REC to Merge into PFC; Mergered Entity Expected to Hold Over INR 11 Lakh Crore Loan Book
The Board of Directors of Power Finance Corporation Limited (PFC) and REC Limited approved a Scheme of Merger on June 28, 2026. The merger involves the transfer of REC (the Transferor Company) into PFC (the Transferee Company), along with their respective shareholders and creditors.This consolidation is set to create a major financing entity with an aggregate loan book exceeding INR 11 lakh crore.
The Scheme remains conditional upon obtaining all requisite approvals and consents under applicable law, including approvals from the shareholders and creditors of both companies, as well as necessary governmental authorities. The merged entity must also qualify as a 'Government Company' under the Companies Act, 2013, with the Government of India retaining majority voting rights and control in the combined organization (directly or indirectly).
Merger Details and Valuation Ratio
The Scheme stipulates a specific Share Exchange Ratio for the proposed merger. The valuation report details are as follows:
| Detail | Value |
|---|---|
| Share Exchange Ratio | 88 equity shares of PFC for every 100 equity shares of REC |
| Valuation Basis (REC) | INR 10/- each fully paid up |
| Valuation Basis (PFC) | INR 10/- each fully paid up |
This ratio is intended to be issued to the shareholders of REC as of a record date, which will be determined by the Boards of PFC and REC at a future date.
Advisors Appointed
The companies engaged specialized advisors for this transaction:
- Transaction and Tax Advisor: Deloitte Touche Tohmatsu India LLP
- Legal Advisor (PFC & REC): Cyril Amarchand Mangaldas
- Joint Valuation Reports Providers: RBSA Valuation Advisors LLP (appointed by PFC) and Ernst & Young Merchant Banking Services LLP (appointed by REC)
- Fairness Opinions Providers: SBI Capital Markets (appointed by PFC) and Nuvama Wealth Management (appointed by REC)
RECLTD Stock Price Movement
On Thursday, REC Limited shares edged higher, gaining 0.21% to settle at ₹364.65. The stock traded in a volume of 6.47 million shares during the session.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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