The consideration that Invesco Oppenheimer has agreed to pay for the additional stake in Zee implies a per share valuation of around ₹400. Zee’s share price closed at ₹361.45 apiece on the BSE on Wednesday, down 5.18%. The bourse’s benchmark index, S&P BSE Sensex gained 0.22% on the same day to end at 37,481.12 points.

Most importantly, the stake sale to a financial investor allows the current management, led by Chandra and his sons Punit and Amit Goenka to remain in charge of the company and the entertainment brand that they have built in India and global markets since 1992. In the run-up to Wednesday’s announcement, the names of several suitors have done the rounds. These range from Sony Pictures Networks to China’s Alibaba, Mukesh Ambani-led Reliance Jio Infocomm and even Google and Comcast.

Proceeds from the stake sale will give much-needed liquidity to the group, which has been struggling with debt ever since the IL&FS crisis roiled the NBFC (non-banking financial companies) sector, making it virtually impossible to rollover existing debt. On November 13, 2018, Zee had issued a statement saying that its promoters had reached an agreement to sell up to half of their holding in the company (which at that time amounted to around 21%) to a strategic investor to help Zee become a global “media-tech company.” In a subsequent pen letter to stakeholders, Chandra admitted that the group was facing financial difficulties and committed to repaying lenders in full by utilising proceeds from the stake sale in Zee, along with the monetisation of other infrastructure assets with the business house.

As on June 30, 2019, the promoters’ stake in Zee had come down to 35.79%, about 64% of which was pledged with lenders. The Essel Group has a debt of around ₹17,000 crore and it needs to make a payment of about ₹7,000 crore to mutual funds by September to avoid a default. It isn’t immediately clear if the promoters are contemplating a further stake sale in Zee to mobilise additional resources to meet their debt obligations. In an interview with Fortune India in November 2018, Punit Goenka had stated that the infrastructure assets of the group, including roads and renewable energy, should yield an equity value of ₹8,000 crore, which along with the stake sale in Zee should be enough to comfortably deleverage the group’s balance sheet.

Zee has a presence in over 173 countries and a reach of more than 1.3 billion people around the globe. It is present across broadcasting, movies, music, digital, live entertainment and theatre businesses with more than 260,000 hours of television content. Its recently launched video streaming platform Zee5 has risen to become the second largest OTT (over-the-top) player in India in terms of monthly active users, behind Star India’s Hotstar.

Comcast

Promoters sell 11% in Zee to Invesco Oppenheimer for ₹4,224 crore