Zee Entertainment Enterprises‘ board of directors has given an in-principle approval to raise funds up to Rs 2,000 crore by issuing equity shares or other eligible securities.
In a regulatory filing, the company said that the fundraising will be conducted in one or more tranches.
“Further to the intimation dated June 3, 2024, we wish to inform that the board of directors of the company, inter-alia, considered and given its in-principle approval for raising funds by way of issuance of equity shares and/or any other eligible securities (convertible/nonconvertible) through permissible modes in one or more tranches, including but not limited to a private placement, a qualified institutions placement, preferential issue, or any other method or combination of methods, provided that the aggregate amount to be raised by issuance of such securities shall not exceed Rs 2000 crores and subject to such regulatory/statutory approvals, including approval of the shareholders, as may be required,” the company stated.
It also said that this will enable the company to enhance its strategic flexibility to pursue future growth opportunities in the evolving media landscape.
This comes after Sony India terminated its $10 billion merger agreement with Zee Entertainment in January this year.
Commenting on the development, Karan Taurani, Senior Vice President and Research Analyst (Media, Consumer Discretionary & Internet) at Elara Capital, said, “The fundraising could be through a preferential allotment to promoters or by raising money via QIP. Either way, we believe this will boost investor confidence, which has been low since the merger with Sony was called off. The total fundraising amount is up to Rs 20 billion, which is about 14% of the current market cap, though we don’t expect the entire amount to be raised.”
“We expect that the cash infusion could lead to improved investor confidence and sentiment, and business expansion and investments, given the increased competitive intensity in the sector following the RIL-Disney merger. As of FY24, the company has a cash balance of Rs 12,300 million and generated free cash flow of Rs 5,838 million. We maintain a positive stance on the stock and await more clarity on the fundraising,” he added.
