India’s Reliance Industries held talks with Zee on possible tie-up, reveals Invesco

ZEEL CEO Punit Goenka. Photo: Mint

Invesco said on Wednesday that it facilitated talks between India’s Reliance Industries and Zee Entertainment earlier this year on a possible tie-up, revealing for the first time that India’s richest man, Mukesh Ambani, was interested in the television giant.

But the U.S. investment firm rejected allegations from Zee that it was resorting to double standards by objecting to a potential merger with Sony Group’s India unit with terms similar to those discussed with Reliance.

Invesco‘s response is the latest in a growing public spat where the U.S. investor, which owns 18% of Zee, is calling for a revamp of Zee’s board and the removal of CEO Punit Goenka over alleged corporate governance lapses.

Zee said on Tuesday that the opposition by Invesco to the proposed Sony deal “runs contrary to the very deal Invesco was proposing” with Reliance and that the U.S. firm’s demands were not motivated by concerns around corporate governance or the company’s business.

Zee has accused Invesco of plotting a hostile takeover of the company, dismissed requests to call a shareholder meeting to vote on the U.S. investor’s demands and said it has tightened its processes.

The two sides are now locked in a bitter legal and public tussle where they are lashing out at each other almost daily. Invesco has asked an Indian tribunal to order Zee to call the meeting, and Zee has two weeks to respond.

While the Zee comments on Tuesday did not name which entity Invesco had tried to arrange a deal with, the U.S. firm’s statement revealed for the first time that it was Reliance, the giant conglomerate run by Mukesh Ambani.

“The role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more,” Invesco said.

“…the implication that we as a shareholder would seek out a transaction for Zee that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic.”

Reliance and Zee did not immediately respond to requests for comment.

Reliance has a vast media presence in India through its Network18 business that includes VH1, Nickelodeon, MTV and a range of other local language channels as well as news portals Firstpost and Moneycontrol and news channels CNN-News18 and CNBC TV18.

But Zee’s statement on Tuesday said it had rejected the Reliance deal offer over valuation concerns and that “it would result in a loss to the stakeholders of the company.”

Invesco has alleged that financial irregularities that have plagued Zee and have been flagged by India’s market regulator, were linked to Goenka’s family.

In an open letter to Zee shareholders this week, Invesco objected to initial terms of the Sony deal that they said give the founding family of Zee an option to ramp up their stake to 20%, from 4%, via methods that remain “wholly opaque”.

In recent weeks, Zee, which is a household name in India’s television and film landscape, has found support from Bollywood stars, who have said on social media they hope the crisis ends soon for the group.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.