Chinese technology group LeEco said today it raised $600 million in fresh funding from a dozen local investors, as it seeks to sustain a number of fledgling businesses amid a cash crunch. Jia “YT” Yueting, chief executive officer of LeEco Global Group, stands for a photograph at the company’s headquarters in […]
The company’s billionaire founder Jia Yueting signed the financing agreements in LeEco’s Beijing headquarters with investors including Jiangsu-based apparel maker Heilan Group, Hong Kong-listed furniture company Man Wah Holdings and Shandong-based pharmaceutical firm Luye Group, according to a company statement sent to Forbes. The statement also said most investors were Jia’s classmates at the Cheung Kong Graduate School of Business in Beijing.
Half of the funds raised will be earmarked for the company’s global and electric car businesses, according to the statement. A company spokeswoman said she has no information on how LeEco intends to use the other half of the proceeds.
The move came a week after Jia acknowledged in an internal letter that LeEco is facing a cash crunch as it expanded into industries as diverse as cars, smartphones, televisions and sports media from its core online video site LeTV. He said the company’s funds and resources are in fact very limited and pledged to cut his annual payment to one yuan ($0.15).
“LeEco’s latest fundraising round can help with its short-term cash shortage,” said Zhang Yi, founder of Guangdong-based consultancy iiMedia Research. “But it won’t solve the company’s core problem, which is Jia tried to do too many things at the same time.”
In a separate statement published today, LeEco said it will temporarily suspend expansion in Asia Pacific. The company has appointed a new chief executive Gao Jun, who has worked at China’s Huawei for 17 years, to lead its regional business, while pledging to improve cash flow, according to the statement.
On Sunday, Jia also visited Hong Kong’s International Finance Center, according to a post on his verified Weibo social media account. LeEco’s cash problem “can be completely solved in the near future” by utilizing financing channels in the city, according to a company statement. The aforementioned LeEco spokeswoman declined to reveal more details on Jia’s trip.