Zee oversubscribed as Subhash Chandra sells his 16.5% stake

Varun Aggarwal Mumbai | Updated on November 21, 2019

Punit Goenka, CEO, Zee Entertainment

As media mogul Subhash Chandra finally agrees to give up control over Zee Entertainment by deciding to sell his 16.5 per cent stakes in the company, investors are already flocking in. The issue has already been oversubscribed nearly three times, Chandra's son Punit Goenka said in a statement.

“I am overwhelmed by the positive response received from our investors. Glad to share that the book was oversubscribed by approximately 3 times. I am grateful to our lenders and investors for their trust and support. I remain committed to elevating ZEE to a global media & entertainment powerhouse”, Punit Goenka, MD & CEO, ZEE Entertainment Enterprises, said.

GIC, Blackrock, Capital Research, SBI MF, HSBC Global, Segantii Capital, Marshall Wace, Norges Bank, Key Square, ICICI Prudential, Reliance MF and Welington Mgmt are some of the investors, according to market sources. Most of the domestic mutual funds have managed to recover their entire money lent against shares of Zee Entertainment Enterprises Ltd. to the Essel Group.

Read also: Subhash Chandra to give up control of Zee Entertainment

Zee Entertainment stock gained Rs 38.10, up 12.40 per cent on BSE on Thursday. The benchmark BSE Sensex index closed 76.47 points lower on Thursday.

Goenka will continue to remain the CEO, and the promoters will maintain management control over Zee despite the single-digit stakes they'd be left with. This is because largest stakeholder in Zee Invesco Oppenheimer has shown no interest in either a board seat or any management control.

Post the sale, Subhash Chandra and his son will be left with only about 5 per cent stake in their flagship company, of which 1.1 per cent stakes are still encumbered with creditors.

The promoters of Essel group are trying to cut down on its debt of about ₹7,000 crore by selling 16.5 per cent stakes in Zee Entertainment, a deal they are hoping could fetch them in excess of ₹5,000 crore.

Existing investor Invesco Oppenheimer will be buying 2.3 per cent of this 16.5 per cent stakes through subsidiary OFI Global China Fund.

The investment from Invesco however, is part of the 11 per cent stake sale earlier announced by the company, which was supposed to fetch ₹4,224 crore.

The promoters currently owe about ₹7,000 crore to mutual funds and financial investors, including Russia's VTB Capital, which has encumbered about 10.71 per cent stake in Zee Entertainment.

The promoter group is also planning to sell stakes in Zee Learning, in which they still have a majority stakeholding.

“The Group is also working actively on further divestments, including its media/ non-media assets, and remains confident to complete the same,” the Zee statement said.

Published on November 21, 2019

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