Shriram Finance, the leading vehicle loan company, has sealed a landmark deal with Japan’s Mitsubishi UFJ Financial Group (MUFG), approving a Rs 40,000 crore capital infusion that ranks as the largest cross-border investment in India’s financial services sector. The fund raise, to be executed through a preferential allotment of equity shares, will see MUFG acquire a 20 percent stake in the non-bank lender on a fully diluted basis.
Shriram Finance is one of India’s largest non-banking financial companies (NBFCs), focused mainly on retail lending. It is part of the Chennai-based Shriram Group and was formed in 2022 through the merger of Shriram Transport Finance Company and Shriram City Union Finance. The merged entity brought together two strong franchises—commercial vehicle financing and retail credit—under a single platform.
The company disclosed the decision after a board meeting held on Friday. As part of the transaction, Shriram Finance will issue 47.11 crore fully paid-up equity shares at Rs 840.93 per share, including a premium of Rs 838.93. The deal values the investment at around $4.4 billion.
The board has also approved granting MUFG certain minority protection rights. These include the right to nominate up to two non-independent directors to the board and pre-emptive rights to maintain its proportional shareholding.
In addition to the equity investment, MUFG will pay a one-time non-compete and non-solicit fee of $200 million to Shriram Ownership Trust, the company’s major shareholder. This payment is subject to approval from Shriram Finance’s public shareholders.
The transaction will require shareholder approval as well as regulatory clearances from authorities including the Reserve Bank of India and the Competition Commission of India.
Shriram Finance said the deal would significantly strengthen its capital adequacy and balance sheet, while providing long-term growth capital. The partnership is also expected to help the company access lower-cost funding and improve its credit ratings over time.
The deal comes amid a surge in foreign interest in India’s financial sector, driven by strong economic growth and expanding credit demand. Japanese banks, in particular, have been actively seeking overseas investments as growth opportunities at home remain limited.