Shriram Finance Limited has taken a significant strategic step by approving a ₹39,617 crore capital raise from MUFG Bank Ltd., marking one of the largest equity investments in India’s non-banking financial company (NBFC) sector. The decision, taken at the Board meeting held on December 19, 2025, reflects strong international confidence in the long-term growth potential, governance standards and business model of Shriram Finance.

The approved transaction involves the issuance of 47.11 crore fully paid-up equity shares of face value ₹2 each at an issue price of ₹840.93 per share, through a preferential issue on a private placement basis. Upon completion, MUFG Bank, one of Japan’s largest and most respected global banking institutions, will hold a 20% minority stake in Shriram Finance on a fully diluted basis and will be classified as a public shareholder.

This landmark development positions Shriram Finance Limited news firmly in focus within the Indian financial services sector. The infusion of long-term capital is expected to significantly strengthen the company’s balance sheet, enhance lending capacity and support sustainable expansion across its core lending segments.

The preferential issue has been structured in compliance with SEBI ICDR Regulations, the Companies Act, 2013, and applicable listing regulations. The floor price and issue price of ₹840.93 per share have been determined strictly in accordance with regulatory guidelines, ensuring transparency and fairness for all stakeholders.

The proposed fund raise remains subject to shareholder approval, as well as regulatory clearances from authorities including the Reserve Bank of India (RBI) and the Competition Commission of India (CCI). Shriram Finance has also announced that an Extra-Ordinary General Meeting (EGM) will be held on January 14, 2026, to seek shareholder consent for the preferential issue and related matters.

Beyond the capital infusion, the Board also approved the execution of a comprehensive Investment Agreement and a Cooperation Memorandum of Understanding with MUFG Bank. These agreements lay down the framework for governance, collaboration and mutual engagement while ensuring that there is no change in control of Shriram Finance as a result of the transaction.

As part of investor protection and governance arrangements, the Board approved granting special minority rights to MUFG Bank, subject to shareholder approval under Regulation 31B of the Listing Regulations. These rights include the ability to nominate up to two non-independent directors on the Board, depending on MUFG’s shareholding levels, as well as pre-emptive rights to maintain its proportional stake in future equity issuances.

Importantly, these special rights are structured with clear thresholds and safeguards. If MUFG’s shareholding falls below 10% on a fully diluted basis, all such rights will automatically lapse. This ensures a balance between investor participation and the long-standing governance framework of Shriram Finance.

Another key aspect of the Board’s decisions relates to the approval of a USD 200 million non-compete and non-solicit fee, payable by MUFG Bank to Shriram Ownership Trust, a promoter entity. This payment, subject to approval of public shareholders, is intended to prevent any potential conflict of interest and protect the long-term interests of the company and its shareholders.

The non-compete arrangement places restrictions on the promoter group from engaging in competing lending or credit businesses, thereby reinforcing strategic alignment between the company, its promoters and the new investor. The Board noted that such an arrangement enhances confidence for long-term investors and contributes to stability in the company’s operating environment.

The Shriram Finance board meeting outcome also included approval to convene the EGM through video conferencing or other audio-visual means, in line with regulatory norms. Shareholders will vote on three key matters: the preferential issue to MUFG Bank, approval of the non-compete payment, and the grant of special rights to the investor.

In a parallel development, the Board took note of an in-principle intent by Shriram Capital Private Limited, the promoter entity, to explore possible restructuring of its lending and credit business. This restructuring is currently at a preliminary and exploratory stage, with no final decision or structure approved.

The potential restructuring may involve a demerger or reorganisation of Shriram Capital’s lending operations from its other business interests. While this development has attracted market attention, the company has clearly stated that there is no immediate impact on Shriram Finance Limited, and any future steps will be subject to detailed evaluation, regulatory approvals and stakeholder consultation.

From a strategic perspective, the MUFG Bank investment India represents a strong endorsement of Shriram Finance’s business fundamentals. The company has a diversified lending portfolio, deep rural and semi-urban reach, and a long track record of serving underbanked and emerging customer segments.

The capital infusion is expected to support growth in priority lending areas, improve capital adequacy and enable Shriram Finance to invest in technology, digital transformation and risk management capabilities. In an increasingly competitive NBFC landscape, access to patient global capital is seen as a key differentiator.

The presence of MUFG Bank also opens avenues for strategic cooperation, knowledge sharing and exploration of mutually beneficial opportunities, particularly in areas such as structured finance, risk analytics and international best practices. While the Cooperation MoU is non-binding, it reflects intent to deepen engagement beyond a purely financial investment.

Market participants view the transaction as a positive signal for the broader NBFC investment news India space. It underscores renewed global investor confidence in India’s financial sector, particularly in well-governed, scale-driven institutions with strong compliance and risk frameworks.

The preferential issue also ensures that existing shareholders benefit from a stronger capital base without any dilution at discounted pricing, as the issue price is aligned with regulatory norms. This approach reinforces Shriram Finance’s commitment to shareholder value and transparency.

As India’s credit demand continues to grow across retail, MSME and commercial segments, well-capitalised NBFCs are expected to play a critical role in supporting economic expansion. Shriram Finance’s strengthened capital position places it in a favourable position to capture emerging opportunities.

In conclusion, the approval of the Shriram Finance fund raise from MUFG Bank marks a transformational moment in the company’s growth journey. With ₹39,617 crore of fresh equity capital, enhanced governance structures and strong global partnership, Shriram Finance is well-positioned to pursue sustainable growth while maintaining financial discipline.

The development also reinforces India’s attractiveness as a destination for large-scale, long-term foreign investment in financial services. As regulatory approvals and shareholder processes move forward, this transaction is expected to set a new benchmark for strategic investments in India’s NBFC sector and strengthen Shriram Finance’s standing as a leading financial services institution.

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