PFC gets board approval for merger of REC with itself

Power Finance Corporation on Friday said that its board of directors gave in-principle approval for the merger of the non-banking finance company REC with itself.

PFC will continue to remain as a 'government company' after the merger.

The board approval for the merger of PFC and REC came after an announcement made in this regard by Union Finance Minister Nirmala Sitharaman in her Union Budget speech on Sunday.

Sitharaman had announced the restructuring of the two companies. “In order to achieve scale and improve efficiency in the Public Sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation,” the FM said.

PFC had acquired the government's 52.63% holding in REC for ₹14,500 crore in March 2019, pursuant to 'In Principle' approval of the Cabinet Committee on Economic Affairs (CCEA). Accordingly, REC has been operating as a subsidiary company of state-owned PFC.

As of December-end, the government had a 56% stake in PFC, exchange data showed.

PFC had a loan book of ₹11.51 lakh crore, while REC had a loan book of ₹5.82 lakh crore, as of December-end.

For the nine months to December, more than three-fourths of PFC's loans were for conventional power generation, as well as transmission and distribution sectors.

Company details

Power Finance Corporation, operates as a public entity under the Ministry of Power and is recognized as a prominent Non-Banking Financial Corporation in India.

REC has developed and broadened its financing scope to encompass the entire Power-Infrastructure sector, which includes Generation, Transmission, Distribution, Renewable Energy, and emerging technologies such as Electric Vehicles, Battery Storage, and Green Hydrogen.

Recently, REC has also ventured into the Non-Power Infrastructure sector, which covers Roads & Highways, Metro Rail, Airports, Ports, IT Communication, and more.

On Friday, PFC share price ended 1.01% higher at ₹419.20 apiece on the BSE, valuing the company at ₹1.38 lakh crore. REC share price closed 2.51% lower at ₹372.50 apiece, with a market capitalization of ₹98,087.59 crore.