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New Delhi: In one of the largest consolidations within India’s infrastructure financing sector, state owned non-banking financial companies (NBFCs) Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) Limited have approved a composite merger plan, with both submitting regulatory filings to the bourses in this regard. This landmark consolidation will unify India’s two primary power infrastructure financing firms, with an aggregate loan book exceeding ₹11 lakh crore.
“The Board of Directors of Power Finance Corporation Limited (PFC) and REC Limited (REC) today approved the Scheme of Merger (Scheme) for 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 press release by REC said.
After the approvals from the respective government agencies come through, REC’s shareholders will get 88 equity shares of PFC for every 100 shares held, while the government will continue to be a majority shareholder in the combined entity.
This consolidation is aimed at unifying a diverse asset pool, given how India is now aiming to build almost 500 GW of non fossil fuel capacity involving trillions of rupees in capital. With this consolidation. Finance Minister Nirmala Sitharaman spoke about consolidating REC and PFC in her budget speech earlier this year to boost efficiency and scale in India’s growing power sector.
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