PFC-REC merger approved: What happens to REC shares, swap ratio and shareholders now?

Power Finance Corporation (PFC) and REC Ltd on Monday approved their proposed merger. Under the approved scheme, REC shareholders will receive 88 equity shares of PFC for every 100 equity shares of REC held.

The boards of state-run Power Finance Corporation (PFC) and REC Ltd on Monday approved their proposed merger, paving the way for the creation of a power sector financing giant with a combined loan book of over Rs 11 lakh crore.

The merger, subject to statutory and regulatory approvals, will consolidate the two state-owned non-banking finance companies into a single balance sheet."The board of directors of Power Finance Corporation Limited (PFC) and REC Limited (REC) approved the Scheme of Merger (Scheme) for merger of REC (Transferor Company) into PFC (Transferee Company) and their respective shareholders and creditors, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013," the companies said in a statement, PTI quoted.

Share swap ratio fixed at 88:100

Under the approved scheme, REC shareholders will receive 88 equity shares of PFC for every 100 equity shares of REC held.Pursuant to the scheme and valuation report, "the share exchange ratio for the proposed merger of REC into PFC shall be 88 equity shares of PFC of Rs 10 each fully paid up for every 100 equity shares of REC of Rs 10 each fully paid up," the companies said.

Record date yet to be announced

The record date for determining eligible shareholders has not yet been announced.

Only REC shareholders holding shares on the record date, which will be fixed later by the boards of PFC and REC, will be eligible to receive PFC shares under the approved swap ratio once the merger takes effect.

Rs 11 lakh crore lending giant

The merger will create one of India's largest infrastructure financing institutions with an aggregate loan book exceeding Rs 11 lakh crore.According to PFC, the combined entity is expected to emerge as the government's principal institution for implementing power sector reforms and flagship programmes.

It said the merger would strengthen the balance sheet, improve operational efficiencies and borrowing capacity, and support financing for India's energy transition and infrastructure build-out.

How PFC and REC came together

The merger follows the Cabinet Committee on Economic Affairs' earlier decision under which PFC acquired 52.63% of the government's stake in REC, resulting in the two companies operating in a holding-subsidiary structure.The proposed merger will consolidate the two entities into a single balance sheet, subject to statutory approvals and completion of the merger process.

REC shareholding pattern

As of March 31, 2026, around 37 mutual funds together held more than 9% stake in REC, while 26 insurance companies owned nearly 6%.State-run insurer LIC held around 3%, while nearly 11.69 lakh retail shareholders together owned more than 10% of the company, according to the latest shareholding data.

Advisers appointed

Deloitte Touche Tohmatsu India LLP is acting as transaction and tax adviser, while Cyril Amarchand Mangaldas is the legal adviser to the two NBFCs, according to an ET report.PFC appointed RBSA Valuation Advisors LLP and REC appointed Ernst & Young Merchant Banking Services LLP to prepare the joint valuation reports.SBI Capital Markets and Nuvama Wealth Management were appointed by PFC and REC, respectively, to provide fairness opinions on the valuation reports.