Shriram Finance Sells 20% Stake to Japan's MUFG in Landmark Deal

Shriram Finance has agreed to sell a 20% stake to MUFG Bank for about USD 4.4 billion, marking the largest FDI in India's financial services. The deal underscores confidence in the sector and aims to boost Shriram's capital base, ultimately driving sustainable growth and innovation.

On Friday, Shriram Finance disclosed that its board has sanctioned the sale of a 20% stake to the Japan-based MUFG Bank. This deal, which involves an investment of Rs 39,618 crore (around USD 4.4 billion), will be executed through a preferential issuance of equity shares. It stands as the largest foreign direct investment in India's financial services to date.

The agreement, pending shareholder approval and regulatory clearances, emphasizes MUFG Bank's confidence in India's lending and financial sectors' robustness and future prospects. It is anticipated to strengthen Shriram Finance's capital base and expedite its growth, according to a regulatory filing by the company.

By combining Shriram's domestic prowess with MUFG's global expertise, the partnership aims to enhance capital adequacy, improve credit ratings, and reduce liabilities costs. Additionally, it will align Shriram's governance with global standards and unlock synergies in technology and customer engagement.