Shriram Finance board to weigh stake sale to MUFG

Core Insights - MUFG is in advanced talks to acquire a 20% stake in Shriram Finance for approximately ₹23,200 crore ($2.6 billion), which would mark the largest strategic investment by a foreign lender in the Indian NBFC sector if completed [1][7] - Shriram Finance's stock has surged over 40% from ₹616 to ₹864 per share, leading to a potential valuation of over ₹40,000 crore for the 20% stake at current prices, making it possibly the largest deal in the Indian financial sector [2][7] - The investment by MUFG will be through primary issuance, differing from previous deals like that of SMBC, which involved secondary market transactions [5][6] Company Developments - Shriram Finance's board is set to meet to consider the equity stake sale to MUFG, with options for raising funds including rights issues and preferential allotments [7] - The deal represents heightened interest from Japanese financial services in Indian banks and shadow lenders, following SMBC's investment in Yes Bank earlier this year [5][7] - The promoters of Shriram Finance hold 25.39% of the company, primarily through Shriram Capital, which has a 17.85% stake [6][7] Industry Context - The Shriram Finance deal would be the largest foreign direct investment (FDI) in the Indian NBFC space to date, highlighting the growing foreign interest in this sector [5][7] - MUFG is open to increasing its stake in Shriram Finance over time, potentially leading to a controlling interest, which would require an open offer [6][7]