REC Limited to Merge into Power Finance Corporation Limited as part of Strategic Consolidation

REC Limited to Merge into Power Finance Corporation Limited as part of Strategic Consolidation​

Power Finance Corporation Limited (PFC) has approved a significant scheme wherein REC Limited will be absorbed by PFC, creating a consolidated entity aimed at driving power sector reform and financing infrastructure growth in India. The board decision solidified the merger between the two public sector entities.

The Scheme involves the merger by absorption of REC into PFC, effective from an Appointed Date to be specified later. Under the terms of the scheme, REC will be dissolved without being wound up. Eligible shareholders of REC will receive Consideration Shares as defined in the scheme.

The agreed share exchange ratio stipulates that for every 100 equity shares of REC, which are fully paid up at INR 10/- each, shareholders will receive 88 equity shares of PFC, also fully paid up at INR 10/- each.

Financial Standing and Scale​

The merger involves two major financing institutions. The financial details for both companies in FY2025-26 demonstrate their scale within the sector.


The merger is underpinned by the combined strength of both companies. PFC holds a 52.63% stake in REC on a fully diluted basis. The combined entity will retain its status as a 'Government Company' under the Companies Act, 2013.

Strategic Rationale for Merger​

The integration of REC into PFC is intended to benefit the power sector significantly and aligns with national development goals.

Key anticipated benefits resulting from this merger include:

• Sectoral Leadership: The merged entity will emerge as the government's principal institution for implementing power sector reforms and flagship programs, maximizing the impact of national policy.
• Financial Enhancement: On a consolidated basis, the combined company is expected to benefit from improved balance sheet strength, stronger capital base, and higher operational efficiencies, facilitating large-scale funding across the power value chain.
• Energy Transition: The merged entity will serve as a key financier for India's energy transition and strategic infrastructure buildout, supporting areas such as generation, transmission, renewable energy, green hydrogen, and grid modernization.

Transaction Details​

The merger is supported by multiple advisors specializing in transactions and valuation. Deloitte Touche Tohmatsu India LLP is acting as the Transaction and Tax Advisor, while Cyril Amarchand Mangaldas serves as the Legal Advisor to both PFC and REC.

For the joint valuation report, RBSA Valuation Advisors LLP was appointed by PFC, and Ernst & Young Merchant Banking Services LLP was appointed by REC. Fairness opinions on the joint valuation reports were provided by SBl Capital Markets (appointed by PFC) and Nuvama Wealth Management (appointed by REC).

PFC Stock Price Movement​

Power Finance Corporation Limited shares slipped by 0.85% on Thursday, settling at ₹432.65 as traders processed the movement in their equity. The stock traded a volume of 8.67 million shares during the session.