India has established itself as one of the fastest growing economies in the world and has consistently won the trust of global investors. As a result, many multinational companies are shifting their business from China to India. In this connection, Japan’s largest banking group, Mitsubishi UFJ Financial Group (MUFG), is planning to make a major investment of about ₹40,000 crore in Shriram Finance, a major player in the Indian banking and financial services sector. This investment will give MUFG about 20 percent stake in India’s second largest non-banking financial company (NBFC). This deal not only reflects the growing confidence of foreign investors in the Indian financial market, but also reflects Japan’s long-term investment approach.
increasing japanese investment
According to an Economic Times report, MUFG is looking for sustainable returns beyond its domestic Japanese market and the fast-growing Indian market. The investment is part of a similar strategy as Japanese financial institutions have become more active in India recently – from Mizuho’s acquisition of Avendus to Daiwa Securities Group’s investment in Ambit.
Similarly, Mitsui Banking Corporation’s acquisition of 20 per cent stake in Yes Bank for $1.6 billion in May also indicates the same trend. This is MUFG’s second major entry into India’s NBFC sector, having earlier tried to invest $2 billion in HDB Financial Services. The $338.5 million investment in DMI Financial Private, increasing its stake to 20 per cent, reflects the group’s strategy to work with local partners in India.
A big deal in India’s NBFC sector
The proposed deal worth about $4.45 billion for a 20 percent stake in Shriram Finance is being considered one of the largest deals in the history of India’s NBFC sector. This will not only further strengthen the Indian financial sector at the global level, but can also open the way for larger acquisitions and strategic partnerships in the future.
