In one of the largest foreign investments into India's non-banking financial sector, Japan's banking behemoth Mitsubishi UFJ Financial Group (MUFG) is set to make a monumental bet. The global financial giant is in advanced discussions to invest between $4.5 billion and $5 billion to acquire a 20% stake in Shriram Finance, India's second-largest non-banking finance company (NBFC).
The Structure of the Mega-Deal
According to multiple sources familiar with the negotiations, the transaction's scale has expanded beyond initial plans. One source indicated the investment is now expected to be in the range of $4.5 to $4.7 billion, while a second person noted it could reach the $5 billion mark. This investment would value Shriram Finance as a whole at an estimated $22 to $25 billion.
The capital raise is planned to be primary in nature, meaning it will involve a fresh issuance of shares by Shriram Finance. This injects new capital directly into the company for growth, rather than being a simple sale of existing shares. The company's board is scheduled to meet on Friday, December 19, 2025, to discuss the final structure, which may involve a rights issue, preferential allotment, or a qualified institutions placement (QIP).
A Strategic Move in a Growing Trend
This potential deal is part of a significant wave of strategic global investments targeting India's financial services landscape. MUFG's move follows other recent high-profile transactions, including Japanese peer Mizuho's majority investment in Avendus and Emirates NBD's controlling stake purchase in RBL Bank in a $3 billion deal. MUFG itself has been eyeing opportunities in India, with reported interest in Yes Bank earlier.
The trend isn't limited to strategic banks. Global private equity major Blackstone acquired a 9.9% stake in Federal Bank for $705 million, and Abu Dhabi's International Holding Company (IHC) invested $1 billion for a 43.46% stake in Samman Capital.
Shriram Finance: A Financial Powerhouse
The target of this massive investment, Shriram Finance, is a dominant player in the Indian credit market. As of September 2025, the company commanded a massive ₹2.81 trillion in assets under management (AUM). Its extensive network spans over 3,000 branches across the country, serving a vast customer base.
The company's financial performance has been robust. In FY25, it reported a total income of ₹41,859.47 crore, a significant jump from ₹34,997.61 crore in FY24. Its net profit also expanded impressively to ₹9,761.00 crore from ₹7,190.48 crore the previous year.
Market confidence in the company is evident. Year-to-date, Shriram Finance's shares have surged 45.34%, closing at ₹848.4 apiece on Tuesday, December 16, 2025. The current promoter group holds a 25.39% stake, primarily through Shriram Capital (17.85%). Other significant shareholders include the Government of Singapore (5.41%) and the Monetary Authority of Singapore (1.2%).
If finalized, the MUFG-Shriram Finance deal will stand as a landmark transaction, underscoring the intense global investor appetite for well-managed, scalable financial institutions in India's high-growth economy. It represents a powerful vote of confidence in the Indian NBFC sector's long-term prospects.
