Cyril Amarchand Mangaldas has been appointed as the transaction counsel for the strategic merger between REC Limited and Power Finance Corporation Limited. This merger will result in the absorption of REC without the need for winding up, allowing it to continue operations as a going concern. The legal firm provided comprehensive counsel to both Power Finance Corporation (PFC) and REC throughout the merger process.
The deal, characterized by intricate negotiations with relevant Ministries and governmental bodies, aimed to finalize the scheme and the overarching structure of the proposed merger. Leading this significant transaction were Amey Pathak, Partner and Head of Banking, and Dhruv Singhal, Partner, supported by a team including Senior Associates Deval Dangayach and Hina Tolani, Associates Divisha Sharma, Shivi Chola, and Rituraj Parmar.
Pururaj Bhar, Partner, along with Principal Associate Apoorv Jain and Associate Utkarshini Anand, provided expertise on banking and finance issues. Shikha Tandon, Partner, and Principal Associate Zaid Drabu offered guidance on dispute-related aspects of the deal. Gazal Rawal, Partner, with Senior Regulatory Advisors Mrs. Lily Vadera and Mr. S. Ganesh Kumar, along with Senior Associate Havish Gotecha and Associate Aniket Panchal, advised on regulatory matters related to the Reserve Bank of India.
This merger represents the unification of two “Maharatna” Central Public Sector Enterprises, which are among India’s largest public sector Non-Banking Financial Companies (NBFCs) and key financiers in the country’s power sector. Both entities are part of the NIFTY 100 and BSE 100 indices. The merger will create a robust financing entity with a combined loan book exceeding INR 11 lakh crore and a collective valuation of approximately ₹2.42 lakh crores.
The proposed scheme is contingent upon obtaining all necessary approvals and consents as per applicable laws. This includes securing approvals from shareholders and creditors of both companies, as well as endorsements from regulatory and governmental authorities like the RBI, SEBI, Ministry of Corporate Affairs, and the Cabinet Committee on Economic Affairs (CCEA). Furthermore, it is essential that PFC, as the merged entity, continues to qualify as a ‘Government Company’ under the Companies Act, 2013, with the Government of India maintaining majority voting rights and control in PFC, either directly or indirectly.
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