State-owned Power Finance Corporation (PFC) on Thursday 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 in a press conference on the deal.
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."
Gupta said, "It would be difficult to tell who have financed this deal. We had a pool of funds raised through different modes and investors. There was a lot of funds availability in the market at competitive rates."
He further said, "The acquisition of REC by PFC has presented PFC with a significant inorganic growth opportunity, whereby on a consolidated basis, PFC's asset book, income, profit etc. would be almost doubled."