Zee to raise over ₹2K cr from preferential issue of convertible warrants

Promoter group to invest Rs 2,237 crore in ZEEL via preferential warrants, raising stake from 3.99 per cent to 18.39 per cent to support growth and strategic vision

Zee Entertainment Enterprises (ZEEL) will raise over Rs 2,237 crore from the preferential issue of convertible warrants, as its board of directors on Monday approved the promoters increasing their shareholding in the company.

 

These warrants are proposed to be allotted to Altilis Technologies or Sunbright Mauritius Investments, according to the stock exchange filing.

 

The promoters’ shareholding in ZEEL will rise to 18.39 per cent from 3.99 per cent.

 

“In a second board meeting held later in the day, the board of directors considered the various alternatives discussed by JP Morgan and, after due deliberations, adopted and approved the enhancement of promoter shareholding by issuance of up to 16,95,03,400 fully convertible warrants to the promoter group entities on a preferential basis, at Rs 132 per warrant. The promoters of the company will participate in the fundraising exercise by investing Rs 22,37,44,48,800 (Rs 2,237.4 crore) for the company’s next phase of growth, taking the total promoter shareholding to 18.39 per cent. The preferential issue is subject to shareholders’ approval,” it said in a statement.

 

Before this, the promoter and promoter group, led by Essel Group’s Chairman Emeritus of ZEEL, Subhas Chandra, and his family, held 3.99 per cent of the shareholding in the company, according to the Bombay Stock Exchange (BSE). Its shares closed at Rs 138.25, up by 0.68 per cent, on NSE.

 

Shubham Shree, on behalf of the promoter group, was quoted saying, “The promoters submitted their desire to enhance their shareholding to the board on 1 May when the stock price was at Rs 106.35; however, they are committed to the company and its business even at this higher price.” 

 

The Mumbai-based broadcaster also had another meeting with JP Morgan, an investment bank, it stated in its release, where the latter presented an assessment of the company’s growth plans and strategic initiatives and also discussed the market perception of the stock and potential alternatives with the board, ZEEL said.

 

R Gopalan, Chairman, ZEEL, said in a statement that the board had deliberated upon the various alternatives discussed with JP Morgan and conducted a thorough evaluation of the company’s growth plans.

 

“The board believes that the steps being implemented to enhance the promoter shareholding will ensure their added motivation to work in line with the enhanced business plan. The investment by the promoters, coupled with the strong, ambitious growth initiatives planned by the management team, will ensure that ‘Z’ (the new brand logo) remains well-positioned to accelerate its strategic plans to achieve its targeted aspirations,” he added.

 

This comes a month after the company announced its rebranding process and a new phase of growth backed by its focus on content and technology, and its long-term vision around ZEEL’s performance and profitability. These steps follow the company implementing several cost-cutting measures in FY25, after Punit Goenka, Chief Executive Officer (CEO), ZEEL, said in the earnings call for the January–March quarter that there is no room for cost-cutting right now for the expansion of its EBITDA margin.

 

In June, the company also announced a strategic equity partnership with content and technology start-up Bullet, where ZEEL is expected to either invest or acquire a stake in the platform, it had stated in the stock exchange filing. Bullet developed India’s first micro-drama application focused on fast-paced, creator-driven content through short-duration vertical format episodes targeted towards younger audiences.