(Bloomberg) — Mitsubishi UFJ Financial Group Inc. is bullish on India, where it’s actively looking for acquisition targets that will help boost its presence in the world’s most populous nation.
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The goal for Japan’s largest lender is to push up its buyouts and investment in India, and increase annual returns from them to 20% in 10 years, Yasushi Itagaki, head of MUFG’s global commercial banking business, said in an interview.
Given India’s ambition to become a manufacturing powerhouse, its energy demand is likely to rise and there are already many renewable projects, creating opportunities for MUFG as a finance provider, Itagaki said. “It has good economic fundamentals and political stability. The financial sector grows in such markets.”
MUFG is competing with a slew of global lenders to expand in the world’s fastest-growing major economy. Domestic rival Mizuho Financial Group Inc., for one, is investing in a financial services startup, while Sumitomo Mitsui Financial Group Inc. is considering how to become more of a full-fledged banking player in the country despite regulatory hurdles.
But while India has a standout economic growth rate, with gross domestic product rising 6.7% from a year earlier in the April-June quarter, that still represents a slowdown from earlier periods. And in the financial sector there’s been an increase in retail-loan defaults due to aggressive lending practices, causing stresses that risk spilling over to the share market and the overall economy.
Itagaki joined a bank in 1987 that through mergers ultimately became MUFG, and he rose through the ranks in overseas businesses. He said he was the head of a handful of bankers who handled secret negotiations to invest $9 billion in Morgan Stanley in 2008 during the global financial crisis.
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MUFG already has a significant presence in India. It’s ranked the first in India’s foreign currency loans league table so far this year, beating other regional powerhouses like HSBC Holdings Plc and DBS Group Holdings Ltd., according to Bloomberg-compiled data.
Like its Wall Street rivals, MUFG has a major back-office business in India that provides support services for the banking group’s global operations. The unit was set up in 2020 and has staff of about 1,500 that Itagaki seeks to double in about three years.
