PFC concludes REC acquisition with internal accruals, term loans

Quashing concerns regarding its financial strength post the acquisition, PFC executives said the company had 19 per cent capital adequacy in Q3FY19

State-owned Power Finance Corporation (PFC) concluded the acquisition of Rural Electrification Corporation (REC) by paying Rs 14,500 crore to the Central government. PFC has acquired 52.63 per cent equity stake of the Centre in REC along with management control. The deal was approved by the Cabinet Committee for Economic Affairs (CCEA) in December 2018.

PFC has financed the deal with internal accruals and by raising term loans. “Around 70 per cent of the payment made is through the cash inflows from the business and the balance 30 per cent is through debt,” Rajiv Sharma, CMD, PFC said.

PFC borrowed around