MUFG negotiating to acquire a $2.6 billion share in Shriram Finance

MUFG in Talks to Acquire Stake in Sriram Finance

On October 1, Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial institution, is reportedly in advanced discussions to purchase a 20% stake in India’s Sriram Finance for approximately Rs 23.2 billion (around $2.6 billion), according to the Economic Times.

This potential acquisition is part of a larger trend where Japanese financial firms are looking to invest in Indian companies, especially following a significant move by rival Mitui Financial Group in acquiring a 24.2% stake in Mumbai’s Yes Bank.

With a contracting domestic market and persistent lowinterest rates in Japan, MUFG has been actively seeking investment opportunities abroad. In fact, MUFG already holds a substantial 23.62% stake in Wall Street’s Morgan Stanley.

While MUFG hasn’t commented on the reported deal, Sriram Finance has dismissed inquiries about potential share sales as speculative, stating it lacks knowledge regarding such transactions. The firm mentioned that any new investment would be through primary issuances rather than secondary sales, and both companies have entered into exclusive negotiation agreements.

Nonetheless, there are indications that higher investments and interests, especially from Tokyo-based financial leaders, could face pushback.

Sriram Finance recently reported an 8.8% growth in standalone profits, amounting to Rs 215.6 crore for the quarter ending June 30. Following the news of MUFG’s interest, Sriram Finance’s stocks experienced a rise of 3.5% on the National Stock Exchange of India.