Three weeks after the report was released, Zee’s biggest investor said it did not see the future of founder Subhash Chandra’s eldest son in the company.
On Monday night, Zee shared a six-page letter dated September 11 with the BSE, asking Invesco to hold an extraordinary general meeting and ask shareholders to sack Goenka, remove two other independent directors and appoint six. asked to vote on new proposals including New Independent Director.
Two independent directors, Manish Chokhani and Ashok Kurian, stepped down immediately even though they were seeking reappointment from shareholders at the company’s annual general meeting held on Tuesday.
Zee’s response was brief: it would “take necessary action in accordance with applicable law”.
As per the rules governing companies, Zee has 21 days from October 2 or the day when investors holding more than 10% of the shares in the company call for the EGM, failing which Invesco itself Shareholders can be asked after giving 21 days notice. , to vote on resolutions.
On Tuesday, the management deferred the only question asked on Invesco’s activation when Zee held its AGM.
What prompted Invesco, which owns 17.88% in the company through Invesco Developing Market Fund and OFI Global China Fund LLC, to move forward with such brute force?
The decision was triggered by a note by Dish TV India Ltd, a proxy advisory firm, and a 55% drop in the value of Zee shares held by one of the world’s largest fund managers, with three executives privy to the development. But said.
“Seeing what State Bank-controlled Yes Bank is doing in Dish has given Invesco confidence,” said one of the three people. “Investors have raised issues of corporate governance, but given Zee’s influence many funds were sitting otherwise,” the executive said, referring to Chandra’s allegiance to the ruling party.
On 6 September, Dish TV told BSE that Yes Bank, which owns 25.63% of the firm, had sought replacement of five directors, including managing director Jawahar Goyal, Chandra’s younger brother.
Only on 1 September, Institutional Investor Advisory Services India Limited (IIAS), the proxy advisory firm, put out a note asking investors to decline the reappointment of directors of Chokhani and Kurien. IIAS also reminded shareholders that CEO Goenka’s remuneration was higher than what was approved at last year’s AGM.
“We believe that the board should bring in the right mix of professionals who have an understanding of the media and digital business. Furthermore, having former promoters on the board may hinder the directors’ ability to make tough decisions,” said IIAS said in his note.
Another executive said, “IIAS briefed Invesco about the developments in Zee and what was happening on Dish TV.”
Amit Tandon, founder of IIAS said, “Look, we are not the loudest voice and just another voice in the room.” Invesco took a 9.4% stake on 31 July 2019, which angered those managing the fund.
invesco spending ₹3,894 crore to buy 10.14% stake in Zee ₹400 per share two years ago, according to an analysis by Mint. This was in addition to the already existing 7.74% stake. At that time, Invesco’s total stake in Zee was worth ₹6,606.6 crores.
Were trading on Zee’s stock on September 11 ₹183 per share, meaning a 55% drop in Invesco’s two-year-old investment ₹1,360 crores. Invesco’s total stake in Zee halved ₹3,141 crore.
“I understand they (Invesco) really ran out of patience. In fact, I’m surprised they’ve been around for so long without a board seat or a change in management,” said a third executive, A former boss in an IT services firm.
An email sent to Invesco seeking comment remained unanswered.
A fourth executive said, “The battle for control over both Dish and Zee could get longer and longer as the promoters cannot give up so easily.”
Sriram Subramaniam, founder and managing director of proxy advisory firm InGovern, said, “Zee was great for this kind of shareholder activism as it had a large free float, small promoter holding, good operating cash flow and the stock was trading at attractive valuations. ” Research. “However, it is surprising that Invesco has not yet made any clear plans for shareholders.”
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