Kolkata: Though a very advanced economy, Japan is plagued by an ageing population. That’s why Japanese big financial institutions are chasing the Indian
financial market with piles of cash. The purchase of stake in Shriram Finance by Mitsubishi UFJ Financial Group’s (MUFG) for a whopping Rs 40,000 crore is just the latest in a trend that could grow more pronounced in future.
While the big investment will give MUFG a 20% stake in Shriram Finance, it will gain access to a fast growing credit market in India which is driven by a demographic advantage, rising income, changing lifestyles, growing urbanisation and fast rising consumption, a lot of which is taking place in the premium category, and which in turn means a lot of relatively big ticket loans even at the retail level. The growth and long-term returns that Japanese institutions are seeking is what the Indian market precisely offers.
Mizuho Securities targets Avendus
MUFG was perhaps following Avendus, which is an institutional financial services firm of India. It was announced this week that Redpoint Investments, which is an investment arm of KKR, will sell its stake in Avendus to Japanese firm Mizuho Securities Company. Significantly, Mizuho Securities Company is a group company of Mizuho Financial Group, which is a banking conglomerate of Japan that has about $1.9-$2 trillion in total assets. It offers a wide variety of financial services from banking to securities.
Agencies reported that Mizuho Securities will buy a majority stake in Avendus from US investment firm KKR for up to $523 million. It was also reported that Mizuho Securities will pick up a stake which could be between 61.6% and 78.3% of Avendus.
Sumitomo Mitsui stake in Yes Bank
The first big purchase of a stake in an Indian financial institution by a Japanese bank was Sumitomo Mitsui Banking Corporation’s buying of stake in Yes Bank’s. This banking giant acquired 25% stake in Yes Bank. It was a strategic move which, on the one hand, boosted Yes Bank’s capital, and on the other, leveraged Sumitomo Mitsui Bank’s expertise.
