Japan’s Mitsubishi UFJ Financial Group (MUFG) is in talks to acquire a 20% stake in India’s second-largest non-banking finance company (NBFC), Shriram Finance. The deal could be worth around ₹23,200 crore ($2.6 billion).
This potential investment highlights the growing interest of Japanese financial services corporations in Indian banks and other lending institutions. If finalised, it would mark the largest-ever foreign direct investment (FDI) in India’s NBFC sector.
MUFG may buy more stake
According to media reports, both parties have already signed a preliminary agreement for discussions. Over time, MUFG may look to increase its stake in the NBFC and even acquire a controlling interest. In such a scenario, it would be required to launch an open offer.
Currently, Shriram Finance promoters hold a 25.39% stake, with the majority owned by group holding company Shriram Capital (17.85%). The rest is with public and institutional investors, including the Government of Singapore (5.41%) and the Monetary Authority of Singapore (1.2%).
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Market capitalisation of Shriram Finance
Shriram Capital is owned by the Shriram Ownership Trust and South Africa’s Sanlam. It also has a stake in a joint insurance venture with its parent company Sanlam.
Shriram Finance shares have gained 5.85% so far this year and closed at ₹616.40 on Tuesday on the BSE, valuing the company at ₹1.16 lakh crore.
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As of the June quarter, Shriram Finance’s total assets under management (AUM) stood at ₹2.72 lakh crore, up 17% year-on-year. In the private sector, it ranks second after Bajaj Finance, which has an AUM of ₹4.41 lakh crore. The company serves nearly 10 million customers across vehicle finance, MSME loans, personal loans, and gold loans.