Invesco Oppenheimer funds have been an investor in ZEEL since 2002. It held 7.74 per cent in the company as of June 30, according to exchange data. Post completion of the deal, the Oppenheimer stake in the company will be around 19 per cent.
Though this transaction provides some breathing space to the Essel Group promoters, it doesn’t entirely resolve the group level debt issue, according to analysts at JP Morgan.
The foreign brokerage firm believes the medium-term growth outlook faces risk from the need for sustained high investments to ensure a successful play in the over-the-top (OTT)/Digital segment (growing ad revenue shift to digital medium, intensified competitive landscape) and growing consolidation amongst telcos (content aggregation, TV distribution, etc).
Debt is around Rs 11,000 crore at the group level as on FY20. Analysts at Elara Capital believe this stake sale has resolved only half of concerns.
"The only positive outcome of this deal is promoters retain control and are motivated to run the business. However, we are surprised by management’s confidence over fetching a higher value for non-media assets (infra, solar and transmission), given troubled times in these verticals," the brokerage firm said in a company report dated August 1, 2019.
The stock does not provide scope for a major rerating, given the threat of digital content consumption, which would be bolstered further by the launch of Jio FTH in the near term, it added.
At 01:15 pm, ZEEL was trading 6 per cent lower at Rs 312 on the BSE, as compared to a 0.85 per cent rise in the S&P BSE Sensex. A combined 15.6 million shares changed hands on the counter on the BSE and NSE till the time of writing this report.