HK investors turn deaf ear to LeEco's pleas for fresh capital

Updated 2017-08-10 09:53:31 Global Times

Most financial groups in Hong Kong are avoiding meeting with Jia Yueting, the founder and CEO of cash-strapped LeEco, who has been trying to line up appointments in recent days to seek a capital infusion, according to domestic media reports on Wednesday.

Experts told the Global Times Wednesday that LeEco's situation is dire if not hopeless, and the company should quickly jettison weak businesses to protect sectors that perform well, such as its video segment.

A PR representative of LeTV Holdings under LeEco said that he was not clear about Jia's moves when contacted by the Global Times on Wednesday.

An employee of a Chinese-funded company in Hong Kong said that most institutions in Hong Kong, including his, are avoiding LeEco projects, finance.qq.com reported.

He also noted that as audits intensify in domestic financial institutions, Chinese companies in Hong Kong do not have sufficient funds and therefore have to spend money in a cautious manner.

Jia sought meetings with some Chinese companies in Hong Kong back in November 2016 to overcome his company's financial difficulties then, the finance.qq.com report said.

LeEco has been grappling with an escalating financial crisis in recent days. On August 1, a total value of about 250 million yuan (.25 million), including the assets of LeTV Holdings and Jia, were frozen by a Beijing court.

Jia has been focusing on the intelligent vehicle segment in recent days in an effort to extricate LeEco from the crisis.

On Monday, he updated his Weibo account by saying that Faraday Future (FF), a California-based automotive start-up that LeEco invested in, has decided to build a premium factory in Hanford, California.

Liu Dingding, a Beijing-based independent technology analyst, said that Faraday Future's cars are technologically advanced.

"Without the negative influence of LeEco, FF cars should easily win a good market reputation, making it possible for the company to get substantial financing. Then perhaps, LeEco could get through the crisis via the help of FF," he said.

"But since FF's market reputation has been implicated by LeEco's situation, it's very unlikely that FF can have a good market reception in the short term," Liu told the Global Times on Wednesday.

FF has tried to draw a line with LeEco. Its COO Stefan Krause said in a recent interview that FF has no legal relationship with LeEco, cnet.com reported on Monday.

Liu Buchen, a senior home appliance industry analyst, said that FF's problem is how to survive through financing, not how to save LeEco. FF itself is facing financial difficulties, he told the Global Times on Wednesday.

The employee in Hong Kong said that it's hard to find anyone in Hong Kong-based financial groups who can understand FF cars or agree with Jia.

Liu Dingding also warned that it's very important for LeEco to protect the business sectors that perform well, such as LeTV, by stripping off sectors that don't pay off.

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