Troubled LeEco lands 16.8 billion yuan lifeline after selling stakes in video, movie assets to Sunac China

LeEco, the cash-starved business run by Chinese entrepreneur Jia Yueting, has received 16.8 billion yuan in funding and investments from real estate developer Sunac China Holdings and other investors after selling its stakes in its video streaming and movie studio businesses.

Sunac, which achieved contract sales of more than 150 billion yuan last year, announced it has agreed to acquire an 8.61 per cent stake in Leshi Internet Information & Technology, the video streaming business, for 6.04 billion yuan, as well as a 15 per cent stake in LeEco’s film production unit, Le Vision Pictures, for 1.05 billion yuan, according to a filing to the Hong Kong stock exchange on Friday.

Sunac also agreed to acquire a 33.5 per cent stake in LeEco’s television hardware subsidiary Leshi Zhixin Electronic Technology for 7.95 billion yuan, bringing the total amount invested by Sunac to 15 billion yuan.

“The company will consider using a small amount of resources to strategically invest in companies with a competitive edge in other industries with a growth potential without affecting the sustainable and healthy development of its property business,” chairman Sun Hongbin said in Sunac’s statement.

“The company believes that the investment will bring a better return on capital for the company and will have greater room for cooperation with Leshi in the field of industrial real estate, and will also bring continued benefits to the further growth of the company’s property business.”

Leshi Zhixin widened its net losses to 730.56 million for the year ended December 2015, from 385.79 million in 2014, the statement said. But Leshi Internet reported that net profit rose 81 per cent to 199.02 million in 2015 from a year earlier, while Le Vision Pictures jumped 104.8 per cent to 128.16 million yuan in 2015 from the previous year.