Zee Entertainment Enterprises shares fall 3% in opening trade; here’s why

Shares of Zee Entertainment Enterprises declined more than 3% in opening trade on Thursday, in line with the benchmark index Sensex, which dropped 265 points to 59,345 levels. The stock price of the entertainment major tumbled after the U.S.-based investment firm Invesco decided to cut its holding in the company.

Invesco Developing Markets Funds, the largest shareholder of Zee Entertainment, is expected to offload up to 8% stake in the company via block deals on Thursday. Invesco, which currently holds 18.8% equity shares in the media conglomerate, is likely to raise around ₹2,200 crore via stake sale at a price range of ₹270 and ₹290 per share.

Reacting to the news, Zee Entertainment Enterprises shares opened lower at ₹285.35 against previous closing price of ₹290.95 on the BSE. The stock declined as much as 3.4% to hit an intraday low of ₹281.1 in the first hour of the trade so far. On the volume front, there was a spurt in selling as 897 lakh shares worth ₹2,538 crore changed hands over the counter as compared to two-week average volume of 13.6 lakh stocks. The market capitalisation of the largecap stock dropped to ₹28,272.8 crore.

The stock traded higher than 20-day, 50-day and 200-day moving averages, but lower than 5-day and 100-day averages. It has gained over 2% in a week, 24% in one month, and 47% over a period of one year. On the year-to-date basis, the stock has given a negative return of 8%. It hit a 52-week high of ₹378.60 on December 15, 2021, while it touched a 52-week low of ₹166.80 on October 23, 2021.

Invesco’s decision to reduce stake came in the backdrop of boardroom battle with Zee Entertainment Enterprises over the ouster of Zee's chief executive officer and the appointment of new independent board members. Last month, the company had withdrawn its demand for an extraordinary general meeting (EGM) that sought the removal of MD and CEO Punit Goenka from the board of Zee.

“Three funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, are launching a bookbuild transaction today to sell up to 7.8% of the share capital of Zee Entertainment. 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," Invesco said in a statement.

“Upon completion of the bookbuild, funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, will continue to own in aggregate at least 11% of Zee, underscoring the investment team’s belief that the Sony deal in its current form has great potential for Zee shareholders," the statement further read.