Speaking to CNBC-TV18, Hetal Dalal, President and COO of Institutional Investor Advisory Services (IiAS), pointed out that the fundraising could dilute existing shareholders by nearly 18-19%, making it important for the company to provide a clear explanation. “The question, therefore, is that if they have to, they will have to seek shareholder approval, but they will have to explain more specifically why they need to actually raise this money,” she said.
The fundraising proposal marks the latest attempt by Zee to secure fresh capital. Similar efforts were made over the past two years, including a proposal involving warrants to promoters that was eventually voted down by shareholders. Dalal noted that the company has consistently sought to raise around ₹2,000-2,300 crore, but has yet to offer a convincing justification for doing so.
Shriram Subramanian, Founder and MD of InGovern, said institutional investors may remain sceptical because little has changed at the company since the previous fundraising attempt. “Nothing has changed since last year. Neither the board has changed, nor management has changed, nor any strategy or any large initiative has panned out,” he said.
A key concern is the lack of clarity around who will provide the capital. The board has approved the fundraising plan, but details about the investor, the instrument to be used, and the purpose of the funds have not yet been disclosed. According to Subramanian, shareholder opinion could vary significantly depending on whether the investor is a promoter, a strategic partner or a financial investor.
Dalal believes the current proposal appears more like an enabling resolution than a fully developed fundraising plan. She noted that promoters have previously expressed interest in increasing their stake in the company, and shareholders are likely to seek more details before deciding.
There is also market speculation that Zee could use the funds to expand its digital and streaming businesses or pursue other value-unlocking opportunities. However, Dalal said investors would need more than broad promises. She argued that the company must present a structured plan showing where the money will be invested, how it will be used and what outcomes shareholders can expect.
For now, the proposal remains subject to shareholder approval. When it comes up for a vote, Zee will likely have to answer a simple question from investors: why raise ₹2,300 crore and dilute shareholders when the company already has substantial cash reserves?
Watch the full discussion here
Shares of Mumbai-based Zee Entertainment Enterprises have declined nearly 20% in the last year, with the company currently commanding a market capitalisation of about ₹10,161.33 crore.
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