Shriram Finance poised for massive re-rating with MUFG entry after $4-bn fresh infusion

Shriram Finance is on track for a significant boost, potentially leading to a re-evaluation of its market position, following a planned $4 billion investment from Mitsubishi UFJ Financial Group (MUFG). Sources have confirmed that the Japanese financial giant is poised to acquire a 20% stake in Shriram Finance through a fresh capital infusion. An official announcement is anticipated around December 19.

The deal is expected to value Shriram Finance shares at approximately Rs 880 each, aligning with the current market price. Overall, the transaction could be valued between $3.5 billion and $4 billion. This investment would place Shriram Finance's total valuation near its existing market capitalization of roughly $10 billion.

The acquisition is planned through a combination of preferential share allocation and warrants. Whether an open offer will be required will depend on MUFG's eventual stake, and would only be triggered at a later stage. MUFG is also expected to gain at least two seats on Shriram Finance's board through nominated directors.

Furthermore, MUFG is likely to secure a first right of refusal (RoFR) in any future capital raising activities. This provision would give them the option to increase their stake gradually, potentially reaching up to 51% over time.

This transaction is particularly noteworthy as it signals a resurgence of large-scale investor confidence in the Shriram Group, especially after Piramal's exit in 2023. The deal is projected to be the largest financial services transaction of 2025, surpassing Emirates NBD’s investment in RBL Bank and SMBC’s acquisition of Yes Bank.

The investment coincides with a period of management transition at Shriram Finance. Parag Sharma recently took over as Managing Director and Chief Financial Officer, succeeding Y S Chakravarthi, who served as chief executive for a long period. In addition, Subhashri Shriram, the MD & CEO of Shriram Capital (the promoter entity), is expected to join the board of Shriram Finance.

The company's stock has performed strongly recently, with shares of Shriram Finance climbing 38% in the past three months. This significantly outperforms the BSE Sensex, which saw gains of approximately 3% during the same timeframe. Year-to-date in 2025, the stock has risen by about 46%, establishing it as one of the year's top performers.