New Delhi: The Boards of Directors of Power Finance Corporation Limited (PFC) and REC Limited (REC) have approved a Scheme of Merger under Sections 230–232 of the Companies Act, 2013, paving the way for the amalgamation of REC into PFC. Once completed, the merged entity will have an aggregate loan book of over ₹11 lakh crore, creating a significantly larger financing institution for India’s power sector.
The merger remains subject to statutory and regulatory approvals, including consent from shareholders and creditors of both companies, as well as approvals from relevant government and regulatory authorities. A key condition is that the merged entity must continue to qualify as a ‘Government Company’ under the Companies Act, 2013, with the Government of India retaining majority voting rights and control, directly or indirectly.
As per the approved scheme and joint valuation report, the share exchange ratio has been fixed at 88 equity shares of PFC (₹10 each, fully paid) for every 100 equity shares of REC (₹10 each, fully paid) held by REC shareholders as on a record date to be determined by the boards at a later stage.
Deloitte Touche Tohmatsu India LLP is acting as Transaction and Tax Advisor, while Cyril Amarchand Mangaldas is the Legal Advisor to both companies. Joint valuation reports were prepared by RBSA Valuation Advisors LLP (appointed by PFC) and Ernst & Young Merchant Banking Services LLP (appointed by REC). Fairness opinions on the valuation were provided by SBI Capital Markets (for PFC) and Nuvama Wealth Management (for REC).
