After a seven month long legal tussle with the founders of Zee Enterprises for the control of India’s largest listed media company and even getting a reprieve from the Bombay High Court to call for a shareholders’ meeting, Invesco Developing Market Funds has decided to sell 7.8% stake in Zee via block deal on Thursday, according to a press statement from the fund.
Invesco is the largest shareholder in Zee and holds 18% stake in Zee, along with OFI Global China Fund LLC. The fund will sell 7.4 crore shares worth ₹2,200 crore via block deals. The price will range between ₹270-290 per share, according to deal terms seen by Mint. Kotak Mahindra Capital is the banker for the stake sale.
Zee shares closed at ₹290.95 per share on Wednesday.
“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,” said Invesco in the 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.
The development comes less than two weeks after Invesco withdrew its demand for an extra-ordinary general meeting (EGM), which it was pursuing since September 2021, to push for the ouster of Zee’s CEO Puneet Goenka and also rejig of the board.
On 23 March, Invesco said it has decided not to pursue the EGM to add six independent directors and instead reiterated its support for the proposed merger of Zee with Sony.
“We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognise that, following the merger, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company,” Invesco had said.
Invesco’s decision came after the Bombay High Court ruled in its favour, recognising that the fund’s requisition to be legally valid.
The US investor had expressed concerns over how the current board and managing director Punit Goenka, son of founder Subhash Chandra, has run the company. Chandra owns 3.99% shares in the company.
In September just before Zee’s annual general meeting, Invesco asked the company to hold an EGM and ask shareholders to vote on its recommendations of removing Goenka and inducting six independent directors.
After Zee rejected the fund’s demands, Invesco moved the National Company law Tribunal (NCLT) in Mumbai which directed Zee to consider the requisition. Zee then approached the high court, seeking a declaration that the requisition notice by Invesco to hold the EGM was illegal and invalid.
In October last year Invesco revealed that it had facilitated merger talks between Zee and Reliance Industries, which fell apart as the fund was not in favour of Goenka and his family increasing their stake in the company by subscribing to preferential warrants. The revelation came after Zee had signed a non-binding deal to merge with Sony.
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