1New Delhi: State-owned Power Finance Corporation (PFC) has completed acquisition of majority stake in REC Ltd by transferring Rs 14,500 crore to the government and is hopeful of merger of the two firms in 2019-20. The transaction assumed significance because it helped the government meet its disinvestment target of Rs 80,000 crore for the current financial year. “We are hopeful about merger of the two firms (PFC and REC) during 2019-20. We have to get direction from the government in this regard and then we would appoint consultant for the purpose,” PFC Chairman and Managing Director Rajeev Sharma told reporters.
This stake acquisition was in pursuance to the in-principle approval from the Cabinet Committee on Economic Affairs for strategic sale of 52.63 per cent of paid-up equity shareholding of REC held by the government to PFC, along with the transfer of management control. Sharma further said, “In line with the agreement, REC acquisition transaction by PFC got concluded today (Thursday) with release of payment to the government and transfer of REC shares to PFC. Now, PFC will be the holding company of REC and also its promoter.”
PFC has acquired 103.94 crore shares constituting 52.63% equity stake held by the government in REC along with the management control at a cash purchase consideration of Rs 14,500 crore. The acquisition price of REC per equity share worked out to Rs 139.50. PFC has financed 7 per cent of the deal from the cash inflows from the business and the balance 30 per cent is through debt.