New Delhi: State owned Power Finance Corporation (PFC) may announce its acquisition of management control in REC Ltd today.
The buyout of the government’s entire stake in the power sector lender by PFC clears the decks for the creation of a $80 billion lending institution for the Indian power sector and is expected to reduce competition, while leveraging synergies and achieving economies of scale. According to Moody’s Investors Service, PFC and REC had total reported assets of Rs2.86 trillion and Rs2.46 trillion, respectively.
“PFC’s strategic importance to the government will further increase upon completion of the acquisition, as the combined entity will become the biggest non-bank finance entity in which the government holds a controlling stake. In addition, it will account for the majority of financing for state power utilities.
