Everything you want to know about Invesco, the fund seeking removal of Zee Entertainment's Punit Goenka

Everything you want to know about Invesco, the fund seeking removal of Zee Entertainment's Punit Goenka

The Atlanta-based fund has significant holdings in the likes of Taiwan Semiconductor and Tencent Holdings, apart from HDFC, Kotak Mahindra Bank, TCS, Infosys.

Invesco has sought the ouster of Punit Goenka. Invesco has sought the ouster of Punit Goenka.

Two summers ago, the stock of Zee Entertainment Enterprises was under pressure in August. It was getting battered and during that difficult period, Invesco-Oppenheimer, a global fund, decided to pick up a 11 per cent stake for Rs 4,224 crore in the Subhash Chandra-promoted company.

The money could not have come at a better time since Chandra's Essel Group was saddled with a debt of Rs 13,000 crore and a potential default to the extent of Rs 7,000 crore was barely a month away.

With this stake, Invesco-Oppenheimer, in all, held 18 per cent of Zee; the first lot of 7.74 per cent was picked up by Oppenheimer in 2002 and in May 2017. The fund was acquired by Invesco, now Atlanta-headquartered, for close to $6 billion. The pessimism of a falling stock price had obviously not deterred Justin Leverenz, the then portfolio manager of Invesco-Oppenheimer Developing Markets Fund.

A statement put out quoted him as saying that their "analysis gives them confidence that the underlying business at Zee remain structurally sound and offer an opportunity for meaningful growth over the years to come." Interestingly, the deal was struck at Rs 400 per share, the day it closed at Rs 327.40.

The following March, after the announcement of COVID-induced lockdown, the stock price plummeted to Rs 128, meaning the fund had seen a drop of 68 per cent in its investment value in just seven months. Of course, with the announcement of a proposed Zee-Sony merger, the story has happily changed with the stock zooming away (it quotes at over Rs 320) leaving the fund in a less challenging position.

Also Read: Invesco renews demand for EGM to reshuffle Zee Entertainment board
A quick look at Invesco Developing Market Funds on Invesco website - the Oppenheimer name has since been dropped - throws up a few interesting points. For the quarter ended June 30, 2021, Zee Entertainment accounted for 0.93 per cent of the total net assets. Its largest investments are in Taiwan Semiconductor Manufacturing at 7.43 per cent and China's Tencent Holdings at 6.35 per cent.

Among Invesco's larger holdings in Indian companies are HDFC (4.40 per cent), Kotak Mahindra Bank (2.82 per cent), TCS (2.49 per cent), Infosys (1.37 per cent), while those with smaller stakes -- of less than 1 per cent -- are HDFC Bank, Oberoi Realty, Godrej Properties, HDFC Life Insurance and Havells India.

Incidentally, Leverenz runs the fund as Team Leader and Senior Portfolio Manager. Invesco's Assets Under Management (AUM) at the end of June stood at $1.5 trillion. Taken at Zee's current market capitalisation, Invesco's holding stands at around Rs 5,600 crore.

As things stand, Invesco is no mood to give up on the corporate governance issues at Zee. Even as it has sought the ouster of Punit Goenka, Zee's MD & CEO, how the story plays out remains to be seen. With Zee now pushing for a merger with Sony, the question is really about who will blink first.   

Also Read: Zee-Sony merger: A win-win for both, strategically and geographically