Invesco to sell 7.8% of ZEE stake for Rs 2,200 crore

Mumbai: Invesco Developing Markets Fund is set to sell up to 7.8% of its stake in Zee Entertainment Enterprises for ₹2,200 crore on the heels of its decision to call off litigation against the top management of the Subhash Chandra-promoted media group.

The US investment giant, which owns 18% in Zee, will sell around 7.4 crore shares in the price range of ₹270-290 apiece, which is as much as 7% below the stock's closing price on Wednesday, according to the terms of the transaction seen by ET. Zee shares fell 3% to close at ₹290.95 on Wednesday.

In a release after local trading hours on Wednesday, Invesco said it is launching a 'bookbuild transaction' to sell up to 7.8% in Zee.

"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."

"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."

Zee declined to comment.

In March, Invesco Developing Markets Fund withdrew its demand seeking removal of MD and CEO Punit Goenka from Zee's board and reiterated its support for the company's proposed merger with Sony Pictures Networks India, ending months of a legal standoff between the fund and the media company.

The price at which Invesco is selling Zee shares is at a 27.5% discount to its acquisition price of ₹400 apiece in December 2019, regulatory data showed. In August 2019, Zee announced that Invesco Oppenheimer Developing Markets Fund had agreed to acquire an 11% stake in the company for ₹4,224 crore at ₹400 per share.

"The base deal size is of 48,025,000 equity shares (or 5% of the total outstanding shares) with an option to upsize 26,625,918 equity shares (2.8 % of TSO) on the screen-based trading platform of the stock exchanges," the term sheet showed.

Kotak Capital is understood to be the sole manager to the deal.

In December 2021, Zee and Sony announced merger of the businesses, paving the way for the creation of one of the largest media and entertainment businesses in the subcontinent. Invesco, the largest institutional shareholder of Zee raised questions over the company's proposed merger with Sony Pictures, saying the transaction was not in the best interest of all shareholders and will benefit only the promoters, who have defaulted on bank loans. On March 25, Invesco said it decided to drop litigation procedures.