Several foreign funds, including the New York-based BlackRock, Singapore government-backed GIC, HSBC Global, Citigroup, Morgan Stanley Asia, Vanguard and Wellington Management, have picked up stakes in Zee Entertainment Enterprises as the promoters sold stock to repay loans.
Shares of India’s biggest listed media company were sold in block deals on the NSE on Thursday at Rs 304 apiece. While the promoters are now left with just 5 per cent stake in the company, they raised more than Rs 4,500 crore from the deals to repay lenders.
Citi and JP Morgan were the book runners for the block deals.
Among the domestic funds that bought into the stock were SBI Mutual Fund, ICICI Prudential Life Insurance, Sundaram, Axis Mutual Fund, and the Edelweiss Group. Among the other overseas funds were Morgan Stanley, Societe Generale, Fidelity, and Nomura.
OFI Global China Fund, a subsidiary of the Invesco Oppenheimer Developing Markets Fund that had earlier bought into the Mumbai-based media company, also picked up a 2.3 per cent stake. The total divestment by ZEE promoters stood at 16.5 per cent of their shareholding.
“I am overwhelmed by the positive response received from our investors,” Punit Goenka, MD and CEO of ZEE, said in a statement. He disclosed that the book was oversubscribed approximately three times.
Three promoter companies, EMVL, Cyquator and Essel Corporate, sold 77 million, 61 million and 11 million shares, respectively. The floor price was set at Rs 277 per share, at a 10 per cent discount to Wednesday’s closing price of Rs 307 apiece, but the deals were carried out at Rs 304 apiece.
After the sale of shares, many broking firms upgraded the ZEE scrip, which rallied about 15 per cent intraday to close at Rs 343 on NSE, up 12 per cent from their previous close.
Morgan Stanley India noted that heightened volatility in the ZEE stock in the past few months could be largely attributed to the sale of pledged shares and uncertainty with respect to the sale of the remaining pledged shares. However, with promoters now selling a 16.5 per cent stake, a large portion of the promoter debt could be resolved.
“This reduces the risk of pledged stock coming to the market, so we lower our bear case probability,” the report said.
The Essel Group is also in talks to divest other media and non-media assets to clear debt.
