Japan based MUFG Bank, a wholly owned subsidiary of Mitsubishi UFJ Financial Group (MUFG), has announced an investment of ₹39,618 crore (around $4.4 billion) to acquire a 20% stake in Shriram Finance through a preferential allotment of equity shares. The transaction represents the largest foreign direct investment (FDI) ever made in India’s financial services sector.
Under the proposed deal, MUFG Bank will be issued over 471 million equity shares at a price of ₹840.93 per share, translating into a 20% holding on a fully diluted basis. Following completion, MUFG will be entitled to nominate two non-independent directors to Shriram Finance’s board.
The investment is subject to shareholder approval, regulatory clearances, and customary closing conditions. Upon completion, MUFG Bank will be classified as a public shareholder of the company.
Shriram Finance said the capital infusion will significantly strengthen its capital adequacy, improve balance sheet resilience, and provide long-term growth capital. The partnership is also expected to enhance access to lower cost funding, support potential credit rating improvements, and align governance and operational practices with global best standards.
MUFG described the investment as a strategic move to deepen its presence in India, which it considers one of its most important global markets. The Japanese lender said the partnership will help scale Shriram Finance’s operations across MSME lending, commercial vehicle finance, and other retail segments, while supporting India’s financial inclusion agenda.
Separately, Shriram Finance disclosed that certain promoter entities have entered into non-compete and non-solicitation agreements as part of the transaction. MUFG will pay a one-time fee of $200 million (approximately ₹1,660 crore) to Shriram Ownership Trust, subject to shareholder approval.
Shriram Finance, the flagship company of the Shriram Group, is India’s second-largest retail NBFC, with assets under management exceeding ₹2.81 trillion, a network of 3,225 branches, and a customer base of over 9.6 million.
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