Citing energy security risks, the government on Tuesday ordered The Children's Investment Fund, a British hedge fund, to drop a bid to raise its 9.9 percent stake in Electric Power Development Co. to 20 percent.

By law, foreign investors need government approval before taking more than a 10 percent stake in a Japanese company in sectors such as electrical power deemed critical to national security.

The order was the first such rejection under the Foreign Exchange and Foreign Trade Law.