Media tycoon Subhash Chandra-led Essel Group said on Wednesday it is planning to sell a 16.5% stake in Zee Entertainment Enterprises Ltd to financial investors to repay loans.
Of the total, Essel Group plans to sell a stake of around 2.3% in Zee to OFI Global China Fund, LLC or its affiliates. OFI Global is an investment vehicle of Invesco Oppenheimer Developing Markets Fund.
The group’s stake in Zee after the sale will fall to about 5%, according to a stock-exchange filing. The stake pledged by the group to take on loans will reduce to around 1.1%, the filing showed.
The group didn’t specify the price at which it would sell the stake. Shares of Zee Entertainment jumped 7.5% to close at Rs 307.15 apiece on the BSE, giving the company a market capitalisation of Rs 29,501 crore. This would value the 16.5% stake around Rs 4,868 crore ($678 million).
Essel Group owned a 22.37% stake in Zee at the end of September, stock-exchange data showed. As much as 96% of this total—or a 21.5% stake in the company—was pledged to lenders.
The lenders to whom the shares have been pledged have consented to the share sale, Essel said.
“This development reaffirms the group's positive progress on its overall asset divestment approach, undertaken to generate adequate liquidity for the repayment process,” it said.
“The group is also working actively on further divestments including its media and non-media assets and remains confident to complete the same,” it added.
OFI Global China Fund held an 8.7% stake in Zee at the end of September while Oppenheimer Developing Markets Funds separately owned 7.74%.
In July, Essel Group had said that it would sell up to 11% of Zee to the Oppenheimer Developing Markets Fund for Rs 4,224 crore ($613.6 million then).
Essel Group runs several ventures across various channels, including television, music and digital platforms. Its product portfolio includes TV channels such as Zee TV and &TV, Zee Music Company and digital platforms such as Cricket Country and Bollywood Life. It had started the process to divest key assets late last year with an aim to repay its lenders.