India may block Chinese investment in LIC's IPO: report

Due to the rising tension between China and India, New Delhi wants to prevent Chinese investors from buying shares in LIC's upcoming IPO. The Indian insurance giant is due to go public before March 2022.

Life Insurance Corp (LIC) is state-owned and considered a strategic asset by the Centre. With over 60% of India's life insurance market with assets of over $500 billion, it is likely to be India's biggest ever IPO with a potential of $12.2 billion. The government is planning to allow foreign investors but it is leery of Chinese ownership, reported Reuters.

Under the current law, overseas investors cannot invest in LIC. But the Modi administration is considering changing it and offering 20% shares. The government has the option of barring Chinese investors from becoming cornerstone investors in the IPO but it will not prevent them from buying shares in the secondary market.

India has been limiting Chinese investments in sensitive companies and sectors since the border dispute escalated in 2020. A government official told Reuters that it cannot be business as usual because the trust deficit has significantly widened. The officer added that Chinese investment in companies like LIC may pose risks.

The Modi administration is hoping to raise 900 billion rupees through selling 5-10% of LIC and solve budget constraints. Sources said that the government hasn't decided whether it will sell one tranche or two, reported The Indian Express.