Shriram Finance poised for massive re-rating with MUFG entry after $4-bn fresh infusion

Shriram Finance poised for massive re-rating with MUFG entry after $4-bn fresh infusion

Japanese financial major Mitsubishi UFJ Financial Group (MUFG) is set to acquire a 20 percent stake in Shriram Finance Limited through a fresh capital infusion, with the proposal expected to be announced on December 19, sources confirmed.

The deal is expected to be priced at around Rs 880 per share, broadly in line with the current market price, and could value the transaction in the $3.5-4 billion range.

The proposed investment would value Shriram Finance close to its current market capitalisation of about $10 billion in dollar terms.

Sources said the stake acquisition will be executed through a combination of preferential allotment and warrants. Any open offer obligation, if at all, would arise only at a later stage depending on MUFG’s eventual shareholding.

As part of the transaction, MUFG is expected to secure at least two board seats through nominee directors. The Japanese lender is also likely to get a first right of refusal (RoFR) in future capital raises, giving it the option to gradually increase its stake to as much as 51 percent over time, sources added.

The transaction assumes added significance as it marks renewed large-investor interest in the Shriram group following the exit of Piramal in 2023.

It is also expected to surpass Emirates NBD’s investment in RBL Bank and SMBC’s acquisition of Yes Bank, making it the largest financial services deal of 2025 so far.

The deal is coming at a time of management transition at Shriram Finance. Parag Sharma was recently elevated as Managing Director and Chief Financial Officer, succeeding long-time chief executive Y S Chakravarthi.

In addition, Subhashri Shriram, MD & CEO of promoter entity Shriram Capital, is likely to join the board of Shriram Finance.

The proposed investment comes amid a strong run-up in the company’s stock. Shares of Shriram Finance have risen 38 percent over the last three months, significantly outperforming the BSE Sensex, which has gained about three percent during the same period.

So far in 2025, the stock is up around 46 percent, making it one of the best performers this year.