PFC-REC merger likely to include preferential allotment to Centre to keep government company tag: Report

Power Finance Corporation (PFC) and REC Merger Scheme

The proposed merger of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) may involve a preferential allotment of shares to the Centre to ensure the combined entity retains its government company status, according to a report by Economic Times.

This decision comes as the merger may result in the Centre's stake dropping below 51%, potentially affecting the entity's status as a government company. To maintain its stake above the required limit, the centre may need to infuse additional equity worth Rs 16,000-17,000 crore.

Merger Scheme Preparation and Equity Infusion

• A government official cited in the report stated that the merger scheme is currently being prepared, and the infusion of equity by the government is one of the options being considered.
• The report noted that the merger scheme is still in its preparation stages, and no official confirmation has been made.

Current Shareholding Pattern

As per the data on PFC's shareholding pattern as on December 31, 2025, the central government held a 55.99% stake in the company, while the rest of the 44.01% stake was owned by the general public.

REC does not directly own a stake in the company, although it is listed as a promoter. PFC, on the other hand, owns a 52.63% stake in REC.

Union Budget 2026 Announcement

During the presentation of Union Budget 2026, Finance Minister Nirmala Sitharaman announced plans to restructure PFC and REC to achieve scale and improve efficiency in Public Sector NBFCs.

Following the announcement, the boards of PFC and REC approved the merger in principle on February 6.

Share Price Reaction

The shares of PFC and REC declined around 1% on February 12, trading at Rs 410.65 apiece and Rs 350.30 apiece, respectively.

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