Invesco looks to sell 7.8% stake in Zee via block deal

Industry:    1 month ago

After a seven-month-long legal tussle with the founders of Zee Entertainment Enterprises Ltd for control of India’s largest publicly traded media company, Invesco Developing Market Funds, the broadcaster’s largest shareholder, decided to sell 7.8% of the firm through a block deal on Thursday.

After the sale, Invesco will be left with about 11% of Zee. Invesco will sell 74 million shares worth ₹2,200 crore via block deals in the range of ₹270-290 per share, according to deal terms seen by Mint. Kotak Mahindra Capital will manage the stake sale.

The announcement was made after the end of trading in Mumbai.

“The purpose of this transaction is to align funds’ exposures to Zee with other funds managed by the investment team and to achieve an aggregate ownership position in the company that is more in line with the investment team’s portfolio construction approach,” Invesco said in a statement.

“Upon completion of the bookbuild, funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, will continue to own in aggregate at least 11% of Zee, underscoring the investment team’s belief that the Sony deal in its current form has great potential for Zee shareholders,” it added.

The development comes less than two weeks after Invesco withdrew its demand for a special shareholders’ meeting, which it pursued since September to oust Zee’s managing director Punit Goenka and a rejig of the board.

On 23 March, Invesco said it decided against pursuing a change in Zee’s board and instead supported the proposed merger of Zee with Sony Pictures Networks India Pvt. Ltd.

“We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognise that, following the merger, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company,” Invesco said.

Invesco’s decision came after the Bombay high court ruled in its favour, validating the fund’s requisition of the shareholders’ meeting.

The US investor had earlier expressed concerns about how the current board and managing director Goenka, son of founder Subhash Chandra, has run the company. Chandra owns 3.99% of Zee.

In September, just before Zee’s annual general meeting, Invesco asked the company to hold a special meeting of shareholders and ask them to vote on its recommendations to remove Goenka and induct six independent directors.

After Zee rejected the fund’s demands, Invesco approached the National Company Law Tribunal (NCLT) in Mumbai, which directed Zee to consider the requisition. Zee then approached the high court, seeking a declaration that the requisition notice by Invesco to hold the EGM was illegal and invalid.

In October, Invesco disclosed that it had facilitated merger talks between Zee and Reliance Industries, which collapsed as the fund did not favour Goenka and his family increasing their stake in the company.

The revelation came after Zee signed a non-binding deal to merge with Sony.