Oppenheimer Fund picks up 11% stake in ZEEL from its promoters for Rs 4,224 crores

New Delhi: Multi-faceted business conglomerate Essel Group, today announced that Invesco Oppenheimer Developing Markets Fund (hereafter referred to as “The Fund”) has agreed to make an additional investment in ZEE Entertainment Enterprises Ltd. (ZEEL).

The Fund has agreed to buy up to an 11% stake in ZEEL from its promoters, for a total consideration value of up to Rs. 4,224 Crore. Essel Group had initiated the process of divesting its key assets, intending to repay all the lenders by September 2019. During this divestment process, the Group has received a positive response from multiple partners expressing interest to buy the stake in ZEEL and the other key Non Media Assets.

Speaking on this development, Mr Punit Goenka, Managing Director and CEO, ZEE Entertainment Enterprises Ltd. said, “I’m extremely glad to share that the Fund as a Financial Investor has further reposed its faith in ZEEL. It also gives me immense pleasure to note their strong belief and trust in the intrinsic value of our precious asset. It is the valuable belief and support of our esteemed financial investors that enables us to consistently generate great value, year after year”. The announcement of 11% stake sale of ZEEL to the Fund is a strong step in the overall divestment process, giving the Promoters the required financial fillip to initiate the repayment process.

The announcement of 11% stake sale of ZEEL to the Fund is a strong step in the overall divestment process, giving the Promoters the required financial fillip to initiate the repayment process. As reported by the Economic Times The Oppenheimer offer was believed to be better than the Comcast led consortium’s offer of Rs 350/share, they add. 

The Invesco Oppenheimer Developing Markets Fund, which is an investment company registered with the US Securities & Exchange Commission, has a long history of investing in India as a financial investor. The Fund has been a financial investor in Zee Entertainment Enterprises Ltd. since 2002. Along with ZEEL, Essel Group is also in the process of divesting some of its Non-Media Assets. Essel Group is confident to complete the overall process of repayment, well within the agreed timeline.

On July 23, ZEEL MD Punit Goenka had said that “As per my last communication I had said that we had received two non-binding term-sheets. Out of that, we now have one binding offer with us. We are expecting to receive another binding offer over the next few days. Once both the offers are on the table, the promoter family will evaluate and make a decision. I will be talking to you again very soon about the transaction and how that will further strengthen Zee’s growth outlook”.

He had also said that “On the offer for stake sale, I am expecting the second offer to come in a matter of days. If that offer was not to come in, then, of course, we will be going with the binding offer that is already on the table. And I am quite hopeful that the second offer will also come in and therefore, the family would have enough discretion to make a decision.”

ZEEL had announced plans to sell promoter’s stake back in November to a global strategic investor. While it was open to selling more than 50 % of promoter stake back in January, it ended up in a far better position leading them to rethink whether they needed to sell that much stake as thought earlier. The company’s negotiation power had gone up following the sale of Essel Infrastructure’s assets which helped in reducing its debt.

The company had a deadline until September 2019 to pay part of its dues to its lenders. The company’s stock had tanked in January following which the promoters met with its lenders and agreed to pay back the loan by September 2019. Given the time need for regulatory clearances needed, ZEEL had set July as the deadline to seal the deal. CCI approvals need at least 30-45 days after the deal is finalized on paper.

At the time going to press ZEEL’s shares were trading at Rs 361.45 apiece, down 5.18 per cent or Rs 19.75 as compared to the previous close of Rs 381.20 on the BSE.

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