With Sergio Aguero competing with Gabriel Jesus for a starting role at the Etihad Stadium, it has left Iheanacho down the pecking order and the Foxes have been in negotiations with City regarding his signature for a number of weeks.
The Spaniard told reporters: "I think Kelechi leaves us in favor of Leicester. I think so, but I do not want to say anything wrong either. We will see. If that does not happen, he will be part of the group."
Iheanacho has netted 21 goals in 64 appearances for City, but the 20-year-old made just five starts in the Premier League during the last campaign.