MUFG likely to sweeten $1.7 billion offer for HDB Finance

has been working on the purchase of a 20% stake in Ltd., Bloomberg News on April 12. A potential premium on such an investment is limited given MUFG would only be buying a minority stake in the business that offers personal, gold and auto loans, the people said.

Still, MUFG sees the prospective deal as a way to form a long-term partnership with HDBF and build its presence in India, the people said. Final details under discussion include MUFG’s influence on HDBF’s strategy, the people said.

Talks are ongoing and could face delays or not lead to a deal, the people said. Other bidders could also emerge, they said.

A representative for MUFG declined to comment, while a spokesperson for HDFC didn’t immediately respond to queries.

HDFC’s shares have dropped 11% this year, valuing the company at about $138 billion. MUFG is up 28% in that time and has a market value of $123 billion.

HDFC, India’s biggest lender, owns a 95% stake in HDBF and has been seeking ways to sell part of it, including a possible initial public offering. At an earnings briefing Saturday, HDFC Chief Financial Officer Srinivasan Vaidyanathan said HDBF needs to list by September 2025. He didn’t comment on the MUFG talks, beyond saying any decision would be a financial one and all opportunities were being explored.

India has become one of the busiest markets for deals, particularly as business in China dries up. MUFG has a branch in Gujarat International Finance Tec-City, a flagship project of Prime Minister Narendra Modi, along with a fund targeting middle- to late-stage Indian startups. It also has a stake in fintech company DMI Finance Pvt.