Mitsubishi UFJ Financial Group (MUFG) is negotiating to acquire approximately 20% of HDB Financial Services, an affiliate of India’s HDFC Bank. The deal, estimated between 200 billion yen to 300 billion yen ($1.3 billion to $1.96 billion), underscores MUFG’s strategy to tap into the burgeoning retail financing demand in India. HDB Financial Services caters to individual consumers and small to midsize businesses, boasting a loan portfolio exceeding 1 trillion yen.
This potential investment aligns with MUFG’s recent strategy in India, following a 19.1 billion rupee ($229 million) investment in DMI Finance in 2023. Unlike DMI, the proposed stake in HDB would grant MUFG significant influence, potentially classifying HDB as an equity-method affiliate.
The investment reflects a broader trend among Japanese financial giants focusing on nonbank financial companies in India, a move facilitated by regulatory constraints on foreign investments in Indian banks. This strategy is mirrored by Sumitomo Mitsui Financial Group and Mizuho Financial Group, both expanding their footprints in the Indian nonbank sector.
The deal, however, faces uncertainties regarding the final acquisition price, with both parties still in discussions. A successful closure would mark MUFG’s first large-scale investment in the region, significantly bolstering its portfolio and strategic positioning in one of Asia’s fastest-growing economies.
