Yidao to reveal identity of investor replacing LeEco in coming days, source says

Premium ride-sharing app Yidao Yongche has secured a new investor ‘strong in capital strength’ to replace LeEco as controlling shareholder, according to an unidentified source

PUBLISHED : Wednesday, 05 July, 2017, 12:04pm
UPDATED : Wednesday, 05 July, 2017, 10:35pm

Yidao Yongche, the premium Chinese ride-sharing company which has been troubled with financial woes over the past months, has gained “a new lease of life” after a well-funded investor has stepped in to replace cash-strapped LeEco as the controlling shareholder, said a source close to the deal.

The source, who declined to name the new investor, told the South China Morning Post that LeEco, which invested US$700 million for a 70 per cent stake in Yidao in 2015, has sold out most of its stakes in the company to the new investor which is “very strong in capital strength”.

Both the car-hailing platform and current management team of Yidao will remain unchanged as part of the agreement.

Yidao’s financial woes not due to ‘misappropriation’ of funds, says LeEco

“The company [Yidao] cherishes the new opportunities and believes it is a new lease of life for Yidao after what it has been through over the past few months,” said the source.

Chinese media reports said that LeEco has filed collateral registration for its stakes in Yidao to a Shanghai-based firm owned by Lancapital Asset Management. Its parent company Lancapital Holdings Group is a financial services enterprise with 16 billion yuan (US$2.35 billion) in assets, which has made investments in Mobike and JD Finance.

Yidao postponed a media briefing scheduled for Tuesday which was intended to introduce the new investor to the public after it announced last Wednesday that cash-strapped LeEco was no longer its controlling shareholder.

The source said the company has been busy helping drivers during the past few days and decided to postpone the event.

The press conference will be held in a few days once Yidao holds meeting on business strategy with the new investor, said the source.

Since June 30 when Yidao relaunched its online cash withdrawal function, drivers have returned to the platform and total operational capacity increased by 300 per cent, according to a statement from Yidao.

However, according to a field test by the Post at several locations in Shenzhen, most of the rides booked in the app were not picked up by drivers, indicating that many drivers are still hesitate to return to the platform.

Since early this year, media reports have suggested that Yidao was unable to make payments to several of its service suppliers, as well as its drivers. Users who have deposited money in the app were also unable to book rides and could not get a refund.

In April, Yidao founder Zhou Hang publicly accused LeEco of misappropriation of funds owned by Yidao – an allegation LeEco later rebutted.