Shareholder activism on rise: Jaago investors Jaago!

If you are a trader or an investor, you might have noticed a huge jump in the stock price of Zee Entertainment Enterprises Limited (ZEEL).  

The stock has skyrocketed over 30 per cent in just one day, defying gravity! If we exclude today’s gain, the stock would have delivered negative returns on a YTD basis, as it has grossly underperformed the benchmark indices.   

So, let’s know the reason behind this sudden and overnight change in the fortune of this stock. 

Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) and OFI Global China Fund LLC, one of the largest shareholders of the company (representing an aggregately 17.88 per cent of the company’s paid-up share capital that carries the right of voting) called for an extraordinary general meeting (EGM) to remove Punit Goenka from the post of the Director of the company. Furthermore, institutional investors also called for the removal of the company’s Independent Directors namely, Manish Chokhani and Ashok Kurien.   

In addition to this, the institutional investors proposed the appointment of six independent directors. Meanwhile, what we are witnessing here is an example of the rise in shareholder activism campaigns. A similar trend was witnessed when investors had a big success in getting rid of the Director of Fortis Healthcare in the year 2018. This was in the framework of investors’ concerns as to the board assessment of certain bids for the company. Hence, similarly, what we are witnessing now is also a significant shareholder activism landmark in India.