The Competition Commission of India Tuesday gave approval to state-owned financial institution Power Finance Corporation (PFC) for the acquisition of 52 per cent stake in REC. The government is expected to garner around Rs 15,000 crore from this sale process.
In December 2018, the cabinet committee on economic affairs as well as the board of PFC had given in-principle approval for the strategic sale. In a tweet Tuesday, the Competition Commission of India (CCI) said it "approves the acquisition of 52 per cent shareholding in REC Ltd by Power Finance Corporation Ltd."
The government's shareholding stood at 57.99 per cent in REC and 65.64 per cent in PFC at the end of the September quarter. However, the government holding in Rural Electrification Corporation (REC) had come down to 52.63 per cent following stake sale through exchange-traded funds (ETFs).
At the end of 2017-18, the total resources of REC stood over Rs 2.46 lakh crore, of which reserves were Rs 33,515.59 crore. The net worth of the company was Rs 35,490 crore and cash and the bank balance was Rs 1,773 crore at the end of March 2018. PFC's reserves and surplus stood at Rs 37,221 crore, and cash and bank balance stood at Rs 4,600 crore at the end of March 2018.
In a separate tweet, the fair trade regulator said it "finds no AAEC in respect of the acquisition of EPC Construction India Ltd by Royale Partners Investment Fund Ltd." AAEC refers to 'appreciable adverse effect on competition'.
Royale Partners, in a notice to CCI, said the proposed acquisition was filed by the Mauritius-based firm following a resolution plan under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code. By way of the resolution plan, the firm proposed to indirectly acquire EPC Constructions by amalgamating the special purpose vehicle, its proposed wholly-owned subsidiary in India, with EPC Constructions, it added.
Further, the entity said that "pursuant to the amalgamation, EPC Constructions will be the surviving entity and will be under the sole control of Royale Partners", as per the notice. EPC Constructions (formerly known as Essar Projects India Ltd) is engaged in the business of providing engineering, procurement and construction services to diverse industries in India, while Royale Partners is currently not engaged in the provision of any service or activity, or in the manufacture or sale of any products in India. Accordingly, there are no overlapping business activities between Royale Partners and EPC Constructions.
(With inputs from agencies.)