Zee Entertainment Enterprises (Zee) managing director and chief executive officer Punit Goenka on Thursday issued a statement that questioned Invesco Developing Markets Fund’s earlier silence on the proposed merger with Reliance Industries (RIL) in February this year. In what he hoped would be his “first and last communication” on the matter, Goenka, on a personal note, questioned Invesco for not making its plans public earlier.
He went a step further and wondered why the rules of good corporate governance didn’t apply to institutional investors. However, he did not elaborate on what corporate governance standards rules did Invesco not abide by. He said in his note, “Does good corporate governance only apply to corporates and not their institutional investors?”
Goenka reiterated his earlier stance that the merger (as proposed by Invesco) was opposed as the valuation was not in favour of shareholders.
“I acknowledge the stance that has been taken by Invesco, but communications pertaining to such proposals are always well-documented, and they speak to the contrary. I too have a lot of points to put across, but I firmly believe that there is a right time and place for it,” Goenka said in a statement. However, the statement did not elaborate on what he termed as “contrary”.
He said that even though he had a lot of points to put across, he believed there was a time and place for it. Explaining his silence on the matter, Goenka said it was “better to break it at the right time, so that truth comes to the fore”.
Goenka also acknowledged that Invesco had been “an extremely strong support” to Zee and said it pained him to see this relationship going sour today due to the unfortunate circumstances. “Our lawyers will do the needful in the court of law, as deemed necessary,” he said, adding “Unfortunately, the way the current situation is unfolding is what disappoints me”.
Earlier, on Wednesday, Invesco had alleged that Goenka and other members of the promoter family had negotiated a deal with RIL and it was a “facilitator”. This was the first time RIL’s name had cropped up in the issue as Zee had not named the business conglomerate earlier, but termed it as a large Indian group.
Earlier, Zee had accused Invesco of approaching Goenka with a merger proposal on behalf of a rival company, which, if accepted, would have led to a loss of Rs 10,000 crore for Zee’s shareholders. On the proposed merger with RIL’s media firms, Zee’s CEO said during his briefing to the board, he had emphasised on the points pertaining to the proposal from Invesco.
“My attention was on the imbalance observed in the valuation and how it was not in the best interest of our shareholders. The only reason I did not agree to the proposal was because the shareholder value was getting compromised. I will withstand any amount of pressure to preserve Zee’s intrinsic value and ensure that nothing impacts the returns being delivered to all the shareholders,” he added.
Invesco – which together with its subsidiary OFI Global China Fund holds a 17.88% stake in Zee – is fighting a legal battle with Zee board, after its two requisition notices (dated September 11 and September 23) to hold an EGM and evict certain directors were not honoured.
Invesco had sought ouster of Punit Goenka and two non-executive directors, alleging breach of corporate governance norms. It has also sought induction of six of its nominees on Zee’s board.