The boards of Power Finance Corporation (PFC) and REC Limited have approved a scheme for the merger of REC with PFC, paving the way for the creation of one of India's largest infrastructure financing entities with an aggregate loan book exceeding Rs 11 trillion.The proposed merger, approved under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, envisages the amalgamation of REC, the transferor company, with PFC, the transferee company, along with their respective shareholders and creditors.The scheme remains subject to multiple approvals, including those from shareholders and creditors of both companies, as well as relevant regulatory and governmental authorities. The merger is also contingent upon the merged entity continuing to qualify as a 'Government Company' under the Companies Act, 2013, with the Government of India retaining majority voting rights and control, either directly or indirectly.As part of the merger arrangement, shareholders of REC will receive 88 equity shares of PFC with a face value of Rs 10 each for every 100 equity shares of REC with a face value of Rs 10 each held on the record date, which will be determined by the boards of both companies at a later stage.Deloitte Touche Tohmatsu India LLP has been appointed as transaction and tax advisor, while Cyril Amarchand Mangaldas is serving as legal advisor to both PFC and REC.For valuation purposes, RBSA Valuation Advisors LLP was appointed by PFC and Ernst & Young Merchant Banking Services LLP by REC to prepare joint valuation reports. SBI Capital Markets and Nuvama Wealth Management were appointed by PFC and REC, respectively, to provide fairness opinions on the valuation reports.The merger is expected to strengthen the combined entity's financing capabilities and enhance its ability to support India's infrastructure and power sectors through a larger and more diversified balance sheet.