Zee Deal: Mutual Funds Not Out Of The Woods Yet, Says Ican Investments’ Anil Singhvi
Singhvi said SEBI should impose a ban on mutual funds lending against the pledge of promoters’ shares.
Subhash Chandra-led Essel Group’s Rs 4,224-crore deal to sell stake in the flagship broadcaster Zee Entertainment Enterprises Ltd. is “too little, too late in the day”, according to Ican Investments Advisors’ Anil Singhvi.
“The fund managers expected the deal to get done at a much higher valuation,” the chairman at the advisory firm told BloombergQuint in an interview. “But now they will have to wait till September-end for another similar transaction (to get their remaining dues settled).”
Promoters of Zee Entertainment agreed to sell 11 percent stake in India’s largest broadcaster to Invesco Oppenheimer Developing Markets Fund at Rs 400 apiece. That’s expected to help the promoters to pare debt. Oppenheimer Fund, according to exchange filings, owns 7.74 percent stake in Zee Entertainment as of June. Essel Group, which had offered shares of Zee Entertainment as collateral, had struck a standstill with lenders, particularly mutual funds, who agreed not to sell pledged shares till September-end.
Singhvi said the market regulator should impose a ban on mutual funds lending against the pledge of promoters’ shares. “They (fund managers) should not be playing with fixed income investors’ money as here period and interest is assured unlike equity risk.”
A fixed-income fund manager’s role is to sell the underlying securities and pay to the interest-bearing fixed income investors. Unfortunately, mindset of most of the fixed-income fund managers is like an equity fund manager. You can take the risk in equity. Good faith reposed (by investors on fund managers) can’t be abused like this.Anil Singhvi, Chairman, Ican Investments Advisors