Japan’s Mitsubishi UFJ Financial Group (MUFG) is nearing completion of a deal to acquire a 20% stake in Indian non-bank financial company Shriram Finance, with an estimated value exceeding 500 billion yen ($3.22 billion), as reported by Bloomberg News on Monday. Bloomberg mentioned that MUFG aims to announce this acquisition within the week, citing multiple familiar sources. This potential deal prompted Shriram Finance’s shares to jump as much as 2.7%, reaching a daily high.
The final purchase price will depend on Shriram Finance‘s stock performance and could surpass 500 billion yen, according to the report. MUFG has declined to comment on the matter, and Shriram Finance has not yet responded to requests for comment from Reuters.
Japanese banks, including MUFG, have been seeking international investment opportunities for years due to declining domestic markets and sustained periods of very low interest rates. For example, Sumitomo Mitsui Banking Corporation owns a 24.2% stake in the Indian private bank Yes Bank.
The Indian business newspaper Economic Times was the first to report MUFG’s interest in acquiring a 20% stake in Shriram Finance in October. However, in the following month, Shriram Finance clarified to Indian stock exchanges that claims of a stake sale were “factually incorrect.” Despite this clarification, the company’s shares have surged by 41% since October began.
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In its latest quarterly report, Shriram Finance exceeded profit forecasts, driven by steady demand for loans for used trucks, underscoring its resilience and growth potential amid market fluctuations.
