Japan's MUFG to buy 20% stake in India's Shriram Finance for $4.4b

Japan's MUFG will acquire a 20% stake in Indian non-bank lender Shriram Finance Ltd (SFL) for $4.4 billion, the companies said on Friday, the largest cross-border investment in India's financial sector.

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The deal marks MUFG’s biggest commitment in India, surpassing its $1.7 billion investments in previous years.

“There's a chance we may push our stake above 50%. The regulations allow for acquiring over 50%. So naturally it’s “a possibility at an appropriate time,” said Masashige Nakazono, executive officer at MUFG Bank and head of the global commercial banking planning division.

India’s financial sector has witnessed nearly $15 billion worth of deals so far this year, more than double the $6.5 billion recorded in 2024, according to Dealogic data.

MUFG's move follows Emirates NBD Bank's $3 billion acquisition of a 60% stake in Indian private lender RBL Bank in November, the largest investment in the sector by a foreign bank until now.

For years, Japan's biggest banks have sought overseas targets in the face of a shrinking domestic market and rock-bottom interest rates. India, with its fast-growing economy, has become a popular destination.

In a similar move, Sumitomo Mitsui Banking Corporation, a unit of Sumitomo Mitsui Financial Group, bought a 24.2% stake in Indian lender Yes Bank, starting with a 20% stake for $1.6 billion in May.

SFL, owned 24.9% by the Shriram Group, stated that the transaction is subject to regulatory approval.