Mega PSU Merger: REC to Merge with PFC; Combined Loan Book to Exceed Rs 11 Lakh Crore; Check Details

On Monday, Indian benchmark indices traded higher, with the Nifty 50 gaining 33.45 points, or 0.14 per cent, to trade at 24,089.45. Amid the positive market sentiment, REC share price jumped 0.47 per cent to Rs 366.35, while Power Finance Corporation (PFC) shares declined 1.54 per cent to Rs 426.00, after the Boards of both Maharatna public sector companies approved a merger scheme under which REC will be amalgamated into PFC, subject to the required statutory and regulatory approvals.

REC and PFC Boards Approve Merger Scheme

REC Limited informed the stock exchanges that the Boards of Directors of both REC Limited and Power Finance Corporation Limited (PFC) have approved a Scheme of Merger, under which REC will be amalgamated into PFC, subject to the necessary statutory, regulatory, shareholder and creditor approvals. According to the company, the proposed merger is expected to create one of India's largest power sector financing institutions with a combined loan book of more than Rs 11 lakh crore, enhancing its ability to finance power, renewable energy and infrastructure projects across the country.

Share Swap Ratio and Approval Process

Under the proposed merger, REC shareholders will receive 88 fully paid-up equity shares of PFC of Rs 10 each for every 100 fully paid-up equity shares of REC of Rs 10 each, implying a share swap ratio of 88:100. The shares will be allotted to eligible REC shareholders as on the record date, which will be determined by the Boards of REC and PFC at a later stage.

The merger remains subject to approvals from shareholders, creditors and the relevant regulatory authorities before becoming effective. Upon completion, the merged entity is expected to continue as a Government-controlled company, with the Government of India retaining majority ownership and control.
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About the Companies

REC Limited is a Maharatna Central Public Sector Enterprise under the Ministry of Power and is one of India's leading infrastructure financing companies. It primarily provides loans for power generation, transmission, distribution, renewable energy and other infrastructure projects, playing a key role in financing the country's energy sector.

Power Finance Corporation Limited (PFC) is also a Maharatna CPSE under the Ministry of Power and serves as one of India's largest power sector financiers. The company provides financial assistance across the entire power value chain, including conventional and renewable energy projects, transmission, distribution, infrastructure and emerging energy transition initiatives. Together, the merged entity is expected to become one of the country's largest infrastructure financing institutions.

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Disclaimer: The article is for informational purposes only and not investment advice.