FT : India Allows Extraordinary Temasek Move

Tuesday, June 19, 2007

Singapore’s state-run investment groups have been given the go-ahead to increase their holdings in India’s ICICI Bank beyond the normal ownership limits for foreign groups controlled by the same shareholder.  The Reserve Bank of India yesterday told the Financial Times it would approve of any move by Temasek and Government of Singapore Investment Corporation (GIC) to increase their respective shareholdings in India’s largest private sector financial institution to 10%.  This represents an exemption to the rule that limits foreign investors controlled by the same entity to acquiring a total stake in an Indian bank of up to 10%.  Temasek presently has a 7.37% stake in ICICI while GIC owns 2.24%.  Any exemption could raise eyebrows among foreign investors not just in the banking sector but in other industries, such as telecommunications, in which overseas buyers have faced strict controls on how much they can acquire of domestic companies.  Vodafone of the UK was grilled for weeks by the government this year over whether its plan to buy a controlling stake in domestic mobile operator Hutchison Essar conformed with foreign ownership limits…..A person familiar with the situation at the RBI said the move was a “one-off” reached as part of India’s bilateral trade agreement with Singapore known as the Comprehensive Economic Co-operation Agreement (Ceca)…..

Reference : http://www.ft.com/cms/s/208d4000-1e02-11dc-89f7-000b5df10621.html

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