PFC board approves REC merger at 88:100 swap
Power Finance Corporation will absorb REC, creating a combined loan book of over ₹11 lakh crore. The swap ratio of 88 PFC shares per 100 REC shares is now set, pending approvals.
— 1 earlier story on Power Finance Corporation Ltd. →What's new
- PFC board approved merger of REC, swap ratio 88:100.
- Combined loan book exceeds ₹11 lakh crore.
- Deloitte and Cyril Amarchand Mangaldas appointed as advisors.
Why this matters
The merger creates India's largest power-sector lender. The swap ratio lets the market price the deal, and the scale positions the combined entity to dominate power financing.
What we're watching
- Shareholder and creditor approval timelines.
- Regulatory clearances from CCI and RBI.
- Potential impact on PFC's debt/equity ratio.
The full read
Power Finance Corporation's board has formally approved the merger of REC, setting a share exchange ratio of 88 PFC shares for every 100 REC shares. The combined loan book will exceed ₹11 lakh crore, making it India's largest power-sector financier. The swap ratio is the key new detail, as it allows the market to calculate dilution and relative value. The scheme still hinges on shareholder, creditor, and regulatory approvals. Deloitte and Cyril Amarchand Mangaldas are advising. For PFC, the merger brings scale but also higher debt (its debt/equity already stands at 8.25x). The open question is whether the integration can deliver the efficiency gains to offset the added complexity.
Questions answered
- What is the share exchange ratio for the merger?
- PFC will issue 88 of its shares for every 100 shares of REC. The ratio was determined by independent valuations from RBSA and EY.
- What will be the size of the merged entity?
- The combined loan book will exceed ₹11 lakh crore. This makes it India's largest power-sector financier.
- What approvals are still needed?
- The scheme requires approval from shareholders, creditors, stock exchanges, and likely the Competition Commission of India and RBI.
- Who advised on the merger?
- Deloitte Touche Tohmatsu India is transaction and tax advisor, Cyril Amarchand Mangaldas is legal advisor. Valuations by RBSA and EY, fairness opinions from SBI Capital Markets and Nuvama.
- How does this merger affect REC shareholders?
- REC shareholders will receive 88 PFC shares for every 100 REC shares, becoming shareholders of the combined entity. The value depends on PFC's share price at execution.
Power Finance Corporation Ltd.
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Story so far
All notes on PFC →- 28 Jun 2026 · 11:13 PM IST PFC board approves REC merger at 88:100 swap
- 13d ago PFC raises US$300M via 5.32% notes due 2031