Info-tech

Cash-strapped LeEco in talks to raise $1.4 b

Reuters Shanghai/Hong Kong | Updated on January 16, 2018 Published on December 29, 2016

jia-yueting   -  REUTERS

LeEco has warned of cash shortage due to aggressive expansion

China’s cash-strapped LeEco said it is in talks to secure 10 billion yuan ($1.4billion) from an unidentified strategic investor, but the announcement was seen as insufficient to dispel concern over the high-tech conglomerate’s financial health.

Hasty growth

Led by tycoon Jia Yueting, LeEco expanded aggressively into electric and driver-less cars and smartphones after making its name in video streaming, but last month warned staff it was facing ‘a big company disease’ after growing too fast and in too many directions left it short of funds. LeEco is still finalising details of the investment, according to a filing by its Shenzhen-listed unit Leshi Internet Information and Technology.

China Business News cited a source familiar with the situation as saying that the strategic investor was an insurance company. Representatives of LeEco declined to comment. “They aren’t saying clearly where their money is coming from or how it will be allocated,” said Alex Ng, an analyst at China Merchants Securities.

More explanation needed

Ng added that the company needed to explain its expansion plans further as so far there had been no discussion of any major change in direction.

Following its admission of a cash crunch, LeEco said soon after that it had secured commitments for $600 million to support its automotive unit and other high-tech businesses.

Published on December 29, 2016
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