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Shriram Finance Limited (SFL) has entered into a definitive agreement with MUFG Bank Ltd., Japan's largest bank and a part of Mitsubishi UFJ Financial Group (MUFG), for an investment of Rs 39,618 crore, the company informed stock exchanges in a regulatory filing on Friday.
According to the filing, the Board of Directors of Shriram Finance approved the proposal at its meeting held on Friday. Under the agreement, MUFG Bank will invest Rs 39,618 crore, equivalent to around USD 4.4 billion, in Shriram Finance through a preferential issuance of equity shares. This investment will result in MUFG Bank acquiring a 20.0 per cent stake in Shriram Finance on a fully diluted basis. It stated "The Board of Directors of Shriram Finance Limited ("SFL") at their meeting held today approved entering into definitive agreements with MUFG Bank Ltd. ( "MUFG Bank" ) for an investment of Rs 39,618 crore". The company said the proposed minority investment by MUFG Bank is subject to shareholder approval, regulatory clearances and other customary closing conditions. Once completed, this transaction will mark one of the largest foreign investments in India's non-banking financial sector. Shriram Finance stated that the collaboration brings together its strong domestic franchise and extensive distribution network with MUFG Bank's global expertise and financial strength. The fund infusion is expected to significantly enhance Shriram Finance's capital adequacy, strengthen its balance sheet, and provide long-term growth capital to support its future expansion plans. The company further noted that the partnership is expected to unlock synergies across multiple areas, including technology, innovation and customer engagement. These synergies are likely to help drive sustainable growth and improve operational efficiency over the long term. In addition, the investment is expected to improve access to low-cost liabilities for Shriram Finance and could potentially strengthen its credit ratings. Shriram Finance also said that the collaboration will help align its governance and operational practices with global best standards, supported by MUFG Bank's international experience and established risk management frameworks. MUFG Bank is a wholly owned subsidiary of Mitsubishi UFJ Financial Group, one of the world's leading financial groups. MUFG has a long-standing presence in India, with a legacy of over 130 years. The group has invested around USD 1.7 billion in India so far and has contributed to job creation for approximately 5,000 people in the country. The investment in Shriram Finance will be MUFG's largest investment in India to date, the company said. (ANI)
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