Mitsubishi UFJ Financial Group is investing 396.2 billion Indian rupees ($4.4 billion) in Indian shadow lender Shriram Finance for a minority stake, becoming the latest Japanese firm expanding in a rapidly growing banking market.
MUFG, Japan’s largest lender, will own 20% of Mumbai-based Shriram, both companies said in statements on Friday. As part of the deal that values the Indian lender at around 2 trillion rupees, MUFG will receive 471 million new shares at 840.9 rupees each, Shriram said in an exchange filing. This marks a 3.3% discount to Thursday’s closing price. The transaction is set to be the single biggest foreign investment in India’s financial services sector.
Japan’s biggest banks are scaling up investments in Indian financial firms, betting on the world’s fastest-growing major economy, as they contend with a shrinking domestic market and relatively low interest rates at home. Sumitomo Mitsui Financial Group became the biggest shareholder of Yes Bank in a landmark deal earlier this year.
