Japan's MUFG nears Deal to Acquire 20% Stake in Shriram Finance

Japan’s Mitsubishi UFJ Financial Group (MUFG) is in advanced discussions to buy a 20% stake in Shriram Finance, one of India’s leading non-bank financial companies (NBFCs). The deal comes amid the growing foreign interest in India's  Banking, Financial Services and Insurance (BFSI) sector.

According to a Bloomberg report citing sources, the deal is expected to be valued at more than 500 billion yen or about $3.22 billion. The report claimed that MUFG may announce the proposed investment as early as this week.

Following this news, shares of Shriram Finance rose sharply, gaining up to 2.7% during intraday trading on Monday (December 15) and closed 0.76% higher on the same day.

However, the discussions are still ongoing and there is no guarantee on whether the deal will go through.

The final price of the acquisition will depend on Shriram Finance’s share price at the time the deal is completed. As a result, the overall value of the transaction could end up being higher than 500 billion yen, the report added.

MUFG’s move reflects growing interest among Japanese banks in India’s financial sector.

With India seen as a fast-growing market, global lenders are increasingly looking to invest in local institutions to tap into rising demand for credit and financial services.

Japan’s largest banks, in particular, have been stepping up their presence in the country.

Earlier this year, MUFG’s rival, Sumitomo Mitsui Financial Group (SMFG), made headlines by becoming the largest shareholder in Yes Bank. SMFG acquired a 24.2% stake in the Indian lender in a landmark deal.

Since then, the Japanese bank has been looking to expand its operations in India by increasing lending activity and reportedly hiring more staff. SMFG has already invested close to $5 billion in the country, underlining its long-term commitment.

Shriram Finance has a strong presence across both urban and rural India. The company is known for providing loans for commercial vehicles, tractors and passenger cars. It also plays a key role in lending to small and medium-sized enterprises (SMEs), a segment that is critical to India’s economy.