Japan's Mitsubishi UFJ Financial Group looks to buy 20% in Shriram Finance

Shriram group may still stay promoter after $4 bn deal

In one of the largest investments in India’s financial services space, Japan’s Mitsubishi UFJ Financial Group (MUFG) is likely to invest over $4 billion in Shriram Finance for a 20 per cent stake, and the domestic lender is most likely to announce the deal on Monday after board approval, sources said.

 

Following the transaction, the Shriram Group will continue to be the largest shareholder and promoter of India's second-largest private sector non-banking finance company (NBFC).

 

The corporate identity of Shriram Finance will also be retained, the sources said.

 

The Shriram Group, through Shriram Capital and Shriram Value Services, holds a 24.98 per cent stake in Shriram Finance. 

South Africa-based Sanlam Life Insurance owns a 0.41 per cent stake, taking the total promoter holding in the lender to 25.39 per cent.

 

The Shriram Finance transaction may not trigger an open offer, as the stake acquisition will be done entirely through a primary issuance of shares. 

Earlier this week, Shriram Finance notified the exchanges that its board will meet on Friday to consider a proposal for raising of funds by way of rights issue, preferential allotment, qualified institutions placement or through any other permissible mode.

 

Separately, the lender clarified to the exchanges that since it is on a growth trajectory, it routinely explores opportunities which are aimed at enhancing shareholder value.

 

Shriram Finance did not respond to an email seeking comment, while MUFG could not be reached for immediate comment.

 

Shriram Finance is one of India’s biggest retail non-banking financial entities, offering credit solutions for commercial vehicles, cars, scooters and personal loans. Its assets under management stood at ₹2.8 trillion as of September 2025.

 

Japanese financial groups have made sizeable investment in India’s financial services space this year, starting with Sumitomo Mitsui Banking Corporation (SMBC) of the Sumitomo Mitsui Financial Group (SMFG), acquiring over 24 per cent stake in private sector lender Yes Bank for over $1.6 billion.

 

Additionally, Japan’s Mizuho Financial Group, earlier this week, said it will acquire a controlling over 60 per cent stake in Avendus Capital through its subsidiary, Mizuho Securities, by buying out the stake held by US-based private equity firm KKR via Redpoint Investments in the investment bank, subject to regulatory approvals.

 

While financial details of the deal were not disclosed, reports said the Japanese lender will acquire 61.6 per cent stake and is seeking approval from other holders to increase that to 78.3 per cent for a total purchase price of ₹4,700 crore ($516 million).

 

According to Pratik Shah, partner-head Financial Services, EY, bilateral relations between India and Japan are very strong.

 

Japanese conglomerates are also flush with low-cost funds and are looking to deploy capital where they can generate attractive returns. As a high-growth market, India naturally attracts a share of this capital. Moreover, Japanese investors are typically long-term in nature and deploy patient capital, which makes them especially attractive partners for Indian companies.

 

“Interest rates in Japan are on the rise, and Japanese investors are actively looking to deploy surplus capital in high yielding markets. India presents a very compelling opportunity-- historically, Japanese investments in India have delivered strong outcomes. Much like the US and Europe have been for India, Japan and the Middle East now play a similar strategic role, with excess capital and long-term intent to invest,” said an industry insider.

 

Not just Japanese investors, India’s financial services space has seen a spate of deals this year, including SMBC’s investment in Yes Bank, NBD Emirates’ $3 billion investment in RBL Bank for 60 per cent stake, International Holding Company’s (IHC) $1 billion investment for over 42 per cent stake in Sammaan Capital, Warburg Pincus and Abu Dhabi Investment Authority’s (ADIA) $877 million investment in IDFC FIRST Bank, and Blackstone’s ₹6,196 crore investment for 9.99 per cent stake in Federal Bank. 

No major rejig?

• Corporate identity of Shriram Finance will be retained 
• Transaction may not trigger an open offer as stake acquisition will be done entirely through a primary issuance of shares
• Shriram Group currently holds a 24.98% stake in Shriram Finance