Zee Entertainment to be removed from MSCI Global Small Cap Indexes following merger

Zee Entertainment will be removed from the MSCI Global Small Cap Indexes on the last day of its trading, which will be known once the effective date for its merger with Sony Pictures is determined.

There will likely be an outflow of around $22 million, according to an analysis by Nuvama Alt & Quantitative Research. The broker said it expected Zee’s last trading day to be either towards the end of September or early October.

It also forecast the shares of the merged entity to debut on the bourses within 4-7 weeks from the last trading day, which means the listing would take place around November. Sony is not listed in India and there is little prospect of the merged entity’s shares being immediately traded, and there would likely be a lag in the process.

“Given the merged entity’s significant market cap, MSCI’s potential early inclusion of the Sony-Zee (merged entity) in the Standard Index post-listing, could generate an estimated $230 million inflow,” Nuvama said in a note.

The merger of Zee Entertainment with Sony recently received the green light from the National Company Law Tribunal.

Since Zee is also in the portfolio of many mutual fund schemes, post-merger and listing of the merged entity, AMFI is likely to shift its category to large-cap from mid-cap now. This will likely take place during a review in the first half of 2024, between February and July.

In addition, the merged entity, due to its large size, would most likely be included in the Nifty Next50 index. Zee Entertainment is now part of the Nifty Midcap index.