MUFG Invests in Shriram Finance, a Leading Non-Banking Financial Company in India
MUFG Bank, a consolidated subsidiary of Mitsubishi UFJ Financial Group, has entered into an investment agreement with Shriram Finance, a leading non-banking financial company (NBFC) in India, and its major shareholders, Shriram Ownership Trust and Shriram Capital, to subscribe to a preferential allotment of 20% in equity shares in Shriram Finance.
The total investment amount is expected to be approximately INR 396.2 billion (JPY 682.3 billion), and the completion of this investment is subject to approvals from relevant regulatory authorities. Upon completion of the Investment, Shriram Finance will become an equity method affiliate of both MUFG and MUFG Bank, and MUFG plans to appoint two directors to the board of Shriram Finance.
In addition, MUFG Bank has entered into a Memorandum of Understanding regarding a strategic partnership with Shriram Finance, aiming to accelerate the growth of Shriram Finance through collaboration between the two companies.
MUFG considers Asia as its second home market, and among Asian countries, India is one of the most important markets globally, expected to become the world’s third largest economy by 2030 due to factors such as rapid population growth. Since the opening of the Mumbai branch of the former Yokohama Specie Bank (a predecessor of The Bank of Tokyo) in 1894, MUFG now covers all of India through six locations, providing full banking services mainly for corporate clients, including deposits, loans, and domestic and foreign exchange transactions. In 2022, MUFG launched the MUFG Ganesha Fund to support the growth of startups, and in 2023, invested in DMI Finance, a non-banking provider of digital financial services in India, to further strengthen the retail digital lending space.
Shriram Finance is the second largest retail NBFC in India in terms of loan balance, with a strong brand and credibility, an experienced and capable management team, a sound business foundation, and high profitability. With approximately 3,200 branches mainly in rural and semi-urban areas, Shriram Finance has a nationwide network across India and focuses on commercial and passenger vehicle loans, with a particularly strong presence in the used vehicle loan market.
This Investment is a strategic step for MUFG to establish a business foundation in India’s MSME and retail markets and capture the country’s growing domestic demand. By providing growth capital to Shriram Finance, MUFG will help drive expansion in segments such as new commercial vehicles and MSME, while enhancing funding capacity and profitability through improved creditworthiness.
Through the Proposed Alliance, by combining MUFG’s broad client network and know-how built through managing partner banks with Shriram Finance’s strong local presence and long standing customer relationships, MUFG aims to support the development of India’s road transport infrastructure and logistics value chain, as well as contribute to advancing financial inclusion which is an important policy agenda in India.
Norbert Gehrke
