MUFG, State Bank of India sign pact to boost cross border deals

[MUMBAI] Japan’s Mitsubishi UFJ Financial Group (MUFG) and State Bank of India (SBI) formed a partnership to explore merger and acquisition opportunities in the country, a month after the central bank allowed local lenders to finance such deals.

The two banking giants signed an agreement to advance collaboration and strengthen the India-Japan economic corridor, MUFG said on Wednesday (Mar 11). In addition to mergers, the partnership will focus on sectors including aviation and real estate finance.

The move comes as Japanese banks go to greater lengths for access to deals in India’s US$4 trillion economy. The Reserve Bank of India has recently taken steps to allow local lenders to finance as much as 75 per cent of the acquisition value in corporate takeovers, and SBI chairman Challa Sreenivasulu Setty previously said that the bank was in talks with Japanese lenders to fund acquisitions.

“Our collaboration with MUFG enhances our ability to provide comprehensive financing and advisory solutions to clients operating across both jurisdictions,” Kishore Kumar Poludasu, deputy managing director of SBI’s international banking group, said.

MUFG, Japan’s largest lender, in December said that it was acquiring a minority stake in Indian shadow lender Shriram Finance. SBI recently launched a US$500 million syndicated gender loan facility with a greenshoe option to promote women’s economic empowerment. The facility, arranged by MUFG, is the largest gender-themed loan by a financial institution globally, it said. BLOOMBERG