Indian financial institution Power Finance Corporation Ltd. (PFC) will reportedly be making the complete payment of Rs 14,500 crore, on March 28, 2019, to the government for purchasing a 52.63% stake in REC Ltd.
Sources privy to the development revealed that the complete amount would be paid by PFC via a real-time gross settlement (RTGS) mode.
The sources stated that Managing Director and Chairman at PFC, Rajeev Sharma, would be handing over the RTGS advice to RK Singh, Power Minister, on March 28 for marking the closing of this acquisition deal, and the money would be transferred to the account of the government.
PFC has raised money from State Bank of India, Life Insurance Corporation and Bank of Baroda, among others, for making the payment.
Further from the reports, PFC had signed a share purchase agreement, earlier on March 20, for acquiring 103.94 crore equity shares of REC at Rs. 10 each. The deal was executed through the in-principle approval of strategic sale, from the Cabinet Committee on Economic Affairs, for a sale of 52.63 percent of REC’s paid-up equity shareholding, along with the management control transfer.
Apparently, this deal would assist the government in meeting its Rs. 80,000 crore disinvestment target for the current financial year ending on March 31. Both REC and PFC are Navratna central public sector enterprises, having around Rs. 50,000 crore combined annual revenue, and this acquisition is a step forward in the direction of consolidation of firms running in the same space.
The shares of REC were purportedly bought by PFC at Rs. 139.50 per piece, with a total acquisition cost of around Rs. 14,500 crore. This acquisition will enable added efficiencies, across both the institutions, in lending processes and policies and would build public value through offering better loan products in the power sector.