MUMBAI: Japan’s Mitsubishi UFJ Financial Group (MUFG) is in talks to invest $4.5-5 billion for a 20% stake in Shriram Finance Ltd, multiple sources familiar with the matter said, in what could rank among the largest cross-border deals involving India this year.
“The deal is expected to become larger than earlier planned with about a $4.5-4.7 billion investment,” one of the people cited above said, adding that the Shriram Finance's board is expected to meet on Friday to discuss the exact structures. A second person added that it could touch $5 billion with the transaction valuing the overall company at $22-25 billion.
“The fundraise is expected to be a primary in nature with a fresh issuance of shares,” a third person familiar with the matter said.
Shriram Finance and MUFG did not immediately respond to Mint’s requests for a comment.
Shriram Finance informed the exchanges late on Tuesday that its board is scheduled to meet on Friday to consider a proposal to raise funds through a rights issue, preferential allotment, qualified institutional placement, or any other permissible mode. The transaction is expected to be carried out through a fresh issue of equity shares and/or other eligible securities, the company said in the regulatory filing.
The potential deal comes in a year marked by some of the largest strategic transactions involving India. Recent big-ticket deals include Emirates NBD’s acquisition of a majority stake in RBL Bank in a $3 billion transaction, Tata Motors’ $4.5 billion acquisition of Iveco, Capgemini’s $3.3 billion buyout of WNS Global Services, and Schneider Electric’s $6.4 billion deal involving Lauritz Knudsen Electrical & Automation.
Global private equity firm Blackstone acquired a 9.9% stake in Federal Bank for $705 million, while Abu Dhabi-based IHC, through its affiliate Avenir Investment RSC Ltd, bought a 43.46% stake in Samman Capital for $1 billion.
The Indo-Japan corridor, in particular, has been active in financial services. Notable transactions include Mizuho’s majority investment in Avendus, and Sumitomo Mitsui Banking Corp’s acquisition of a stake in Yes Bank earlier this year. MUFG’s proposed investment in Shriram Finance would add to that momentum.
Shriram Finance is India’s second-largest non-banking finance company. It had assets under management of about ₹2.81 trillion as of September and operates more than 3,000 branches across the country, according to its website. The company’s shares are up 45.34% year-to-date, closing at ₹848.4 apiece on Tuesday.
In FY25, Shriram Finance reported total income of ₹41,859.47 crore, compared with ₹34,997.61 crore a year earlier. Net profit rose to ₹9,761 crore from ₹7,190.48 crore in FY24.
The promoters own 25.39% of Shriram Finance, largely through group holding company Shriram Capital, which holds a 17.85% stake. The remaining shareholding is held by public and institutional investors, including the Government of Singapore, which owns 5.41%, and the Monetary Authority of Singapore, which holds 1.2%.
Shriram Capital is owned by the Shriram Ownership Trust and South Africa’s Sanlam, and also holds a stake in the group’s insurance joint venture with Sanlam, according to various reports.