PFC-REC Merger News: A mega merger of two PSUs is on the cards. Two companies that will soon merge into a single entity are PFC and REC. PFC-REC merger, which was announced in the Budget, is aimed at achieving scale and improving efficiency in the public sector NBFC space.
According to a top government official, the Modi government may issue preference shares or fresh equity so that the ownership rests with it.
PFC-REC Merger News: Largest merger
"The government would like to retain a majority stake in the merged entity as it would be the largest government-owned NBFC with strategic presence. Discussions are going on over the options to ensure that the government stake in the merged entity does not fall below 51 per cent," the government official said.
PFC Ltd stands for Power Finance Corporation (PFC), while REC Ltd stands for Rural Electrification Corporation (REC).
As per the Companies Act, a 'government company' is one in which not less than 51 per cent of the paid-up share capital is held by the central government, or by any state government, and includes a company that is a subsidiary company of such a government company.
Other than the preference shares, the other option which the government is also considering is the issuance of fresh equity.
"Both the options will help the government increase its stake in PFC so that the merged entity remains a state-owned company," the government official said.
At present, the government holds 55.99 per cent stake in PFC and 52.63 per cent in REC.
