PFC-REC Merger Gets NSE, BSE Nod; Shares In Focus Today

Power Finance Corporation (PFC) and REC shares will be in focus on Wednesday, October 21, after the companies received no-objection letters from the NSE and BSE for the proposed merger of REC into PFC.

The exchange clearance marks another step forward for the merger after the Reserve Bank of India (RBI) gave its no-objection certificate on October 15. PFC and REC informed the exchanges late on October 19 that they had received the NSE and BSE letters for the scheme.

Under the proposed merger, REC shareholders will receive 88 equity shares of PFC for every 100 REC shares held on a record date that will be announced later.

PFC shares last closed at ₹332.40, while REC ended at ₹302.35. Indian equity markets were closed on Tuesday, October 20, which means Wednesday will be the first regular trading session after the latest exchange clearance.

The merger is not complete yet. It remains subject to further statutory and regulatory approvals as well as approvals from shareholders and creditors of the two companies.

PFC-REC Merger Gets NSE And BSE No-Objection Letters

PFC said in its exchange filing that it had received no-objection letters from both stock exchanges in relation to the proposed scheme under which REC will be merged into PFC. REC made a similar disclosure, saying the letters were received on October 19.

The exchange clearance follows the RBI's no-objection certificate received last week and takes the transaction another step through the approval process. The boards of PFC and REC had approved the merger scheme in June.

The transaction will combine two of India's largest state-owned power-sector financiers. According to the Ministry of Power, the merged entity will have an aggregate loan book of more than ₹11 lakh crore.

The government will continue to retain majority voting rights and control in the merged company, subject to the conditions laid out under the scheme.

The merger still requires other approvals before it becomes effective, including those of the respective shareholders and creditors and other authorities as applicable.

PFC-REC Merger Share Swap Ratio At 88:100

The share exchange ratio was fixed when the boards approved the merger. For every 100 REC shares, an eligible REC shareholder will receive 88 fully paid-up PFC shares with a face value of ₹10 each.

The entitlement will apply to REC shareholders whose names appear on the record date. That date has not yet been announced and will be decided by the boards at a later stage.

REC will be merged into PFC under the scheme, with PFC remaining the listed entity after the transaction becomes effective.

The merger is part of the government's plan to consolidate the two power-sector lenders and create a larger financing institution.

For investors, attention on Wednesday will be on how PFC and REC shares react to the latest approval as trading resumes after Tuesday's market holiday.

The NSE and BSE letters do not by themselves complete the merger, but remove another step in the approval process after the RBI clearance.

Any movement in PFC and REC shares after the opening bell will also show how investors are pricing the 88:100 share exchange ratio as the transaction moves closer to completion.

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