This collaboration combines Shriram Finance’s established domestic franchise and extensive distribution network with MUFG Bank’s global expertise and financial strength. The fund infusion will significantly enhance SFL’s capital adequacy, strengthen its balance sheet, and provide long-term growth capital,”
New Delhi: Financial Services firm Shriram Finance on Friday said its board has approved the sale of a 20 per cent stake to the Japan-based MUFG Bank for an investment of Rs 39,618 crore (about USD 4.4 billion) through a preferential issuance of equity shares.
This deal would result in the biggest FDI flow in the financial services space.
This investment will result in MUFG Bank acquiring a 20 per cent stake on a fully diluted basis, Shriram Finance Ltd (SFL) said in a regulatory filing.
“There’s a chance we may push our stake above 50%. The regulations allow for acquiring over 50%. So naturally it’s a possibility at an appropriate time,” said Masashige Nakazono, executive officer at MUFG Bank and head of the global commercial banking planning division.
The signing of definitive agreements with MUFG Bank reinforces confidence in India’s lending and financial services sector fundamentals and future growth potential, it said, adding that it will also strengthen SFL’s capital base and accelerate its growth trajectory.
The proposed investment by MUFG Bank is subject to shareholder approval, regulatory clearances and customary closing conditions, it said.
“This collaboration combines SFL’s established domestic franchise and extensive distribution network with MUFG Bank’s global expertise and financial strength. The fund infusion will significantly enhance SFL’s capital adequacy, strengthen its balance sheet, and provide long-term growth capital,” it said.
This partnership is further expected to unlock synergies in technology, innovation, and customer engagement, driving sustainable growth, it said.
It will also improve access to low-cost liabilities and potentially strengthen SFL’s credit ratings while aligning governance and operational practices with global best standards, it added.
India’s financial sector has witnessed nearly $15 billion worth of deals so far this year, more than double the $6.5 billion recorded in 2024, according to Dealogic data.
MUFG’s move follows Emirates NBD Bank’s $3 billion acquisition of a 60% stake in Indian private lender RBL Bank in November, the largest investment in the sector by a foreign bank until now.
JAPAN’S BANKS EXPAND ABROAD AMID SHRINKING DOMESTIC MARKET
For years, Japan’s biggest banks have sought overseas targets in the face of a shrinking domestic market and rock-bottom interest rates. India, with its fast-growing economy, has become a popular destination.
In a similar move, Sumitomo Mitsui Banking Corporation, a unit of Sumitomo Mitsui Financial Group (8316.T), opens new tab, bought a 24.2% stake in Indian lender Yes Bank (YESB.NS), opens new tab, starting with a 20% stake for $1.6 billion in May.