The cabinet approved the sale of government’s entire 52.63 percent in power sector financier REC Ltd. to state-run peer Power Finance Corporation Ltd. as it looks to mop up funds through such a deal for the second straight year to meet its divestment target.
The Cabinet Committee of Economic Affairs has given its in-principle approval for the strategic sale of 52.63 percent REC to PFC—both public listed entities—along with transfer of management control, Finance Minister Arun Jaitley said in a media briefing. “This was announced in the 2017-18 budget that if in one space there are multiple PSUs then their consolidation, acquisition or merger will happen. In this case the cabinet has approved the acquisition model.”
In the finance ministry, we agreed to the proposal given by the power ministry. They wanted PFC to become the holding company and REC a subsidiary. It doesn’t make a difference because they will be part of the same managerial setup. The two will remain separate companies. The shareholding of one will be controlled by the other so that there’s a synergy in their lending policy.
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