Mitsubishi UFJ Financial Group (MUFG), Japan’s largest mega bank with close to $3 trillion in assets, last week placed its biggest bet in India: It doubled an existing investment with a further commitment of ₹4,712 crore on DMI Finance. Masakazu Osawa, Asia Pacific CEO for the bank, tells Joel Rebello the group has only started its investment journey in India and would increase exposure in the economy tipped to be the world’s third biggest soon. Edited excerpts:
You doubled down on your investment in DMI Finance last week. What is the strategy for investments in India?
MUFG Bank focused on the large corporate business here in Asia, outside Japan. In 2013, we made a decision to take more risks outside Japan in Asia as a so-called second mother market for us, which is the neighbourhood from Japan. So we started investing in some of the commercial banks in Asia, including Krungsri Bank in Thailand, and Bank Danamon in Indonesia, which are now subsidiary banks in those countries, and Security Bank in the Philippines, and VietinBank in Vietnam, which are affiliates with 20% stake in those countries. We expanded our client coverage, to more local corporate, and even in some cases, SMEs in those countries, especially in Thailand and Indonesia.Additionally, we decided to have more exposure and stake in consumer finance or the startup area starting from 2017-18, and that’s why we invested in Grab Singapore, back in 2020. I believe India is really a strategic focus, because you have excellent, digital financial service platform here. We believe there’s a lot of critical factors with which the startups can grow exponentially, in years to come. We set up the Ganesha Fund in 2022, when I was the chief digital transformation officer based in Tokyo. I am hoping that the investments will further be ramping up in this fiscal year. DMI is pretty much a unicorn now and since the Ganesha fund only have the $300 million investment limit, the MUFG Bank itself is investing in DMI, including the additional investment this time.
What is the role MUFG foresees in India? Are you going to be a lender or an investor in the long term?
For the last 70 years, our corporate banking business has been the centre of our strategies consistently and we would wish to place our banking functions in the centre of our strategy. But we are keen to strengthen our competitive edge by leveraging our GIFT City branch expertise. We also have a growing capital market business, together with Morgan Stanley, with which we have a 20% plus stake.
MUFG has bought stakes in high-growth Asia. What about India? Is there a possibility that you will look at some kind of opportunity?
Yes, yes. Of course, we, in principle, are open to any opportunities we might have here in India, but basically, based on the laws and regulations here in India, we are not allowed to acquire the full-fledged bank, so it may not be that easy, and of course, there could be some room for negotiation with the regulators. Our bank in Indonesia is also a listed bank. Since 2013 we have tried to expand our client coverage from large corporate to more local corporates. We are quite open to any opportunities.
