Zee Entertainment slips over 3% after Invesco Oppenheimer buys 11% stake

Shares of Zee Entertainment (ZEEL) slipped as much as 3.44 per cent to Rs 347.20 apiece in the early morning deals on Thursday, a day after the parent company Essel Group led by Subhash Chandra, said it had offloaded 11 per cent of the nearly 36 per cent promoter stake in Zee Entertainment Enterprises to existing investor Invesco Oppenheimer for Rs 4,224 crore.

The stock, however, pared losses and was trading over 1 per cent lower at Rs 356.55 on the BSE. In comparison, the benchmark S&P BSE Sensex was trading 181 points or 0.48 per cent lower at 37,300 levels.

The deal, at Rs 400 per share, values Zee at a premium of 10.6 per cent over the current market price and will be used to pay off part of the promoter-level debt, which stands at Rs 11,000 crore. On Wednesday, Zee closed trade at Rs 361.45 per share, down 5.18 per cent over the previous day’s close on the BSE. CLICK TO READ FULL REPORT
 

Invesco Oppenheimer already holds 7.74 per cent stake in Zee; now, it will now hold 18.74 per cent. Promoter stake in Zee, on the other hand, will fall to just under 25 per cent post the deal.

“The fund has been a financial investor in Zee Entertainment for 17 years,” said Justin Leverenz, portfolio manager, Invesco Oppenheimer Developing Markets Fund. “This additional financial investment underscores our continued confidence in the management’s ability to deliver long-term growth and financial returns.”

Despite being the largest public shareholder in Zee, Invesco Oppenheimer will not hold a board seat, Punit Goenka, managing director at Zee Entertainment clarified in an analyst call on Wednesday.

Market analysts welcomed this deal. For instance, Ashwin Patil, senior research analyst at LKP Securities, said, “We believe this development to be a positive step towards meeting Zee’s desired target of stake sale by September 30." 

“We expect the management to achieve success in meeting this deadline by doing a further stake sale and sale of non-media assets," Business Standard reported quoting Patil as saying. 

Other group firms were trading mixed in the trade. Zee Media was trading 8 per cent higher at Rs 12.70 apiece on the BSE while Zee Learn was ruling at Rs 21.30, up 4 per cent. Dish TV India, on the other hand, fell over 1 per cent to Rs 27.05 on the BSE.