China’s cash-strapped LeEco group, which has made major pushes into entertainment and technology, has raised $2.18 billion of fresh capital. The cash injection comes from diversified Chinese property group Sunac.
In a regulatory filing Sunac China said that it will pay $875 million (RMB6.04 billion) for an 8.61% stake in LeShi Technology. It will also pay $152 million (RMB1.05 billion) for a 15% stake in movie arm LeShi Pictures (better known as Le Vision), and pay $1.15 billion (RMB7.95 billion) for a 33.5% stake in LeShi Zhixin, the division that is involved in smart TV sets.
The new injections will ease a period of uncertainty for the LeEco group and allow LeShi Technology shares to restart trading on the Shenzhen stock Exchange. In a separate announcement, LeShi said that Huaxia Life, a Chinese insurance firm, had paid $58 million (RMB400 million) for a share stake in LeSHi Zhixin.
In late October LeEco’s cofounder Jia Yueting made a dramatic confession that the group had overstretched itself financially, by pursuing expansion over profitability. Its three overlapping moves into the electric car business has been specially costly. While the Sunac investments do not directly address the cash burn from cars, they do take the pressure off the other parts of the business.
Sources close to the group also indicate that a funding round for the LeEco-backed U.S.-based Faraday Future may also soon be on the cards. Faraday this month used the CES convention in Las Vegas to unveil its likely first production model.
LeVision Pictures is one of the investors and China distribution partners on “The Great Wall,” the monster movie directed by Zhang Yimou. The U.S.-Chinese co-production has grossed over $160 million in China and opened number one at the box office in territories including Thailand and Romania. It goes on release this weekend in Germany and France, ahead of a North American outing in February.