Cyril Amarchand Mangaldas has acted as transaction counsel for the merger by absorption of REC Limited into Power Finance Corporation Limited — one of the most consequential public sector consolidations in India’s financial history. The boards of directors of both companies approved the scheme of merger on June 28, 2026, to create a larger financing entity in the power sector. The firm advised both PFC and REC across the full spectrum of the transaction, from structuring to regulatory engagement.
Introduction
The boards of directors of Power Finance Corporation Limited (PFC) and REC Limited approved the Scheme of Merger for the merger of REC (Transferor Company) into PFC (Transferee Company) and their respective shareholders and creditors, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The transaction is structured as a merger by absorption, with REC being dissolved and integrated into PFC on a going concern basis without being wound up.
The scheme is subject to approvals from shareholders, creditors, and regulatory authorities, and requires the merged entity to retain its status as a Government Company with the Government of India holding majority voting rights. Required approvals include those from the Reserve Bank of India, SEBI, the Ministry of Corporate Affairs, and the Cabinet Committee on Economic Affairs (CCEA), among other governmental authorities. The President of India had approved the merger of REC Ltd with Power Finance Corporation, with the Ministry of Power conveying this approval through a letter dated June 10, 2026, according to REC’s regulatory filing.
Deal Value
The proposed merger shall create a financing entity with an aggregate loan book of over INR 11 lakh crore, and the combined entity is valued at approximately INR 2.42 lakh crore.
The board approved a share exchange ratio of 88 equity shares of PFC of INR 10 each fully paid up for every 100 equity shares of REC of INR 10 each fully paid up, with no cash consideration involved in the transaction. The ratio was determined based on a joint valuation report dated June 28, 2026, issued by independent valuers M/s. Ernst & Young Merchant Banking Services LLP and M/s. RBSA Valuation Advisors LLP, supported by fairness opinions from SBI Capital Markets Limited and Nuvama Wealth Management Limited.
Legal Teams Involved
Cyril Amarchand Mangaldas acted as the Legal Advisor to both PFC and REC. The firm’s mandate spanned general transaction counsel, banking and finance, disputes, and RBI-related regulatory advice. See also the Deal Meter for a running tracker of top Indian law firm mandates.
Transaction Counsel Team (General — advising both PFC and REC)
- Amey Pathak, Partner (Head – Banking) — Lead
- Dhruv Singhal, Partner — Lead
- Deval Dangayach, Senior Associate
- Hina Tolani, Senior Associate
- Divisha Sharma, Associate
- Shivi Chola, Associate
- Rituraj Parmar, Associate
Banking and Finance Team
- Pururaj Bhar, Partner — Lead
- Apoorv Jain, Principal Associate
- Utkarshini Anand, Associate
Disputes Team
- Shikha Tandon, Partner — Lead
- Zaid Drabu, Principal Associate
RBI Regulatory Team
- Gazal Rawal, Partner — Lead
- Mrs. Lily Vadera, Senior Regulatory Advisor
- Mr. S. Ganesh Kumar, Senior Regulatory Advisor
- Havish Gotecha, Senior Associate
- Aniket Panchal, Associate
Significance and Impact
The merger of REC into PFC is particularly significant as it constitutes the merger of two “Maharatna” Central Public Sector Enterprises and India’s largest public sector NBFCs, both being the primary financiers of India’s power sector, and both the companies also forming part of the NIFTY 100 and BSE 100 index.
Finance Minister Nirmala Sitharaman had first announced the proposed restructuring in the Union Budget 2026 as part of the government’s broader strategy to improve operational efficiency, strengthen lending capacity, and create a larger, globally competitive power sector financing institution. The merger simplifies the structure because PFC already owns REC, and also creates a larger government-backed power finance institution.
The deal involved extensive discussions with Ministries and other governmental authorities for finalisation of the scheme and overall structuring of the proposed merger. The breadth of Cyril Amarchand Mangaldas‘s mandate — spanning general transaction structuring, banking and finance, regulatory, and disputes workstreams simultaneously — reflects the complexity and multi-jurisdictional regulatory character of this transaction.
The board-approved merger by absorption of REC Limited into Power Finance Corporation Limited marks a landmark consolidation in India’s public sector financial architecture. Once completed, the merger is expected to create a stronger public sector financial institution capable of supporting India’s energy transition, power infrastructure expansion, renewable energy financing, and large-scale infrastructure investments. Cyril Amarchand Mangaldas, advising both companies across four distinct practice workstreams, played a central role in structuring and executing this transaction.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. It is based on the details provided and publicly available sources.
