LeEco Obtains $2.2 Billion Injection Amidst Cash Crunch

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Beijing-based LeEco managed to secure a $2.2 billion injection from several new investors, as evidenced by yesterday's stock exchange filings, Reuters reports. The parties that decided to back the struggling Chinese tech giant are Sunac China Holdings and Tianjin Jiarui Huixin Corporate Management Company that's controlled by Sunac China. The residential property developer already announced plans to invest the aforementioned sum in LeEco back in January, but the transaction itself has only now been completed. The new capital injection is primarily aimed at keeping the company's entertainment business afloat as the money will be distributed among Leshi Internet Information, Leshi Zhixin, and Le Vision Pictures.

The new investment is good news for the Beijing-based tech conglomerate that has been struggling with liquidity in recent months due to its expansion strategy. Back in late 2016, founder and Chief Executive Officer of LeEco Jia Yueting said the company got too ambitious in a short period of time and started diversifying its portfolio too aggressively. That strategy saw LeEco expand to too many new market segments too quickly, which led the company to financial issues seeing how many of its recently established divisions are still far from profitability while LeEco is in need of liquid capital to continue operating. Prior to receiving the new investment, LeEco also managed to find a solution to a potential competition issue regarding Yueting's wife Gan Wei and her stake in Le Young Pictures, a company that's a potential competitor to LeEco's own entertainment unit. LeEco's Leshi Internet Information will acquire a 47.8-percent share in Le Young Pictures that Wei also founded, all with the goal of complying with antitrust rules, stock exchange filings indicate.

The latest capital injection secured by LeEco will likely help the company's entertainment unit survive its financial woes, though some of the conglomerate's other ventures are still facing an uncertain future. Apart from direct investments, recent reports indicate the Beijing-based tech giant is currently considering the idea of liquidating a portion of its assets with the goal of enduring hard times that have befallen it. The company might even sell a 49-acre property in the Silicon Valley it purchased from Yahoo last year for $250 million, industry sources recently said.

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