Historic Stake: MUFG's Record Investment in Shriram Finance

Three proxy advisory firms endorse the proposals at Shriram Finance's EGM, including a notable 20% stake acquisition by Japan's MUFG Bank for Rs 39,618 crore. Considered the largest cross-border investment in India's financial sector, it includes key resolutions on share allocation, special rights, and a non-compete fee.

Three proxy advisory firms have given their nod to all proposals for Shriram Finance's extraordinary general meeting (EGM), including a significant stake acquisition by MUFG Bank of Japan. Scheduled for January 14, the EGM's agenda includes securing approval for MUFG's Rs 39,618 crore fund infusion by diluting 20% of shares.

Highlighting the planned investment, MUFG's acquisition marks the financial sector's largest cross-border venture in India to date. Key resolutions on the table include the preferential share allocation and granting special rights to MUFG, alongside a USD 200 million non-compete fee for Shriram Ownership Trust, which will be disbursed upon completing the preferential issue.

Advisory firms like ISS and InGovern have recommended support, citing alignment with capital requirements and investor credibility. Despite high shareholder dilution concerns, the markets responded positively to MUFG's stake purchase, reflected by a 20% share price increase. Brokerage Motilal Oswal maintains a 'Buy' rating on Shriram Finance, targeting a Rs 1,100 price per share.

(With inputs from agencies.)