India-Japan Finance Synergy: MUFG’s $4.4B Investment Powers Shriram Finance Expansion

Updated: December 19, 2025 12:30

Shriram Finance Ltd has approved a $4.4 billion investment from MUFG Bank via preferential equity issuance at ₹840.93 per share. MUFG will acquire a 20% stake, gain board representation, and special rights. The deal strengthens Shriram’s capital base, governance, and growth prospects, marking a milestone in India’s NBFC sector

In a landmark move for India’s financial services sector, Shriram Finance Ltd (SHMF.NS) has approved a fundraise of up to $4.4 billion through a preferential issuance of equity shares to MUFG Bank, Japan’s largest financial institution. The deal positions MUFG as a 20% stakeholder in Shriram Finance, underscoring global confidence in India’s NBFC (non-banking financial company) sector.

The preferential allotment will be executed at a floor price of ₹840.93 per share, reflecting strong valuation support. Alongside the equity infusion, Shriram Finance has also approved a $200 million payment towards non-compete and non-solicitation obligations to the Shriram Ownership Trust, ensuring smooth governance and operational clarity.

Key Highlights

Investment Size: MUFG Bank to invest $4.4 billion via preferential equity issuance.
Stake Acquisition: MUFG to acquire a 20% stake in Shriram Finance.
Governance Rights: MUFG will gain the right to nominate up to two non-independent directors on Shriram’s board.
Pre-emptive Rights: Investor granted rights to subscribe to pro-rata shareholding in future issuances.
Special Rights: Subject to regulatory approvals, MUFG will enjoy enhanced investor protections and participation rights.
Strategic Impact: The deal strengthens Shriram Finance’s capital base, enabling expansion in retail lending, vehicle finance, and SME credit.
Sector Context: The partnership highlights rising foreign interest in India’s NBFCs, driven by strong credit demand and regulatory reforms.

Why It Matters

This investment marks one of the largest foreign capital infusions in India’s NBFC space, bolstering Shriram Finance’s growth trajectory while giving MUFG a significant foothold in India’s retail finance market. The collaboration is expected to accelerate lending capacity, improve governance, and enhance shareholder value.

Sources: Economic Times, Business Standard, Moneycontrol, Bloomberg

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