NEW DELHI: While the world watches the final merger of PFC and REC today, the journey began with a historic ₹14,500 crore transaction. In a strategic move directed by the Cabinet Committee on Economic Affairs (CCEA), Power Finance Corporation (PFC) officially acquired the Government of India’s entire 52.63% equity shareholding in REC Limited.
The Deal That Created a "Holding-Subsidiary" Giant
The acquisition, which was completed in March 2019, transformed PFC into the promoter and holding company of REC. This wasn't just a financial transaction; it was a tactical consolidation of India’s two largest power-lending NBFCs under one umbrella.
Key Highlights of the Acquisition:
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The Price Tag: PFC paid approximately ₹139.50 per share for 103.94 crore equity shares.
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The Ownership Shift: Management control shifted from the Government of India directly to PFC, while both remained under the administrative control of the Ministry of Power.
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Combined Revenue: At the time of the deal, the combined annual revenue of both Navratna companies was estimated at a staggering ₹50,000 crore.
Strategic Rationale: Why the Government Sold
The primary goal of this acquisition was to create economies of scale. By bringing REC under PFC, the government aimed to:
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Lower Borrowing Costs: A larger, combined balance sheet allows for better bargaining power in international debt markets.
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Synergy in Lending: It reduced competition between two government entities and streamlined funding for generation, transmission, and distribution projects.
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Unified Resolution: It allowed for a more coordinated approach to resolving "stressed assets" (bad loans) in the power sector.
Fast Forward to 2026: From Subsidiary to Merger
For years, PFC and REC operated as separate legal entities with a parent-subsidiary relationship. However, as announced in the Union Budget 2026-27, the government is now taking the "final step" by merging them into a single, unified financial behemoth.