The boards of the government-owned companies, Power Finance Corporation (PFC) and REC Limited, have officially approved a merger plan. This mega merger will combine REC into PFC, creating India’s largest power sector financing company. The landmark deal unites two top state-run lenders to manage a massive combined loan book exceeding ₹11 lakh crore.
Under the approved plan, the share exchange ratio is fixed at 88:100. This means REC shareholders will receive 88 equity shares of PFC (worth ₹10 each) for every 100 equity shares they hold in REC. Once the merger is complete, the old REC shares will be cancelled.
The independent financial experts Ernst & Young and RBSA Valuation Advisors calculated this share deal based on the value of both companies.
Why This Merger Matters
The main goal of this merger is to build a massive financial foundation to support India’s power and energy projects. By joining forces, the new, giant company can borrow money from global and domestic markets at much lower interest rates. This pooled strength will help fund huge infrastructure projects, such as green energy networks, solar power plants, and modern electricity grids across the country.
Finance Minister Nirmala Sitharaman has already approved this merger plan. The companies are targeting 1 April 2027 as the official date for the merger to take effect. Before that, the deal needs final clearances from the National Company Law Tribunal (NCLT), the stock market regulator SEBI, and company creditors. The Government of India will continue to hold the majority of shares and control the combined company to keep it under public sector management.
