Power Finance Corporation and REC Limited have approved a merger that will create India’s largest government-backed power financing platform, potentially transforming sector finance and operational efficiency, pending regulatory and shareholder approvals.
Power Finance Corporation and REC Limited have cleared a merger proposal that would combine two of India’s biggest state-owned power financiers into a single company with a loan book of more than ₹11 lakh crore, according to statements and reports on the boards’ approvals.
The plan, approved by the boards of both companies, would see REC folded into Power Finance Corporation under Sections 230 to 232 of the Companies Act, 2013. The proposed share swap gives REC shareholders 88 fully paid-up PFC shares of ₹10 each for every 100 REC shares of the same face value, based on a valuation report and a record date to be fixed later by the two boards.
The scheme still needs a series of clearances before it can proceed. According to the company announcement, it depends on approval from shareholders and creditors, as well as the relevant regulatory and government authorities. It also hinges on the merged business retaining its status as a government company, with the Government of India continuing to hold majority voting rights and control, directly or indirectly. If completed, the deal would create a much larger financing platform for India’s power sector, with the scale to support lending and potentially improve operating efficiency.
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