Japan's MUFG Bank buys 20% stake in Shriram Finance for Rs 39,600 crore

The floor price for the preferential issue has been set at Rs 840.83 per share, with MUFG set to acquire 47.11 crore equity shares

Japan's Mitsubishi UFJ Financial Group on December 19 said it has picked up a 20% stake in Shriram Finance in a deal valued at $4.4 billion (Rs 39,600 crore) through preferential allotment of shares, marking the largest foreign direct investment in India's financial sector.

MUFG will have the right to appoint two nominee directors on the board of Shriram Finance.

Moneycontrol’s earlier report that the board of Shriram Finance approved the transaction at its meeting held on December 19 has been confirmed.

The floor price for the preferential issue has been set at Rs 840.83 per share, with MUFG set to acquire 47.11 crore equity shares, as reported by Moneycontrol.

At Rs 39,618 crore, the Shriram Finance transaction is the largest investment in India’s financial services sector, ahead of Emirates NBD’s Rs 26,850-crore deal for RBL Bank, Sumitomo Mitsui Banking Corporation’s Rs 14,043-crore investment in Yes Bank, International Holding Company’s roughly Rs 8,850-crore investment in Sammaan Capital, and the Rs 7,500-7,700 crore infusion by Warburg Pincus and ADIA into IDFC First Bank.

Once completed, the deal will mark the largest foreign direct investment in India’s financial services sector, underscoring growing global investor confidence in India’s lending and financial ecosystem, an official press release said.

The lender had assets under management exceeding Rs 2.81 trillion and operates through a nationwide network of 3,225 branches.

The proposed minority investment by MUFG Bank is subject to shareholder approval, regulatory clearances and other customary closing conditions. The transaction involves a primary issuance of equity shares and will significantly strengthen Shriram Finance’s capital base, improve its balance sheet resilience and provide long-term growth capital to support business expansion across lending segments, the release added.

Commenting on the transaction, Umesh Revankar, Executive Vice Chairman of Shriram Finance, said the investment marks a defining milestone in the company’s growth journey and reflects global confidence in both India’s financial services sector and Shriram Finance’s leadership position. He added that the partnership with MUFG would help strengthen capabilities, improve governance standards and build a future-ready institution anchored in trust and financial inclusion

Hironori Kamezawa, Group Chief Executive Officer of Mitsubishi UFJ Financial Group, said MUFG was proud to enter into the transaction and become a strategic partner of one of India’s most respected financial institutions. He said MUFG and Shriram Finance share a common vision for sustainable growth and that MUFG would leverage its global capabilities to support Shriram Finance’s expansion and contribute to economic development and communities in India

KPMG India Corporate Finance is acting as the lead financial advisor to MUFG Bank, with JP Morgan also advising on the transaction. Legal advisors to MUFG Bank include AZB & Partners and Nishimura & Asahi, while Shriram Finance is being advised by Wadia Ghandy & Co.

Shriram Finance's shares were up 1.8 percent at Rs 886 as of 12:20 PM on December 19.