Shriram Finance has approved a fund raise of Rs 39,617.98 crore from Japan’s MUFG Bank through a preferential issue of equity shares. The investment will give MUFG a 20% stake in the company on a fully diluted basis. The share price of Shriram Finance surged nearly 5% in Friday’s trade.
This deal would result in the biggest FDI flow in the financial services space.
The company released the details after its board meeting today. The fund raise will be carried out through the issuance of 47.11 crore fully paid-up equity shares at a price of Rs 840.93 per share, which includes a premium of Rs 838.93 per share.
MUFG to be classified as public shareholder
Post the transaction, MUFG will be classified as a public shareholder. The company clarified that the investment will not result in any change in control of Shriram Finance.
Board approved payment of a one-time $200 million non-compete and non-solicit fee by MUFG to Shriram Ownership Trust, subject to public shareholder approval.
The transaction is subject to shareholder approval and regulatory clearances, including approvals from the Reserve Bank of India and the Competition Commission of India.
Share price of Shriram Finance
Share price of Shriram Finance surged nearly 2.82% in Friday’s trade. on the YTD basis the company has gained 52.9% so far this year.