Japan’s Mitsubishi UFJ Financial Group, Inc. (MUFG) To Buy 20% Share In India’s Shriram Finance For $4.4 Billion

Core Viewpoint - Mitsubishi UFJ Financial Group, Inc. (MUFG) is making a significant investment of $4.4 billion to acquire a 20% stake in India's Shriram Finance, marking the largest cross-border investment in India's financial market [1][2]. Group 1: Investment Details - The $4.4 billion investment surpasses MUFG's previous investments in India, which totaled over $1.7 billion, making this the company's largest commitment in the country [2]. - The deal requires regulatory approvals and includes minority protection rights for MUFG, such as the ability to recommend up to two non-independent directors to the board [2]. - MUFG will pay a $200 million non-compete and non-solicit fee to Shriram Ownership Trust, pending shareholder approval [2]. Group 2: Strategic Implications - The investment follows recent clarifications from India's central bank regarding regulations for banks owning stakes in non-banking financing firms, allowing MUFG the potential to increase its stake above 50% in the future [3]. - Shriram Finance anticipates that this investment will enhance its liability base and credit ratings, strengthen its balance sheet, and improve its capital adequacy ratio, providing long-term growth capital [3]. - As of the end of September, Shriram Finance reported assets under management of 2.8 trillion rupees ($31 billion), and its shares rose by 3.7% following the announcement of the investment [3].