MUFG Bank to invest ₹39,618 crore in Shriram Finance via preferential share issuance

The Board of Directors of Shriram Finance Limited (SFL) approved today the execution of definitive agreements with MUFG Bank Ltd., which is Japan's largest bank and the core commercial banking unit of the Mitsubishi UFJ Financial Group (MUFG), for an investment of approximately ₹39,618 crore in SFL via a preferential issue of equity shares. This will give MUFG Bank a 20% stake on a fully diluted basis.

According to the press release issued by Shriram Finance, this landmark transaction highlights SFL’s position as India’s second-largest retail Non-Banking Financial Company (NBFC) by assets under management and marks a significant milestone for the Indian financial services industry due to: being the largest FDI in a financial services company in India; boosting confidence in India’s lending and financial services sector fundamentals and future growth potential; and strengthening SFL’s capital base while accelerating its growth trajectory.

Umesh Revankar, Executive Vice Chairman of Shriram Finance Limited, stated, "This deal signifies a pivotal point in our growth. MUFG, one of the world's largest financial institutions, boasts a vast international presence and a commitment to growth and financial inclusion. Their investment as a major stakeholder enhances global trust in India’s financial sector and affirms our leadership role. Together, we seek to enhance our capabilities, foster economic development, and make a positive difference in communities, shaping a future-ready organisation built on trust and good governance.”

The proposed minority investment by MUFG Bank depends on shareholder approval, regulatory clearances, and standard closing conditions.

This collaboration combines SFL’s established domestic franchise and extensive distribution network with MUFG Bank’s global expertise and financial strength. The fund infusion will significantly enhance SFL’s capital adequacy, strengthen its balance sheet, and provide long-term growth capital. It is also expected to unlock synergies in technology, innovation, and customer engagement, driving sustainable growth. Additionally, it will improve access to low-cost liabilities and potentially elevate SFL’s credit ratings while aligning governance and operational practices with global best standards, per the press release.

This investment demonstrates MUFG Bank’s confidence in India’s vibrant financial services sector. Mitsubishi UFJ Financial Group (MUFG), the parent of MUFG Bank, has over 130 years of history in India, having invested $1.7 billion and created around 5,000 jobs. The investment in SFL will be MUFG’s largest in India, underscoring its commitment to financial inclusion and sustainable growth.

Hironori Kamezawa, Group Chief Executive Officer, Mitsubishi UFJ Financial Group, stated, “MUFG is proud to enter into this transaction and become a strategic partner of Shriram Finance, one of India’s most respected financial institutions. MUFG and Shriram Finance share a common vision and aligned values for the future. Leveraging our global capabilities, MUFG is committed to supporting Shriram Finance’s growth and contributing to economic development, communities, and society in India.”

Transaction advisors on the deal included KPMG India Corporate Finance as lead financial advisor to MUFG Bank, alongside J.P. Morgan as financial advisor, with legal advice provided by AZB & Partners and Nishimura & Asahi (Gaikokuho Kyodo Jigyo). Shriram Finance was advised by Wadia Ghandy & Co., which acted as its legal advisor.