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Business News/ Mutual Funds / ZEE-Sony merger collapse: Mutual funds that have highest and lowest exposure to ZEE
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ZEE-Sony merger collapse: Mutual funds that have highest and lowest exposure to ZEE

Out of the 42 AMCs, only 29 invested in ZEE, while the remaining 13 held a very small amount of the stock, with ICICI Mutual Fund holding the highest exposure to ZEE.

Fisdom Research has delved into the mutual fund landscape, examining which Asset Management Companies (AMCs) maintain Zee Entertainment in their portfolios. (REUTERS)Premium
Fisdom Research has delved into the mutual fund landscape, examining which Asset Management Companies (AMCs) maintain Zee Entertainment in their portfolios. (REUTERS)

The mutual fund industry's collective exposure to ZEE stands at 8,680 crore, which is less than one percent of the industry's total equity Assets Under Management (AUM), highlighted brokerage house Fisdom Research in a recent note.

In the note, Fisdom Research has delved into the mutual fund landscape, examining which Asset Management Companies (AMCs) maintain Zee Entertainment in their portfolios and those that have chosen to remain underweight in the wake of these developments. Notably, actively managed mutual funds display diversified holdings, with many opting for a conscious underweight position in the company over an extended period.

In the report, the brokerage highlighted that out of the 42 AMCs, only 29 invested in ZEE, while the remaining 13 held a very small amount of the stock, with ICICI Mutual Fund holding the highest exposure to ZEE.

Read here: Subhash Chandra takes his peeve with regulator to FM

Among the 13 AMCs with very little exposure in ZEE, excluding Trust AMC, which exclusively deals in debt funds, 9 maintained no exposure to ZEE over the last 12 months and only 3 — Quant, LIC, and Shriram — maintained exposure, it added.

Among these 3, Quant MF and LIC MF scaled back their exposures in July 2023, while Shriram AMC opted for a complete exit from the stock in April 2023, noted Fisdom.

It further observed that as of December 23, AMCs with the least amount invested in terms of market value include PGIM India MF with 1 crore, Union MF with 2 crore, and ITI MF with 3 crore.

Read here: Zee share price tanks 25%: Mutual funds loose more than 1900 crore in a day

Meanwhile, the AMCs with the largest investments in terms of market value were ICICI MF with 1,751 crore, Nippon India MF with 1,362 crore, and HDFC MF with 1,211 crore, highlighted the brokerage.

As per the brokerage, ICICI Mutual Fund holds the highest exposure to ZEE; however, this exposure represents just 0.5 percent of its total equity AUM. Importantly, ICICI AMC has not increased its exposure to ZEE, and in the last 6 months, it has either reduced or maintained flat exposures across all its actively managed equity funds.

Equity oriented funds with the highest allocation, as noted by the report, are Edelweiss Equity Savings Fund-Reg(G), Aditya Birla SL Equity Savings Fund-Reg(G), and Nippon India Focused Equity Fund(G).

Source: Fisdom Research
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Source: Fisdom Research

Meanwhile, actively managed funds with the lowest allocation to Zee Entertainment are Axis Balanced Advantage Fund-Reg(G), Axis Equity Saver Fund-Reg(G), and ICICI Pru Balanced Advantage Fund(G), informed Fisdom.

Source: Fisdom
View Full Image
Source: Fisdom

Why is ZEE in focus?

Zee Entertainment Enterprises has been in focus after the stock experienced a significant decline of over 30 percent on Tuesday following the termination of the merger agreement between ZEE and Sony, with Sony demanding a $90 million termination fee. The market reaction was pronounced, with Zee Entertainment losing more than 5,000 crore in market capitalisation.

Investors reacted nervously to the termination of the ZEE-Sony merger, expressing concerns about ZEE's future growth prospects and the overall valuation of its stock.

On Tuesday, January 23, Zee Entertainment's share price plummeted by 33 percent to close at 155.90 on the BSE. However, it rose almost 8 percent to its intra-day high of 168.10 on Wednesday.

Read here: Zee and Sony: An awkward split-up

Speculation had been circulating that the ZEE-Sony deal might be called off, contributing to a 43 percent decline in Zee Entertainment's share price in January. Sony informed that the merger did not close by the agreed-upon end date due to unmet closing conditions, despite efforts to extend the end date through discussions.

However, experts believe the stock is likely to see further fall.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 24 Jan 2024, 12:09 PM IST
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