American investment firm Invesco announced on Wednesday, that it plans to sell 7.8 per cent of its stake in Zee Entertainment Enterprises days after it buried differences with the Subhash Chandra led company.
Three funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, are launching a bookbuild transaction to sell the stake.
“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 per cent of Zee, underscoring the investment team’s belief that the Sony deal in its current form has great potential for Zee shareholders,” Invesco said in a statement.
Invesco has not specified at what price they will sell their stake but industry experts suggest that these shares will be sold at ₹270-290 per share. Zee Entertainment shares closed at ₹292 on NSE on Wednesday.
“Given that Invesco is selling such a huge block of shares in one go, it is likely that the shares will be sold at a discounted price” said Shriram Subramanian, MD of InGovern Research Services, a corporate governance advisory firm. Subramianian also added that there will be a good demand for these shares amongst investors.
Invesco wanted changes
Invesco has been waging a legal battle with the Zee promoters for the past year. Invesco wanted the Sony merger deal approved by a new board of directors who were not controlled by promoters. In addition they wanted to remove MD and CEO Punit Goenka, from the company’s board.
Their request for an emergency meeting was initially blocked by the Bombay High Court, right before both Zee and Sony’s board announced that they had approved their non-binding term sheet to merge.
The tiff died down after Zee and Sony’s board approved their decision to merge the two media enterprises. While market watchers believe that this could indicate that the American investment fund is not too enthusiastic about the merger, Invesco itself has reiterated that they believe that Zee-Sony deal in its present form has great potential for shareholders.
According to an analyst, Invesco is selling its stake partially because it may not be sure that the merger between Zee and Sony will pass regulatory hurdles. Furthermore, they might not want Punit Goenka as the CEO of the merged entity