Shriram Finance shares rose sharply to close over 6% higher after Bloomberg reported that Japan-based Mitsubishi UFJ Financial Group Inc. is looking to eventually gain majority control of the non-banking financial company. The deal, if executed, would mark the largest foreign investment in India's financial sector. Mitsubishi UFJ currently has a 20% stake in Shriram Finance. The Nifty Financial Services index rose 1.5% for the day, driven by Shriram Finance.
Mitsubishi UFJ Financial Group Inc. is studying ways to eventually gain majority control of Shriram Finance Ltd., in a deal that would mark the largest foreign investment in India’s financial sector if it goes ahead, people familiar with the matter told Bloomberg.
On October 13, Shriram Finance shares closed 6.3% higher at Rs 988 apiece.
Japan’s largest bank is in the early stages of considering the idea of increasing its stake in Shriram to more than 50% from about 20% now, the people said, asking not to be named because the discussions are private. It may need to inject more than $10 billion into Shriram to gain control, according to the people, reported Bloomberg.
While MUFJ wants to work toward the ultimate goal of gaining control of the company, it hasn’t set a firm timeline for a potential deal, some of the people said. Deliberations are still at an early stage and details of the possible transaction could still change, according to the people.