Reliance Jio's interest to heat up race for Zee Entertainment stake

Mukesh Ambani-led Reliance Jio's likely bid for a stake in Zee Entertainment Enterprises (ZEEL) could lead to pitched corporate battles as many international players have also shown interest in the entertainment major.

While Jio may enter the fray for half of promoter Subhash Chandra-led Essel Group's stake in ZEEL,  global giants like Amazon, Apple, Tencent and Alibaba are also eyeing a share of the equity, as per media reports.

AT&T, Singtel, Comcast and Sony Pictures have also evinced interest, according to a report in Business Standard.

In November last year, the ZEEL promoters said they would divest up to 50 percent of their stake to the "right global strategic partner".

The equity restructuring would help the company maximise long-term growth and aid in better market penetration.

The move will also transform us from content only entity to a content-technology company which can thrive in the new digital world. We also believe this is in the best long-term interest of our minority shareholders

The Essel Group has appointed Goldman Sachs Securities India as the investment banker and the multinational LionTree as the international strategic adviser.

As of the September quarter, promoter and promoter group firms held 41.62 per cent stake in ZEEL.

"Even though our business is on a strong footing, given our global ambitions and the rapidly converging world of content and technology, we have decided to get a strategic partner with a strong technical expertise and global reach which will help us achieve our ambitions faster," newswire PTI cited ZEEL managing director and chief executive Punit Goenka as saying.

"The move will also transform us from content only entity to a content-technology company which can thrive in the new digital world. We also believe this is in the best long-term interest of our minority shareholders," he said, according to the report.

The strategic partner is expected to augment the company's capabilities in content, technology, and distribution and take the company's clientele beyond the Indian diaspora.

Capital allocation priorities

Goenka said the strategic review of Essel's shareholding will maximise the company's value for the business.

The proposal to divest up to 50 percent of promoter holding will address the group's capital allocation priorities. The capital will go into completely retire the debt of the promoters and pursue new interests, Goenka said.

Asked if its Silicon Valley arm Zee Media Labs, which is into technology innovation, will converge with the company after the strategic partner comes on board, he said: "That will depend on strategic partner's interest, though we are open to bringing both into the fold."