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Promoters of Zee Entertainment may flag potential conflict of interest issues against Invesco if it pushes for a merger between Zee and Reliance Industries’ media business.
According to sources close to the promoter group, Invesco’s exposure to RIL’s shares across its mutual fund portfolio may be flagged for shareholders of Zee.
Invesco’s RIL portfolio
Invesco’s MFportfolio comprises 36 funds in all, of which 17 funds have invested in various properties of Reliance Industries Limited. For 11 of the funds, Reliance features in the top 3 of the portfolio. Invesco India fund specifically has invested 2.2 per cent of its net assets in Reliance’s media properties, TV18 Broadcast Ltd and Network18 Media & Investments Ltd.
“This could mean that Invesco could have had a vested interest and gained from a potential merger between Zee and Reliance’s media properties,” the source said.
However, some experts believe, that citing this as grounds for raising conflict of interest “is a bit of a stretch”.
No significant exposure
A senior proxy advisor told BusinessLine on conditions of anonymity that “Reliance’s media assets are a very small part of its overall business. To put this into context, RIL as a conglomerate has a yearly turnover of ₹1-lakh crore. Its media assets could be contributing less than a thousand crore. If Invesco was holding 5-10 per cent in Network18 (Reliance) that would be grounds to raise conflict of interest. But Invesco holding less than 1 per cent of RIL isn’t grounds to raise a red flag,” the proxy advisor said.
Earlier this year, Invesco tried ti facilitate a merger between Zee promoters and Reliance, but the latter dropped it as differences emerged between Punit Goenka and Invesco.
Invesco mum
Invesco did not disclose this matter when on September 11 it requested an extraordinary general meeting for the removal of promoter Punit Goenka.
This fact was also not disclosed after a merger between Zee and Sony was announced on September 23, when Invesco insisted that the EGM should be called. The matter is right now before the National Company Law Tribunal and the Bombay High Court, which will decide if the EGM is to be held or not.
Amit Tandon of IiAS, a proxy advisory firm, said all these developments are a distraction and “What should matter to investors is the future of Zee Entertainment Enterprises, with or without Punit Goenka, with or without Sony, or in combination with another suitor or even as an independent company.” According to Tandon, if Invesco is coming to the deal with dirty hands, this matter should be put to vote with shareholders.
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