The alliance follows recent reforms by India’s central bank permitting domestic lenders to finance corporate acquisitions, funding up to 75% of the deal value for listed and unlisted firms.
These new rules, effective April 1, also allow funding acquisitions up to 20% of a bank’s eligible capital base, providing Indian banks with fresh credit growth opportunities.
The alliance will combine SBI’s domestic reach and market leadership in India and MUFG’s global network and cross-border structuring expertise to support Japanese corporates expanding in India as well as Indian enterprises pursuing international growth, including entry into Japan and other global markets, SBI and MUFG said in a joint statement.
The partnership will also focus on M&A advisory, trade finance, and retail banking solutions to support inbound and outbound transactions linked to Japanese firms.
Additionally, the two aim to introduce Indian mid-corporates and micro, small, and medium enterprises (MSMEs) to Japanese corporate clients, and identify financing opportunities.
SBI has sought partnerships with Japanese banks for M&A financing, according to a report from The Economic Times last month.MUFG has underwritten major M&A deals in India, positioning itself as a key player in the segment. These include Tata Motors‘ 3.8 billion euro buyout of Iveco Group and Schneider Electric SE’s 5.5 billion euro stake purchase of its Indian joint venture from Temasek Holdings Pte.
The Japanese financial services group is also in the process of acquiring a 20% stake in Indian non-bank lender Shriram Finance, marking one of the largest foreign investments in India’s financial sector.