Japan's MUFG Bank Buys 20% Stake in Shriram Finance for Rs 39,618 Crore

Mumbai, Dec 19 (KNN) Japan's MUFG Bank has decided to acquire a 20% stake in Shriram Finance Ltd (SFL) for Rs 39,618 crore (US$4.4 billion), marking the largest foreign direct investment (FDI) in a financial service company in India.

In a press release on Friday, Shriram Finance said that its board of directors has approved the definitive agreement with MUFG Bank for the proposed investment by the Japanese lender.

Shriram Finance said that the deal has reinforced confidence in India’s lending and financial services sector fundamentals and future growth potential. Also, it strengthens Shriram Finance's capital base.

Terming the deal as a landmark transaction, Shriram Finance said it underscores the company's status as India’s second largest retail Non Banking Financial Company (NBFC) in terms of assets under management and represents a significant milestone for the Indian financial services industry.

"The proposed minority investment by MUFG Bank is subject to shareholder approval, regulatory clearances and customary closing conditions," Shriram Finance said.

While Shriram Finance is India’s second largest retail NBFC with Assets Under Management (AUM) of over Rs 2.81 lakh crore, MUFG Bank is Japan’s premier bank, with a global network spanning around 50 countries.

Shriram Finance said that the deal with MUFG Bank combines its established domestic franchise and extensive distribution network with the Japanese 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.

Commenting on the deal, Umesh Revankar, Executive Vice Chairman, Shriram Finance said that the transaction marks a defining moment in the company's growth journey.

"MUFG is one of the largest financial institutions, with an extensive international network and strong values rooted in substantial growth and financial inclusion. The entry of MUFG as a key investor reinforces global confidence in India’s financial services sector and our role as a leader within it," he said.

Hironori Kamezawa, Group Chief Executive Officer, Mitsubishi UFJ Financial Group stated, “MUFG and Shriram Finance share a common vision and aligned values for the future. Leveraging our global capabilities, MUFG is committed to supporting Shriram Finance’s growth and contributing to economic development, communities, and society in India.”

Mitsubishi UFJ Financial Group (MUFG) is the parent entity of MUFG Bank.

(KNN Bureau)