Question: Incorporated on July 16th, 1986, Power Finance Corporation Ltd. is?
(a) Navaratna CPSE
(b) Maharatna CPSE
(c) Non-Banking Financial Corporation
(d) Both (a) and (c)
- State-Owned power sector Financier Power Financier Corporation (PFC) completed its Mega Deal to buy majority stake in Rural Electrification Corporation Limited (REC Ltd.) on 28th March, 2019.
- PFC paid Rs 14,500 crore to the Government to buy a 52.63% stake in REC.
- This deal helped the Government exceed its disinvestment target of Rs. 80,000 crore for the FY 2018-19.
- The PFC-REC merger deal, to be completed by next year, can potentially help in faster resolving of power sector NPAs.
- PFC has financed 70 % of the deal through cash inflows from the business and the balance 30 % is via debt instruments.
- PFCs asset book, income and profit would be nearly doubled.
- Post the deal, the company’s consolidated annual income would be about Rs. 50,000 crore and annual profit about Rs. 11,000 crore.
- Merger would make PFC India’s second largest state-owned financial firm by market capitalization after SBI.
- PFCs 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.