The Children's Investment Fund said Monday it will accept a government order barring it from doubling its stake in J-Power.

Citing energy security risks, the government on May 13 blocked the U.K.-based TCI's bid to raise its stake in Electric Power Development Co., or J-Power, from 9.9 percent to 20 percent.

It was the first such order by the government under the Foreign Exchange and Foreign Trade Law, in which foreign investors seeking to acquire a stake of 10 percent or more in a Japanese firm deemed critical to national security must gain government approval. J-Power is the nation's top energy wholesaler.

The hedge fund had 60 days to file a complaint against the government's decision.

The move came after J-Power investors rejected all five TCI proposals — to double the annual dividend to ¥120, change management, hire at least three outside directors, limit cross-shareholding to a maximum of ¥5 billion and buy back ¥70 billion worth of shares — at a shareholders' meeting last month.

TCI released a statement saying the government is not likely to change its decision and "it is not in the interests of any of the parties to pursue an appeal or a lengthy judicial process."

John Ho, head of the fund's Asian operations, said in a statement: "It is disconcerting that legitimate investors who want to improve corporate governance of privatized and listed companies can be so hastily characterized as threats to public order. This is evidence of the government choosing shareholders for listed corporations which will result in weakened management accountability to their investors."

TCI does not rule out the possibility of reapplying for an additional investment in the future, Ho added.