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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Tech firm LeEco wins $2.2 bn lifeline

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Beijing: Cash-strapped Chinese tech firm LeEco secured a $2.2 billion investment from a group led by property developer Sunac China Holdings, but shares in the rescuer plunged on news of the deal.


Hong Kong-listed Sunac said on Friday it would plough 15.04 billion yuan into the sprawling LeEco empire, which has interests in various sectors including self-driving cars, smartphones, film-making, and TV-set manufacturing.


Its diverse ventures pit the company against Apple, Netflix and Tesla and homegrown Chinese champions Baidu, Tencent and Alibaba.


But the company’s relentless expansion has put a strain on its cash flow, and in November billionaire founder Jia Yueting told employees the company grew too quickly and was short of funds.


Shares in its Shenzhen-listed LeShi affiliate dived more than 36 per cent last year and in December were suspended from trading before restarting on Monday. It ended down 1.12 per cent at 35.40 yuan in Shenzhen.


The deal will make Sunac the second-largest shareholder of LeEco, with 8.61 per cent equity in LeShi Internet, 15 per cent in LeShi Pictures, and 33.5 per cent in the TV unit Leshi Zhixin, Sunac said in an announcement to the Hong Kong stock exchange.


But shares in Sunac plunged as much as 10 per cent in Hong Kong before paring the losses to end 7.96 per cent lower at HK$6.71. — AFP


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