Mumbai | 01-Oct-2025, 09:45 IST
Japan’s Mitsubishi UFJ Financial Group (MUFG) is in advanced talks to acquire about 20% stake in Shriram Finance for roughly ₹23,200 crore, according to reports. If finalised, the transaction would mark one of the largest foreign direct investments (FDI) in India’s non-banking finance sector (NBFCs).
Deal Structure
The potential investment is expected to be routed through a primary share issuance, meaning Shriram Finance would raise fresh equity capital from MUFG rather than existing shareholders selling their stakes. The exclusivity agreement between the parties suggests negotiations have moved into an advanced stage.
People familiar with the talks noted that MUFG may not stop at 20%. If it chooses to increase its stake later, it could be required to make an open offer to minority shareholders under Indian takeover rules.
Shriram Finance at a Glance
Shriram Finance, one of India’s largest NBFCs, has a diversified portfolio that spans vehicle loans, MSME finance, gold loans, and personal lending. Its assets under management (AUM) stood at about ₹2.72 lakh crore as of June 30, 2025.
In the quarter ended June, the company posted a standalone net profit of ₹2,156 crore, reflecting an 8.8% rise year-on-year. The group has a wide distribution network, particularly in semi-urban and rural markets, making it an attractive play for long-term investors.
| Metric | Detail |
|---|---|
| Proposed Deal Size | ₹23,200 crore |
| Stake on Offer | ~20% |
| Shriram AUM | ₹2.72 lakh crore |
| Profit Growth | +8.8% YoY (Q1FY26) |
Market Reaction
Shares of Shriram Finance (NSE: SHRIRAMFIN) were trading around ₹628.40 at early-morning on Wednesday. Market participants view the potential stake sale as a positive signal for sector valuations, given the size and pedigree of MUFG.
Analysts also pointed out that fresh equity infusion could strengthen Shriram’s balance sheet and support credit growth in retail and commercial lending.
Risks & Outlook
While the deal could transform Shriram Finance’s capital base, there are a few hurdles ahead:
- Regulatory approvals will be required for a large foreign investment in an NBFC.
- Valuation negotiations may take longer, given Shriram’s growth outlook and market conditions.
- Open offer obligations could arise if MUFG decides to increase its stake beyond current plans.
If completed, this would not only underscore MUFG’s growing interest in India’s financial sector but also set a benchmark for large-scale global investments in NBFCs. For Shriram, the deal could provide growth capital to expand lending operations at a time when demand for retail credit remains strong.
