Zee Entertainment promoters to infuse ₹2,237 crore to strengthen balance sheet; Shares up 3%

Shares of Zee Entertainment Enterprises Ltd. opened with gains of 3% on Tuesday, June 17, after the board approved the issuance of 16.95 crore fully convertible warrants for a total cash consideration of approximately ₹2,237 crore.

Each warrant is priced at ₹132, which is at a 4.5% discount to Monday's closing price. The warrants will be allotted to two promoter group entities, Altilis Technologies Private Limited and Sunbright Mauritius Investments Limited.

This preferential allotment will increase the promoter group's stake from 4.28% to 18.39%.

The board held two meetings on Monday. In the first, investment bank JPMorgan India presented a review of strategic alternatives for Zee, including potential growth initiatives. During the second meeting, the board considered these options and aligned on a strategic direction for the company.

Zee said that, in line with its future ambitions, it is taking the necessary steps to identify and invest in new growth avenues and capitalize on emerging opportunities.

In July 2024, the board had also approved a ₹2,000 crore fundraising plan via foreign currency convertible bonds (FCCBs) in 10 tranches. As of March 31, 2025, only the first tranche had been utilized, with ₹200 crore drawn.

The company's cash and cash equivalents stood at ₹2,406 crore as of March 31, 2025.

Strategic Direction Going Forward

The newly raised funds will be used to strengthen the company’s financial foundation, fortify core business segments, and explore high-growth, value-accretive opportunities.

Zee emphasised its ongoing focus on transforming into a Content and Technology Powerhouse.

Brokerage firm Kotak Institutional Equities has a 'Reduce' rating on Zee Ent, with a price target of ₹127. The brokerage firm retained its 'Reduce' stance as its awaits clarity on end-use of growth capital and a broad-based recovery in the linear TV ad environment.

According to Zee, the raise serves the dual purpose of (1) fortifying the core business and potentially funding value-accretive growth opportunities and (2) enhancing promoter stake and accountability.

Kotak has raised target multiple to 13x from 12x earlier.

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