The largest shareholder of ZEEL- Invesco, which was until recently involved in a legal battle with the entertainment major, decided to reduce its stake in the latter via block deals on Thursday.
Invesco which holds a total of 17.88 percent stake along with OFI Global China Fund LLC, will offload around 7.8 percent of the equity by selling 7.4 crore shares, which is worth over Rs 2,200 crore of the stock. Kotak Mahindra will be the banker for the block deal.
The decision comes a few weeks after Invesco announced that it has decided to withdraw its requisition notice that sought the removal of MD and CEO Punit Goenka from the board of ZEEL.
According to Karan Taurani of Elara Capital, the probable reasons for Invesco selling its stake can be they may still not want Punit Goenka as CEO of the company.
“Invesco believes that the merger deal with Sony may not go through due to regulatory hurdles. They want to reduce exposure in the company and hence reduce stake by 8% towards 10%,” observes Karan.
Throwing some light on the impact of the stake offloading, Karan said, “In case of no corresponding buyer for the entire block being absorbed, We believe there will be immense pressure on the share price over the near term, which will remain very volatile and in turn negatively impact investor confidence – high likelihood of negative impact on investor confidence.
“This may also have a negative impact on Sony Group, which is in the final stages of a merger with zee – the low likelihood of Sony backing out,” he observes.
“On the flip side, if the entire block is absorbed by another financial investor, it may make the voting and another approval process easier for Zee – low likelihood scenario as the block is relatively large in size and the company is loosely held among public and investors with a mere 4% promoter stake,” Karan concluded.
