REC Ltd to raise funds, Power Finance Corporation to up stake

New Delhi: REC Ltd on Wednesday said its board of directors has approved a proposal to raise Rs 90,000 crore under different debt segments for the financial year 2019-20. Approval has been accorded to raise Rs 78,000 crore through instruments such as domestic bonds/debentures, external commercial borrowings (ECBs) and capital gains tax exemption bonds, while Rs 12,000 crore will be raised through short term loan from banks/ FIs/ NBFCs and commercial paper, it added.

Meanwhile, the state-owned Power Finance Corporation (PFC) has signed a share purchase agreement to acquire all 52.63 per cent shares of the government in Rural Electrification Corporation (REC) for about Rs 14,500 crore. Both PFC and REC are navratna central public sector enterprises with combined annual revenues of about Rs 50,000 crore. The acquisition is a step towards consolidation of companies operating in the same space, PFC said in regulatory filings on Wednesday.

“PFC has already arranged funds for the acquisition which will be complete by March 28. It is in pursuance to the in-principle approval of December 6 last year from the Cabinet Committee on Economic Affairs.  “The acquisition will enable increased efficiencies in lending processes and policies across both institutions, and create public value by offering better loan products to the power sector,” PFC said.

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