Shriram Finance to sell 20% stake to Japanese firm MUFG Bank for Rs 39,618 cr

New Delhi: Financial Services firm Shriram Finance on Friday said its board has approved the sale of a 20 per cent stake to the Japan-based MUFG Bank for an investment of Rs 39,618 crore (about USD 4.4 billion) through a preferential issuance of equity shares.

This deal would result in the biggest FDI flow in the financial services space.

This investment will result in MUFG Bank acquiring a 20 per cent stake on a fully diluted basis, Shriram Finance Ltd (SFL) said in a regulatory filing.

The signing of definitive agreements with MUFG Bank reinforces confidence in India's lending and financial services sector fundamentals and future growth potential, it said, adding that it will also strengthen SFL's capital base and accelerate its growth trajectory.

The proposed investment by MUFG Bank is subject to shareholder approval, regulatory clearances and customary closing conditions, it said.

"This collaboration combines SFL's established domestic franchise and extensive distribution network with MUFG Bank's global expertise and financial strength. The fund infusion will significantly enhance SFL's capital adequacy, strengthen its balance sheet, and provide long-term growth capital," it said.

This partnership is further expected to unlock synergies in technology, innovation, and customer engagement, driving sustainable growth, it said.

It will also improve access to low-cost liabilities and potentially strengthen SFL's credit ratings while aligning governance and operational practices with global best standards, it added.