The promoters of Zee Entertainment will hike their shareholding in the company from nearly 4% to 18.39% by investing Rs 2,237 crore in a preferential issue of 169.5 million fully-convertible warrants, the firm said on Monday, signalling their intent to support the company for the long term.
While Zee’s promoters did not disclose how the funds would be raised, the company, in a notification to the stock exchanges, said the warrants will be issued at Rs 132 apiece, which is 2.65% higher than the Sebi-prescribed floor price of Rs 128.58 per warrant.
After conversion of the warrants, the stake of mutual funds, which is 9.49% at the end of the March 2025 quarter, will reduce to 8.07%; insurance companies will decline to 5.18% and foreign portfolio investors’ stake will come down to 19.40% from 22.83%. Retail investors will see their stake fall to 28.56% from 33.61%, data from BSE show.
Proxy advisory firms which FE spoke to said that the stake enhancement could be part of a broader plan of the promoters to increase their shareholding to 26% in the company in the future. In January 2024, Subhash Chandra, the founder of Zee Entertainment, had indicated that he wished to increase the promoter shareholding in the company to 26% without using debt.
“It (stake increase) will take time. We will need a lot of money. But we are clear that we are not going to raise funds from the outside. We don’t want debt,” Chandra said at that time.
Shriram Subramanian, founder and MD of InGovern Research, a proxy advisory firm, said that the move to hike promoter shareholding while positive would require shareholder approval. “It shows that the promoters are willing to support the company and stay invested for the long term. However, it will require shareholder approval,” he said.
R Gopalan, chairman of Zee, said the promoter stake enhancement was discussed as part of its broader deliberations with regard to the firm’s future growth plans. Last month, Zee announced that it was transforming to a content and technology company as it sought to get future-ready.
“The board has deliberated upon the various alternatives discussed with JP Morgan and has 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,” he said.
Last week, Zee had announced that it had entered into a strategic equity partnership with content and tech startup Bullet, co-founded by serial entrepreneurs Azim Lalani and Saurabh Kushwah. While it did not disclose the stake size or investment amount in Bullet, the partnership with the latter would see the launch of a new “micro-drama” application, which was focused on fast-paced, creator-driven, short-duration content, targeted at mobile-first audiences. This was the first investment by Zee post its transformation into a content and technology company last month.
“As the digital ecosystem grows exponentially, we are constantly identifying several value-accretive opportunities to drive scale,” Zee said.
The company, which is listed on the stock exchanges, closed FY25 with revenue of Rs 8,294 crore and net profit of nearly Rs 680 crore. While revenue was down 4% amid tightening of ad budgets by advertisers, net profit rose four-fold as the company pruned costs and workforce in a bid to improve earnings.
In the last few quarters, the company has increased its focus on improving margins and giving a push to content and technology initiatives after it failed to merge with Sony (in 2024) amid consolidation in the domestic media market.