After fighting a bitter battle with Zee Entertainment Enterprises (Zee) for several months over board-level changes, Invesco Developing Market Funds has decided to sell up to 7.8% of its stake in the company via a block deal on Thursday. It will sell 7.74 crore shares, which is worth around Rs 2,200 crore.
The price will range between Rs 270.50-290.90 per share and Kotak Mahindra Bank will be the banker for the block deal. This means the share sale will happen at a discount of up to 7% to Wednesday’s closing price of Rs 290.95 on the Bombay Stock Exchange.
Invesco along with OFI Global China Fund is currently the largest shareholder in Zee with a total stake of 17.88%.
“Three funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, are launching a bookbuild transaction today to sell up to 7.8% of the share capital of Zee Entertainment. The purpose of this transaction is to align these 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.
According to reports, Invesco Developing Markets had about 7.9% of its assets, which is about $3.4 billion, exposed to Russia as of December 31, 2021.
Invesco had sprung a surprise late last month when it suddenly withdrew its demand that Zee convenes an extraordinary general meeting (EGM) for the removal of two directors and its MD and CEO Puneet Goenka. It had also demanded the induction of six new independent directors. This sudden U-turn had come after the Bombay High Court had ruled in Invesco’s favour to pursue its demand in the National Company Law Tribunal for the convening of the EGM.
Withdrawing the demand, it had reiterated its support for Zee’s proposed merger with Sony Picture Networks India (SPNI).
“We continue to believe the Sony deal in its current form has great potential for Zee shareholders. We also recognise that, following the merger’s consummation, the board of the newly-combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company. Given these developments, and our desire to facilitate the transaction (with Sony), we have decided not to pursue the EGM as per our requisition dated September 11, 2021,” it had said.
Following the completion of the Zee-Sony deal, Sony Pictures Entertainment will indirectly hold a majority 50.86% stake in the combined entity, while the promoters of Zee will hold a 3.99% stake and the remaining shareholders of Zee will hold the balance of 45.15% in the merged entity.
Zee’s Punit Goenka will continue as the managing director and chief executive officer of the merged entity. The other board members, the majority to be nominated by Sony Group, would include SPNI managing director and CEO NP Singh, who will assume the broader executive position as the chairman of SPE.
Zee founders will also limit the equity they may own in the combined company to 20% of its outstanding shares. The merger agreement does not provide the promoters (founders) of Zee any pre-emptive or other rights to acquire equity of the combined company from the Sony Group, the combined company or any other party. Any shares purchased by the promoters (founders) of ZEE, would have to comply with all applicable laws including any pricing guidelines.
