CORRECTED: Murugappa Group withdraws FIPB proposal for sale of TI’s Cholamandalam stake to Sumitomo

SUMITOThe government of India today said that Tube Investments, a part of the Murugappa Group, withdrew its proposal seeking approval for the sale of the 14% equity it held in Cholamandalam MS General Insurance Co to Japan’s Mitsui Sumitomo Insurance Co Ltd.

CORRECTION UDPATE: Murugappa Group has clarified that it has withdrawn the application after a clarification by the government that such transactions did not require FIPB approval.

“The Central Government has notified that transactions of this nature did not require specific approval from FIPB, and hence the earlier request made by Tube Investments of India to FIPB (in December 2015) is no longer necessary or applicable,” the company informed.

It also clarified that the deal was not being canceled or rolled back and has been completed as of 31 March, 2016.

As such, we are withdrawing the following statement of the original story.

The deal, if it went through, would have raised the foreign equity in Cholamandalam to 40% from 26%.

All large foreign investment into companies in India, especially in regulated sectors such as financial services, must be approved by the Cabinet, the top decision-making body in the country.

TI had, four months ago, approved selling the stake to Sumitomo for Rs 882.67 cr. The news had sent Tube Investments’ shares up 17% during trading on the day.

The Government today approved seven foreign direct investment proposals involving Rs 517.57 crore.

One of the proposals that got approved was by Australia’s MarketOne, which sought permission for its expenditure of Rs 16 lakh for setting up an operating facility in Bangalore.

Acquisition of financial services and broking firm Sharekhan Ltd by France’s BNP Paribas group was neither approved nor rejected by the government today. It will be taken up in the next meeting.