Japan’s MUFG Likely to Invest Over $4 Billion in Shriram Finance for 20% Stake
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 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 funds by way of rights issue, preferential allotment, qualified institutions placement, or any other permissible mode.
Separately, the lender clarified to the exchanges that since it is on a growth trajectory, it routinely explores opportunities 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 NBFCs, offering credit solutions for commercial vehicles, cars, scooters, and personal loans. Its assets under management (AUM) stood at ₹2.8 trillion as of September 2025.
Japanese financial groups have made sizeable investments in India’s financial services space this year. This began with Sumitomo Mitsui Banking Corporation (SMBC) of the Sumitomo Mitsui Financial Group (SMFG) acquiring over 24 per cent stake in Yes Bank for over $1.6 billion.
Additionally, Japan’s Mizuho Financial Group said it will acquire a controlling stake of over 60 per cent in Avendus Capital through its subsidiary Mizuho Securities, by buying out the stake held by KKR via Redpoint Investments, 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 to increase it to 78.3 per cent, for a total purchase price of ₹4,700 crore ($516 million).
According to Pratik Shah, Partner and Head – Financial Services, EY, bilateral relations between India and Japan are very strong.
“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 strategic role, with excess capital and long-term intent to invest,” said an industry insider.
Key takeaways from the proposed transaction:
No major rejig expected
Corporate identity of Shriram Finance will be retained
Transaction may not trigger an open offer as stake acquisition is via primary issuance
Shriram Group currently holds a 24.98% stake in Shriram Finance