MUFG said to near deal for stake in India’s Shriram

[TOKYO] Mitsubishi UFJ Financial Group is nearing a deal to buy a minority stake in India’s Shriram Finance, according to people familiar with the matter, the latest foreign bank seeking to build a presence in the world’s most populous country.

MUFG may invest more than US$3.2 billion to buy a stake of around 20 per cent, the people said, asking not to be identified because the deliberations are private. Talks are advanced and an agreement may be reached as soon as this week, the people said, adding that details such as the price and stake size could still change.

Shriram’s shares climbed as much as 2.7 per cent before paring some of the gains. The stock has risen almost 50 per cent this year, giving the Mumbai-based financial services firm a market value of roughly US$18 billion.

Negotiations are ongoing and may face delays or even fall apart, the people added. A representative for MUFG declined to comment, while Shriram didn’t immediately respond to a request seeking comment.

Shriram operates businesses across urban and rural areas, focusing on loans for commercial vehicles, tractors and passenger cars. It also lends to small and medium-sized enterprises.

Japan’s largest banks are investing in local financial institutions in India, betting on the country’s growth. Sumitomo Mitsui Financial Group became the biggest shareholder of Yes Bank in a landmark deal earlier this year. It’s now seeking to boost lending and add staff in the nation, having deployed almost US$5 billion.

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The Economic Times had reported MUFG’s interest in buying a stake in Shriram in October. BLOOMBERG