Japan's leading lender MUFG Bank on Wednesday acquired 20 percent stake in Shriram Finance Limited (SFL) for Rs 39,618 crore. This investment is the largest investment between two countries in the financial sector of India so far. Shriram Finance said in a statement that the company's board of directors, in its meeting held on Wednesday, has approved allotment of equity shares to MUFG Bank through 'Preferential Issue'. Preferential issue is a process in which the company issues shares only to a few selected investors.
According to the statement, MUFG Bank has purchased about 47.11 crore shares at the rate of Rs 840.93 per share. This deal has been completed after receiving all the necessary regulatory and statutory approvals including that of the Competition Commission of India. In December, Mitsubishi UFJ Financial Group Inc. (MUFG) had entered into an agreement to purchase a minority stake in the non-banking lender, which has now been completed. After the allotment of shares, MUFG Bank will hold 20 per cent equity stake in SFL on a fully diluted basis, the bank said. The bank further said that this investment will further strengthen MUFG's presence in India and enable SFL to leverage MUFG's global expertise and capabilities to accelerate its long-term growth strategy. The bank said that the completion of this transaction is an important milestone for both MUFG and SFL. This will strengthen their long-term strategic cooperation.
Umesh Revankar, Executive Vice Chairman, SFL, said this collaboration will open new avenues of innovation, increase access to diverse and affordable funding, and help adopt global best practices in risk management and governance. He said that this investment will greatly strengthen our capital base. As we move forward, our focus will remain on delivering sustainable and responsible growth, while creating long-term value for all stakeholders. Junichi Hanzawa, President and Group CEO of MUFG, said that SFL is a leading financial institution in India with a strong business foundation, and great potential for growth in the MSME and retail sectors.
