NEW DELHI: In a major consolidation move within the state-run power financing sector, the Board of Directors of Power Finance Corporation Ltd. (PFC) has formally approved the proposal to merge REC Limited (REC) into itself. The Maharatna central public sector enterprise has authorized its Chairman and Managing Director (CMD) to seek final approval from the President of India.
The corporate amalgamation will bring together two of India’s largest power sector non-banking financial companies (NBFCs), optimizing capital allocation and streamlining infrastructure financing across the country. REC has been a subsidiary of PFC since March 2019, when PFC acquired a controlling 52.63% stake from the government.
Key Decisions & Structural Highlights
The corporate action plan passed during the board meeting outlines several critical steps to execute the mega-merger:
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Presidential Sanction: The PFC CMD has been empowered to submit the formal application to the President of India, a mandatory step given the ownership structure of the state-run enterprises.
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Valuation & Share Swap: Independent valuers will be appointed shortly to determine the official share exchange ratio for retail and institutional shareholders.
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Sovereign Status Maintenance: The structural framework ensures the combined entity will strictly retain its status as a “Government Company.” If required, the Central Government will execute capital infusions or issue securities to maintain its majority stake.
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Asset Consolidation: Upon receiving the statutory nod, all assets, liabilities, and ongoing loan portfolios of REC will stand transferred to PFC. Subsequently, REC will be dissolved under Sections 230–232 of the Companies Act, 2013.
Trading Window Closure
Following the market-sensitive announcement, PFC has ordered an immediate closure of its trading window for equity shares and listed debt securities until further orders. The restriction applies strictly to designated persons and their immediate relatives to ensure compliance with SEBI insider trading regulations.
About the Power Financing Giants
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Power Finance Corporation (PFC): A Maharatna CPSE under the administrative control of the Ministry of Power, acting as the leading financial institution dedicated to funding power, renewable energy, and infrastructure projects in India.
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REC Limited: A premier public sector enterprise specialized in financing power generation, transmission, distribution, and rural electrification projects across the national grid ecosystem.
