Essel Group sells 11% stake in Zee to US fund for Rs 4,224 crore

Mumbai, July 31 

US-based fund Invesco Oppenheimer today agreed to pick up an additional 11% in the fund-starved Zee Group flagship Zee Entertainment Enterprises (Zee) for Rs 4,224 crore.

The equity will be picked up by the Atlanta-based global fund house’s Developing Markets Fund, which already owns 7.74% in the company, a company statement said. Invesco Oppenheimer has been a financial investor in Zee since 2002.

“Invesco Oppenheimer Developing Markets Fund has agreed to make an additional investment in Zee. It has agreed to buy up to an 11% stake more in Zee from the promoters, for Rs 4,224 crore,” it said.

The promoters, who have been since last November trying to pare their stake by even half, own 35.79% in Zee as of June 2019, of which 63.98% has been pledged with mutual funds and other financial institutions. Following this deal, promoter stake will come down to around 23%.

As per media reports, the promoters’ stake is estimated to be around Rs 13,000 crore at current market price with market capitalisation of Rs 34,717.3 crore at a closing price of Rs 361.45 on Wednesday.

From last year, the Essel Group was trying to divest its key assets, with an aim to repay all the lenders by September 2019.

The group claimed that during the divestment process, it received positive response from multiple partners expressing interest to buy the stake in Zee and the other key non-media assets.

“I am glad to share that Invesco Oppenheimer Developing Markets Fund as a financial investor has further reposed its faith in Zee, showing their strong belief and trust in the intrinsic value of our assets,” Zee MD Punit Goenka said.

Last November, Subhash Chandra-led Essel Group had decided to sell up to 50% of their equity in Zee to a strategic partner.  In January, Chandra had admitted his company was in a financial mess, and blamed it on aggressive bets on infra, which has gone out of control since the IL&FS crisis. — PTI

Deal dynamics 

• The equity will be picked up by the Atlanta-based global fund house’s Developing Markets Fund, which already owns 7.74% in the company, a company statement said
• Invesco Oppenheimer has been a financial investor in Zee since 2002
• The promoters own 35.79% in Zee as of June 2019, of which 63.98% has been pledged with mutual funds and other financial institutions
• Following this deal, the promoter stake will come down to around 23%