Oppenheimer buys 11% stake in ZEEL

The ₹4,224-crore deal will help Essel Group to partially meet debt obligations of about ₹12,000 crore.

ZEEL MD & CEO Punit Goenka said Oppenheimer, as a financial investor, has further reposed its faith in his firm. Paul Noronha

Media baron Subhash Chandra’s Essel Group has sealed a deal with private equity fund Invesco Oppenheimer Developing Markets Fund, which will pick up 11% stake in Zee Entertainment Enterprises Ltd. (ZEEL) for ₹4,224 crore. The proceeds will help the group, which was scouting for an investor for months, to partially meet its debt obligations.

Oppenheimer, which already has 7.74% stake in ZEEL, will buy 11% from the promoter group. By inference, this works out to ₹400 per share, a 10.6% premium to Wednesday’s closing price. The promoters of ZEEL currently hold 35.79%.

Still, the group has a long way to go to bring down debt, which will stand at around ₹8,000 crore post the deal.

‘Strong step’

“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 company said in a statement.

“The deal is ideal for Essel promoters as they will continue to run the company and provide continuity for business, a critical thing for media businesses,” said Abneesh Roy of Edelweiss Securities. The group was open to selling stake to a global player in the media entertainment business, which would have helped them to expand footprint overseas, but was not averse to any financial investor.

“I’m extremely glad to share that the Fund [Oppenheimer] as a financial investor has further reposed its faith in ZEEL,” said Punit Goenka, managing director and CEO, ZEE Entertainment Enterprises Ltd.

Along with ZEEL, Essel Group is also in the process of divesting some of its non-media assets like solar and road projects to raise funds.

“Essel Group is confident of completing the overall process of repayment, well within the agreed timeline,” the statement said.

The group had earlier said that it had entered into an agreement with lenders who had taken pledged shares of the group flagship and listed entities — Zee Entertainment Enterprises and Dish TV India — to not declare the group as a defaulter till September end despite a fall in share price.

“Essel Group had initiated the process of divesting its key assets, with an aim to repay all the lenders by September 2019,” the statement said. “During this divestment process, the group has received positive response from multiple partners expressing interest to buy the stake in ZEEL and the other key non-media assets,” it added. ZEEL stocks ended 5.18% lower than its previous close, at ₹361.45 a share.