New Delhi: The Centre wants to block
Chinese investors from buying shares in Indian insurance giant Life Insurance Corp (LIC) which is due to go public, four senior government
officials and a banker told news agency Reuters, underscoring tensions between the two nations
State-owned LIC is considered a strategic asset, commanding more than 60% of India's life insurance market with assets of more than $500
billion.While the government is planning to allow foreign investors to participate in what is likely to be the country's biggest-ever IPO
worth a potential $12.2 billion, it is leery of Chinese ownership, the sources said.Political tensions between the countries rocketed last
year after their soldiers clashed on the Himalayan border and since then, India has sought to limit Chinese investment in sensitive
companies and sectors, banned a raft of Chinese mobile apps and subjected imports of Chinese goods to extra scrutiny."With China after the
border clashes it cannot be business as usual
The trust deficit has significantly widen(ed)," said one of the government officials, adding that Chinese investment in companies like LIC
could pose risks.The sources declined to be identified as discussions on how Chinese investment might be blocked are ongoing and as no final
decisions have been made.India's finance ministry and LIC did not respond to Reuters emailed requests for comment.China's foreign
ministry and commerce ministry did not immediately respond to requests for comment
Aiming to solve budget constraints, Prime Minister Narendra Modi's administration is hoping to raise Rs 90,000 crore through selling 5% to
10% of LIC this financial year which ends in March.The government has yet to decide on whether it will sell one tranche of shares seeking to
raise the full amount or choose to seek the funds in two tranches, sources have said
Under current law, no overseas investors can invest in LIC but the government is considering allowing foreign institutional investors to buy
up to 20% of LIC's offering.Options to prevent Chinese investment in LIC include amending the current law on foreign direct investment
with a clause that relates to LIC or creating a new law specific to LIC, two of the government officials said.They added that the government
was conscious of the difficulty in checking on Chinese investments that could come indirectly and would attempt to craft a policy that would
protect India's security but not deter overseas investors.A third option being explored is barring Chinese investors from becoming
cornerstone investors in the IPO, said one government official and the banker, although that would not prevent Chinese investors from buying
shares in the secondary market.Ten investment banks including Goldman Sachs, Citigroup and SBI Capital Market have been chosen to handle the
offering.(This story has not been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
