This merger will result in the combined entity having an aggregate loan book of over ₹11 lakh crore. The merger will take place under Section 230 to 232, and other applicable provisions of the Companies Act, 2013.
What Are The Conditions For The REC, PFC Merger?
The scheme of merger is subject to receipt of all requisite approvals and consent required under applicable law, including approvals from respective shareholders and creditors, and other relevant regulatory and government authorities.
Post the merger, the combined entity will continue to operate as a Government company, with the Government continuing to retain majority voting rights and control.
At the end of the March quarter, the government had a 52.63% stake in REC, and 55.99% stake in PFC, based on the shareholding pattern uploaded on the BSE.
What Will REC Shareholders Get With The PFC Merger?
Shareholders of REC will be getting 88 shares of PFC, for every 100 shares that they own, as on the record date, which is yet to be determined.
At the end of the March quarter, Mutual Funds had a 9.02% stake in REC, led by Nippon India AMC (1.28%), ICICI Prudential MF (2.01%), and others. Life Insurance Corporation of India also had a 2.84% stake.
As many as 11.68 lakh small retail shareholders, or those with authorized share capital of up to ₹2 lakh, have a 10.21% stake in REC as of March 31 this year.
What Are The Benefits of The REC, PFC Merger?
As per the release uploaded by PFC to the exchanges, the merger will have multiple benefits, such as the combined entity emerging as the principal institution for implementing power sector reforms and flagship programs.
The combined entity will also have improved balance sheet strength, higher operational efficiencies, stronger capital base, and enable large-scale funding across the power sector value chain.
The merged entity will also act as a key financier of India’s energy transition and strategic infrastructure buildout.
Shares of REC had ended little changed last Thursday at ₹364.4. The stock has been flat this year, but is significantly below its record high of ₹654.
Shares of PFC had ended 0.8% lower last Thursday at ₹433.4. The stock has risen 20% so far this year but trades well below its peak levels of ₹580.
