Once completed, the merger will strengthen India’s ability to finance large-scale power and renewable energy projects through a unified, globally competitive institution.
The boards of Power Finance Corp. Ltd (PFC) and REC Ltd (REC) have approved a merger scheme that will combine India’s two leading government-backed power sector financiers into a single entity with a consolidated loan book exceeding ₹11 trillion ($132 billion).
In a joint statement issued early Monday, the companies said, “The Board of Directors of Power Finance Corporation Ltd (PFC) and REC Ltd (REC) have approved the Scheme of Merger for the merger of REC (Transferor Company) into PFC (Transferee Company) and their respective shareholders and creditors, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013.”
The merger will create one of India’s largest financing institutions dedicated to the power and energy sector, combining the strengths of both Navratna public sector enterprises. The merged entity will continue to qualify as a government company under the Companies Act, 2013, with the Government of India retaining majority voting rights and control.
Under the approved scheme and valuation report, shareholders of REC will receive 88 equity shares of PFC (₹10 each, fully paid up) for every 100 equity shares of REC (₹10 each, fully paid up) held on a record date to be determined later by the boards of both companies.
The merger remains subject to statutory, regulatory, and shareholder approvals, including consent from creditors and relevant government authorities.
Advisors to the transaction include Deloitte Touche Tohmatsu India (transaction and tax), Cyril Amarchand Mangaldas (legal), RBSA Valuation Advisors (valuation for PFC), and Ernst & Young Merchant Banking Services (valuation for REC). SBI Capital Markets and Nuvama Wealth Management have provided fairness opinions on the joint valuation reports.
Once completed, the merger will consolidate financial resources, streamline lending operations, and strengthen India’s capacity to fund large-scale power and renewable energy projects through a unified, globally competitive power financing institution.