Japan’s Mitsubishi UFJ Financial Group (MUFG) is investing USD 4.4 bn to acquire a 20% minority stake in India’s shadow lender Shriram Finance, according to a press release (pdf).

Key details: The acquisition, which values Shriram at approximately INR 2 tn (USD 22.2 bn), involves the issuance of 471 mn new shares at a 3.3% discount to the stock’s recent closing price, Bloomberg reports. This transaction is set to be the single largest foreign investment in India’s financial services sector, ahead of Emirates NBD’s USD 3 bn majority stake acquisition of Mumbai-based RBL Bank.

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Why it matters: Japanese investors are scaling up their India exposure, increasingly overlapping with Gulf sovereign wealth funds that have been building positions in India’s banking and consumer finance sector.

Other SWF bets in 2025: Abu Dhabi’s International Holding Company (IHC) picked up a 41.2% stake in housing finance firm Samaan Capital at USD 1 bn. Abu Dhabi Investment Authority also picked a 7% stake in IDFC First Bank for USD 310 mn.

The pattern: The MUFG-Shriram transaction caps a strong year for Indian dealmaking. Total M&A volume in India is projected to exceed USD 60 bn in 2025, with the financial services sector alone accounting for roughly USD 10 bn of that flow. MUFG is the latest Japanese financial group to scale up in India:

  • Sumitomo Mitsui recently became the largest shareholder in Yes Bank after snapping up a 20% stake for USD 1.3 bn.
  • Mizuho recently acquired a USD 524 mn majority stake in Avendus Capital.

What’s next: Expect the momentum to carry into 2026 as overseas institutions continue to look for avenues for consolidation in India. For Gulf investors, the challenge will be competing with the sheer scale and low cost of Japanese capital, which is increasingly being deployed in India.

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