MUFG Bank’s ₹39,600-Crore Bet Signals Strong Global Confidence in Shriram Finance
Japan’s Mitsubishi UFJ Financial Group (MUFG) has made a decisive entry into India’s non-banking financial sector by acquiring a 20% stake in Shriram Finance through a preferential allotment of shares. Valued at $4.4 billion, or approximately ₹39,600 crore, the transaction stands out as the largest foreign direct investment (FDI) ever recorded in India’s financial services sector, reinforcing global investor confidence in the country’s lending ecosystem.
The investment, announced on December 19, underscores MUFG’s long-term commitment to India and highlights Shriram Finance’s growing stature as a leading retail-focused lender with deep penetration across semi-urban and rural markets.
Preferential Allotment Details Highlight Strategic Depth of the Transaction
Under the terms of the deal, MUFG will acquire 47.11 crore equity shares of Shriram Finance at a floor price of ₹840.83 per share. The transaction will result in MUFG holding a significant minority stake, accompanied by the right to appoint two nominee directors to the board of Shriram Finance.
Moneycontrol had earlier reported that Shriram Finance’s board approved the transaction at its meeting held on December 19, a development that has now been formally confirmed by the company. The structure of the deal involves a primary issuance of equity shares, ensuring that the capital raised directly strengthens the lender’s balance sheet.
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Largest FDI in Financial Services Sets a New Benchmark
At ₹39,618 crore, the MUFG–Shriram Finance deal surpasses several marquee investments in India’s banking and financial space. These include Emirates NBD’s ₹26,850-crore investment in RBL Bank, Sumitomo Mitsui Banking Corporation’s ₹14,043-crore infusion into Yes Bank, and Warburg Pincus and ADIA’s ₹7,500–7,700 crore investment in IDFC First Bank.
An official press release described the transaction as a landmark moment, stating that it “underscores growing global investor confidence in India’s lending and financial ecosystem.” Once completed, the deal will formally be recorded as the largest FDI in India’s financial services sector.
Shriram Finance’s Scale and Reach Strengthen Investment Appeal
Shriram Finance enters this strategic partnership from a position of operational strength. The lender reported assets under management exceeding ₹2.81 trillion and operates through an extensive nationwide network of 3,225 branches. Its diversified lending portfolio and strong presence in underbanked segments have made it a preferred play on India’s consumption and credit growth story.
The capital infusion from MUFG is expected to further enhance Shriram Finance’s ability to expand across lending segments while maintaining prudent risk management standards.
Leadership Commentary Reflects Shared Vision for Long-Term Growth
Commenting on the transaction, Umesh Revankar, Executive Vice Chairman of Shriram Finance, described the investment as a pivotal moment for the company. “This investment marks a defining milestone in Shriram Finance’s growth journey and reflects global confidence in both India’s financial services sector and our leadership position,” he said.
Revankar added that the partnership with MUFG would help strengthen capabilities, improve governance standards, and build a future-ready institution anchored in trust and financial inclusion.
From MUFG’s side, Group Chief Executive Officer Hironori Kamezawa emphasized the strategic alignment between the two institutions. “MUFG is proud to enter into this transaction and become a strategic partner of one of India’s most respected financial institutions,” he said. Kamezawa noted that both MUFG and Shriram Finance share a common vision for sustainable growth and that MUFG would leverage its global capabilities to support Shriram Finance’s expansion and contribute to economic development in India.
Regulatory Approvals and Advisory Roles Define the Next Steps
The proposed minority investment by MUFG Bank remains subject to shareholder approval, regulatory clearances, and other customary closing conditions. Once these approvals are secured, the transaction is expected to significantly strengthen Shriram Finance’s capital base and improve its balance sheet resilience.
KPMG India Corporate Finance is acting as the lead financial advisor to MUFG Bank, with JP Morgan also advising on the transaction. Legal advisors to MUFG include AZB & Partners and Nishimura & Asahi, while Shriram Finance is being advised by Wadia Ghandy & Co.
Market Reaction Reflects Investor Optimism
Investor sentiment around the deal remained positive, with Shriram Finance shares trading 1.8% higher at ₹886 as of 12:20 PM on December 19. Market participants view the MUFG investment as a strong validation of Shriram Finance’s business model and governance framework, while also highlighting India’s continued attractiveness as a destination for long-term foreign capital.
As global financial institutions seek exposure to India’s expanding credit markets, the MUFG–Shriram Finance partnership may well serve as a blueprint for future cross-border investments in the country’s financial sector.
