LeEco Receives $600 Million Funding From Jia Yueting's CKGSB Classmates Amid Cash Crisis

摘要: On November, 15th, LeCar, a subsidiary of LeEco, announced to the public that LeEco had received an investment of $600 million. The first half of the funding would be transferred to LeEco within this November and will support LeEco Global and LeEco's electric vehicle business.

(Chinese Version)

Jia Yueting’s classmates at Cheung Kong Graduate School of Business (CKGSB) has decided to help out and invest in LeEco, which is mired in cash crisis recently.

On November, 15th, LeCar, a subsidiary of LeEco, announced to the public that LeEco had received an investment of $600 million, and the first half of the funding would be transferred to LeEco soon. It is reported that this round of financing was led by enterprises including Hailan Group, Evergreen Conglomerate, Yihua Group, Man Wah Holdings, Yuyue Group, Luye Pharma, all of which are enterprises owned by Jia’s classmates at CKGSB.

According to the statement, the first half of the funding will be transferred to LeEco within this November and will support LeEco Global and LeEco's electric vehicle business. However, they haven’t settled on the shares structure, so it’s inconvenient to reveal more details about this round of investment. Since this round of financing is merely financial investment, new investors shall not get involved in the everyday business. “We can trust him,” Jia’s classmates and new investors said. The other half of the investment will be transferred to LeEco based on the actual needs.

If so, it’s more like an investment proposal than formal investment agreement. After all, no specific plan has been made as to the other half of the investment.

According to CBNweekly, to help Jia receive this round of financing, his monitor led a group of 60 entrepreneurs and paid visit to LeEco’s headquarters for two days. After a series of negotiation, they finally agreed to invest in LeEco.

Zhou Jianping, chairman of Hailan Group, believed new energy vehicles business was very promising, and LeEco was one of the leading developers. Since it will take time for LeEco’s competitors to catch up, there’s still much room of development for LeEco.

"We see huge investment value and enormous growth potentialin LeEco," he said.

Jie Yueting and his classmates at CKGSB

Jie Yueting and his classmates at CKGSB

LeEco's respondents told CBNweekly that the majority of $600 million was invested personally because it would take too long for a listed company to proceed with an investment.

However, Man Wah Holdings and Luye Pharma have both issued statement of clarification today, saying that they had no plan to invest in LeEco.

"Indeed, the company didn't invest in LeEco. The truth is: I think Jia's LeEco is very promising in the future, so I decide to invest in the company on my own behalf," Huang Minli, chairman of Man Wah Holdings, told CBNweekly.

When these new investors, Man Wah Holdings included, signed the agreement with LeEco, they all stated that they would invest in LeEco on company's behalf. Therefore, Huang's latest statement puts LeEco in a very awkward position.

In addition, some sources revealed that Jia posted an update on WeChat friends circle recently and added to his Position International Finance Centre, the gathering place of lots of international financial organizations. Therefore, some analysts predicted that LeEco might have also received some investment in Hong Kong.

The company also announced in an internal email that LeEco would cease its expansion plan in Asia, become more prudent in financial management and focus more attention on increasing cash flow and widening user base. In addition, it is announced that Anthony Gao (Gao Jun) will assume the position of president of LeEco APAC, concurrently the CEO of LeEco Hong Kong. Mo Cuitian, the former president, will be appointed as an advisor of LeEco APAC and assume other positions later.

However, this is the second time LeTV adjusted its corporate and personnel structure within ten days. Five days ago, LeEco announced that it would set up a subsidiary called “LeEco Marketing & Service Platform” under LeEco Smart Gadget Business Division, and that Zhang Zhiwei, former head of LeEco O2O and LePar, will assume the position of president of the new subsidiary.

LeEco is undergoing a series of strategic and organizational adjustment recently due to the break of its fund chain, so this latest statement is also a response to the ongoing cash crisis. Previously, TMTpost has issued a series of reports, including “Zhao Hejuan: Will LeEco Tumble Like D'Long Did?”, “LeEco’s Senior Executives Stepped Forward And Invested 300 Million RMB Into LeEco”, “LeEco Owed 100 Million RMB To Its Suppliers” and revealed LeEco’s struggles in terms of its financial management.

LeEco’s current cash crisis is a natural result of the mismatch among its bold expansion, cash flow and business capability. Only time can tell how much time it will take for LeEco Global and LeEco’s electric vehicle business to use up this latest round of investment.

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[The article is published and edited with authorization from the author @TMTpost, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.

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