Mitsubishi UFJ Financial Group is in advanced talks to take a 20% stake in Shriram Finance Ltd. for about $2.6 billion, the Economic Times reports, citing unidentified people familiar with the matter.
Both sides have signed an exclusivity agreement on negotiations, according to the publication. MUFG’s investment will be through a primary issuance via a preferential allotment and will not entail any secondary sale of shares, the Economic Times said.
Any deal by Japan’s biggest lender would follow moves by its rivals to expand in India, where banks have focused on as a growth market. Sumitomo Mitsui Financial Group Inc.’s banking unit agreed in May to buy a 20% stake in Indian lender Yes Bank Ltd. for about $1.58 billion, marking the biggest foreign investment in the country’s banking sector.
MUFG may look to take a higher stake in Shriram Finance, even a controlling interest, over time, according to the Economic Times. Both lenders didn’t respond to queries by the publication.