Invesco funds to divest up to 7.8% stake in ZEEL

Investment firm Invesco has said three funds managed by its developing markets investment team, including Invesco Developing Markets Fund, will sell up to 7.8% of the share capital of Zee Entertainment Enterprises (ZEEL) to align exposures to the firm with other funds managed by the team, as per a report by news agency PTI.

The report went on to add that Invesco, which is the single-largest shareholder in ZEEL, said after the proposed sale the three funds managed by its developing markets investment team will continue to own in aggregate at least 11% of ZEEL.

It underscores the investment team's belief that the Sony deal in its current form has great potential for ZEEL shareholders, Invesco’s statement read.

The three funds are launching a bookbuild transaction on April 6 to sell the shares, it added.

Under a bookbuild transaction, institutional investors such as fund managers are invited to submit bids for the number of shares and the price which they are willing to pay for the same.

"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," the statement said.

Last month, Invesco had said it would support the Zee-Sony merger deal and has decided not to pursue the call for an EGM of ZEEL to remove Managing Director and CEO Punit Goenka and two independent directors.

The company had also stated that it would support the merger of Zee and Sony saying the "deal in its current form has great potential for Zee shareholders" but added if it is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM.

Last year in December, Sony Pictures Networks India (SPNI) and ZEEL signed definitive agreements for merger of ZEEL into SPNI following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence.

At that time Invesco along with OFI Global China Fund LLC, which together hold about 17.9% stake in ZEEL, had opposed the deal.

When the merger deal was announced in September 2021, the two networks had stated that Sony would invest $1.575 billion and hold 52.93% stake in the merged entity and Zee the remaining 47.07%.

Under the terms of the definitive agreements, SPNI will have a cash balance of $1.5 billion at closing, including through infusion by the current shareholders of SPNI and the promoter founders of ZEEL.

ZEEL's chief executive Punit Goenka will lead the combined company as its Managing Director and CEO.

The merged entity will become India's second-largest entertainment network by revenue with 75 TV channels along with two video streaming services -- ZEE5 and Sony LIV). It will also house two film studios -- Zee Studios and Sony Pictures Films India and a digital content studio (Studio NXT).

When it is completed Sony Pictures Entertainment Inc will indirectly hold a majority 50.86% of the combined company and the promoters (founders) of ZEEL will hold 3.99%, while the other ZEEL shareholders will hold a 45.15% stake.

In July 2019, Subhash Chandra-led Essel Group had roped in existing investor Invesco Oppenheimer to raise its stake in flagship Zee Entertainment Enterprises by another 11% for Rs 4,224 crore.

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