THEBUSINESSBYTES BUREAU
NEW DELHI, JUNE 30, 2026
In a transformative move for India's power sector and
financial ecosystem, the Boards of Directors of Power Finance Corporation (PFC)
and REC Limited (REC) on Tuesday approved the Scheme of Merger of REC into PFC,
paving the way for the creation of one of the country's largest infrastructure
financing institutions with a combined loan book exceeding ₹11
lakh crore.
The proposed merger, approved under Sections 230 to 232 and
other applicable provisions of the Companies Act, 2013, aims to consolidate the
strengths of the two leading state-owned non-banking financial companies
(NBFCs) that have played a pivotal role in financing India's power and
infrastructure sectors.
The merger remains subject to several statutory and
regulatory approvals, including consent from the shareholders and creditors of
both companies, as well as clearance from the relevant regulatory and
government authorities. A key condition of the scheme is that 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,
directly or indirectly.
As per the approved valuation report, shareholders of REC
will receive 88 fully paid-up equity shares of PFC (face value ₹10
each) for every 100 fully paid-up equity shares of REC (face value ₹10 each).
The share exchange will be executed based on a record date that will be determined by the Boards of
PFC and REC at a later stage.
The merger is expected to create a stronger and more
diversified financing institution with enhanced capital strength, greater
operational efficiencies and improved capacity to support India's rapidly
expanding power, renewable energy and infrastructure sectors. Industry
observers believe the consolidation will improve scale, optimise resource
allocation and reinforce the government's vision of building globally
competitive public sector financial institutions.
To facilitate the transaction, Deloitte Touche Tohmatsu India
LLP has been appointed as the Transaction and Tax Advisor, while Cyril
Amarchand Mangaldas is serving as the Legal Advisor to both companies.
For valuation, RBSA Valuation Advisors LLP was appointed by PFC and Ernst & Young Merchant Banking Services LLP by REC to jointly prepare the valuation reports. SBI Capital Markets and Nuvama Wealth Management have provided the respective fairness opinions on the joint valuation reports for PFC and REC.
The proposed merger marks one of the most significant consolidations in India's public sector financial space and is expected to strengthen long-term financing support for the country's growing energy and infrastructure ambitions.
