A quiet set of negotiations may soon culminate in one of the most consequential cross-border financial deals involving India this year. Japan’s Mitsubishi UFJ Financial Group (MUFG), one of the world’s largest banking groups, is in advanced talks to invest between $4.5 billion and $5 billion for a 20% stake in Shriram Finance Ltd. If completed, the transaction would not only value Shriram Finance at an estimated $22–25 billion, but also underscore the deepening strategic ties between Indian financial institutions and Japanese capital.
A Deal That’s Grown Bigger Than Planned
What began as a more modest proposal has steadily expanded in scale. According to people familiar with the discussions, the investment size has been revised upward to around $4.5–4.7 billion, with the possibility of touching $5 billion, depending on the final structure. Shriram Finance’s board is expected to deliberate on the proposal shortly, weighing the precise mechanics of the transaction.
Crucially, the proposed fundraise is expected to be primary in nature, involving a fresh issuance of shares rather than secondary stake sales. This means new capital would flow directly into the company, strengthening its balance sheet and supporting future growth rather than merely reshuffling existing ownership.
While both MUFG and Shriram Finance have refrained from public comment, regulatory disclosures offer clues. Shriram Finance has informed stock exchanges that its board will consider various fundraising routes—ranging from a rights issue and preferential allotment to a qualified institutional placement or other permissible modes—through a fresh issue of equity or eligible securities.
Part of a Banner Year for Strategic Transactions
The timing of MUFG’s interest is notable. 2025 has already been a blockbuster year for strategic and cross-border deals involving India, particularly in banking, manufacturing, and technology-enabled services. Among the standout transactions are Emirates NBD’s $3 billion acquisition of a majority stake in RBL Bank, 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.
Financial services, in particular, have seen sustained global interest. Blackstone’s $705 million investment in Federal Bank and Abu Dhabi-based IHC’s $1 billion acquisition of a controlling stake in Samman Capital highlight the appetite for Indian financial assets. Against this backdrop, MUFG’s potential entry into Shriram Finance stands out for both its scale and strategic significance.
The Indo-Japan Financial Corridor Gains Momentum
The proposed investment also reinforces the growing Indo-Japan corridor in financial services. Over the past year, Japanese financial institutions have steadily expanded their footprint in India. Mizuho’s majority investment in Avendus and Sumitomo Mitsui Banking Corporation’s stake acquisition in Yes Bank are emblematic of this trend.
MUFG’s interest in Shriram Finance would add further momentum, signaling confidence not just in a single company, but in India’s broader non-banking financial ecosystem. For Japanese institutions facing low growth and compressed margins at home, India’s expanding credit markets and underpenetrated financial services sector present a compelling long-term opportunity.
Shriram Finance: Scale, Performance, and Market Confidence
At the center of this potential deal is Shriram Finance’s formidable scale and performance. As India’s second-largest non-banking finance company, it manages assets under management of approximately ₹2.81 trillion and operates a vast network of over 3,000 branches nationwide.
The market has rewarded this performance. The company’s shares are up 45.34% year-to-date, closing at ₹848.4 recently. Financially, Shriram Finance has delivered robust growth: in FY25, total income rose to ₹41,859.47 crore, up from ₹34,997.61 crore the previous year, while net profit climbed to ₹9,761 crore from ₹7,190.48 crore in FY24.
Its ownership structure reflects a mix of strong promoter backing and global institutional confidence. Promoters hold 25.39%, largely through Shriram Capital, while prominent global institutions—including the Government of Singapore and the Monetary Authority of Singapore—feature among its shareholders.
What This Could Mean Going Forward
If finalized, MUFG’s investment would mark more than a capital infusion. It would represent a strategic partnership between a global banking heavyweight and one of India’s most influential non-banking financiers. Such a tie-up could bring not just financial muscle, but also global expertise, governance insights, and cross-border collaboration opportunities.
Takeaways
The proposed MUFG–Shriram Finance deal sits at the intersection of global capital flows, India’s financial sector growth, and the strengthening Indo-Japan economic relationship. Whether it closes at $4.5 billion or reaches the $5 billion mark, its significance is clear: India’s financial services story continues to attract the world’s biggest institutions—and the bets are only getting larger.
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Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.