Boards approve PFC-REC merger, with 88 PFC shares for 100 REC shares

New Delhi: The boards of Power Finance Corporation Ltd. (PFC) and REC Ltd. have approved a merger scheme that will combine the two state-owned financiers into a larger government-backed lending entity with an aggregate loan book of over Rs 11 lakh crore.

Under the proposed terms, REC shareholders will receive 88 equity shares of PFC for every 100 equity shares of REC, both with a face value of Rs 10 each, fully paid up. The share exchange ratio is subject to the approval of shareholders, creditors, regulatory authorities and other required consents under the Companies Act, 2013.

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The merged entity will continue to qualify as a government company, with the Government of India retaining majority voting rights and control, directly or indirectly. The transaction marks a major consolidation move in India’s public-sector financial space, aimed at creating a larger institution with deeper lending capacity.

According to a press release sent by PFC, the merger is being structured with support from multiple advisors and valuation firms. Deloitte Touche Tohmatsu India LLP is serving as transaction and tax advisor, while Cyril Amarchand Mangaldas is the legal advisor to both companies.

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RBSA Valuation Advisors LLP has been appointed by PFC and Ernst & Young Merchant Banking Services LLP by REC for joint valuation reports. SBI Capital Markets has been appointed by PFC and Nuvama Wealth Management by REC to provide fairness opinions on the valuation.

The merger, once completed, would bring together two of the country’s most important power-sector financiers under a single balance sheet, strengthening the government’s ability to channel long-term funding into infrastructure and energy projects.

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