MUFG Bank to Acquire 20% Stake in Shriram Finance for INR 39,620 Cr As part of the arrangement MUFG plans to appoint two directors to the board of Shriram Finance.
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MUFG Bank has entered into an investment agreement with Shriram Finance Limited and its major shareholders Shriram Ownership Trust and Shriram Capital Private Limited to acquire a 20 percent equity stake in the non-banking financial company through a preferential allotment of shares.
The total investment is expected to be around INR 39,620 crore and will be completed after receiving approvals from the relevant regulatory authorities.
After the completion of the transaction Shriram Finance will become an equity method affiliate of MUFG and MUFG Bank.
As part of the arrangement MUFG plans to appoint two directors to the board of Shriram Finance.
In addition, MUFG Bank and Shriram Finance have signed a MoU for a strategic partnership that is intended to support the lender's growth through closer collaboration between the two organisations.
India continues to be a key market for MUFG within Asia. The country is expected to become the world's 3rd largest economy by 2030 and plays an important role in the bank's long term regional plans.
MUFG's presence in India dates back to 1894 when Yokohama Specie Bank established its Mumbai branch. Over the years MUFG has expanded its footprint and currently operates across 6 locations in the country, offering services such as deposits loans and domestic and foreign exchange transactions. The bank was also the first Japanese lender to open a branch at GIFT City to support cross border transactions and international funding requirements.
MUFG has stepped up its engagement with India's financial sector in recent years. In 2022 it launched the Ganesha Fund with a corpus of about USD 300 million to support emerging startups. In 2023 MUFG invested in DMI Finance Private Limited to strengthen its presence in digital retail lending and related services.
Shriram Finance is one of the largest retail focused non banking financial companies in India by loan book size. The company operates around 3,200 branches, mainly in rural and semi urban areas. Its core focus areas include commercial and passenger vehicle financing, with a strong position in the used vehicle loan segment. The lender serves a broad base of customers including small businesses, transport operators and individual borrowers.
The investment is expected to support Shriram Finance's expansion in segments such as new commercial vehicles and micro small and medium enterprises. Through the proposed alliance MUFG's global banking experience and client network are expected to complement Shriram Finance's local reach and customer relationships.
The collaboration is also expected to support financing linked to road transport and logistics while contributing to efforts aimed at improving financial inclusion in India.
