Troubled Chinese technology conglomerate Leshi Internet Information & Technology Corp., Beijing(LeEco) appears to have received a much needed capital infusion from some of China’s biggest companies.
According to unconfirmed Chinese media reports, property developer Sunac China Holdings Limited has teamed up with Tencent Holdings Limited, Suning Holdings Group and JD.com to invest RMB3 billion (US$478 million) in television maker New Leshi Smart Home, an affiliated of Leshi. The companies had not confirmed the news at press time.
It’s not the first time these four corporations have formed an unlikely alliance to invest in a financially troubled Chinese conglomerate. In January, the four teamed up to acquire around 14% of Dalian Wanda Commercial Properties Co. for approximately RMB34 billion (US$5.4 billion).
In the new deal, about RMB 2 billion (US$318 million) will come from the corporate investors, and the remaining funds will be raised through debt-to-equity swaps.
The investment does make strategic sense for Tencent. In March, it partnered with Leshi to allow Leshi TV to distribute TV and video contents whose copyrights were owned by Tencent, and to share the membership and advertisement fees generated from the contents.
Industry analyst points out that the partnership may help Tencent to gain members from Leshi.
New Leshi Smart Home(formerly known as Leshi Zhixin Electronic Technology (Tianjin)) owns LeTV Super TV, considered the highest quality asset within the group.
Earlier this month, LeTV announced plans to seek cash and debt funding of no more than RMB3 billion(US$478 million) with a valuation of RMB 9 billion(US$1.43 billion).
Currently, Leshi holds 40.31% stakes of New Leshi Smart Home, but has pledged all its shares to financial institutions, including 34.9% to Sunac and Tianjin Jiarui Huixin Enterprise Management Co, and 5.37% to banks and trust companies.