The merger of REC into PFC will create a financing entity with an aggregate loan book of over Rs 11 lakh crore, according to a statement.
The Share Exchange Ratio for the Proposed Merger of REC into PFC shall be 88 equity shares of PFC for every 100 equity shares of REC.
Deloitte Touche Tohmatsu India LLP is acting as Transaction and Tax Advisor and Cyril Amarchand Mangaldas as the Legal Advisor, to both PFC and REC. Further, RBSA Valuation Advisors LLP was appointed by PFC and Ernst & Young Merchant Banking Services LLP was appointed by REC, for providing joint valuation reports. SBI Capital Markets was appointed by PFC and Nuvama Wealth Management was appointed by REC, for providing their respective fairness opinions on the joint valuation reports.
The merger plans for the two public sector NBFCs was announced in the Union budget.
“The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption. 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,” Union Finance Minister Nirmala Sitharaman had said in her budget speech.
Pursuant to ‘In Principle’ approval of Cabinet Committee on Economic Affairs (CCEA), PFC had acquired 52.63 per cent of the government’s holding in REC. Accordingly, PFC and REC are operating as holding and subsidiary companies.