Jia Yueting, the billionaire chairman of Chinese technology group LeEco, is on his way to clear up public concerns about the company's liquidity.
On Friday, LeEco announced that it had received a 16.8 billion yuan ($2.4 billion) strategic investment from a consortium led by property developer Sunac China Holdings. Sun Hongbin, founder of Sunac, was born in North China's Shanxi Province, just like Jia.
The two parties held a press conference Sunday afternoon to talk about their future cooperation plans.
"Everything was ready except capital," and now the capital is no longer an issue, Jia said at the conference.
Sunac's "strong capital ability" can guarantee the development of LeEco, which aims at surpassing Chinese technology powerhouses Baidu Inc, Alibaba Group Holding and Tencent Holdings, according to a press release LeEco sent to the Global Times over the weekend.
Jia said in November that LeEco's overall operating revenue probably exceeded 50 billion yuan in 2016. He noted on Sunday that he expected LeEco's listed arm can be valued at $100 billion eventually.
By contrast, Alibaba's gross merchandise volume for fiscal 2016 exceeded 3 trillion yuan.
LeEco, an ecosystem engaged in smart devices, driverless cars and online video content, was expanding over the past year at so fast a speed that Jia previously admitted it exceeded the company's limited capital and resources.
At the conference, Sun, a former employee of Lenovo, emphasized that his investment in LeEco was a prudent decision taken after deeply consulting with industry experts from Lenovo and PwC auditors.
"All of them told me that LeEco deserved attentions," but they had major concerns about LeEco's capital position, said Sun, noting that Sunac aimed to eliminate such worries.
Sunac, which promised 15 billion yuan to LeEco, is the nation's seventh largest property developer.
Its contract sales in December were up 200 percent year-on-year to 25.5 billion yuan.
Liu Dingding, a Beijing-based independent industry expert, said that LeEco could possibly take on the three technology giants with the participation of new investors with deep pockets.
"I think LeEco's unique business model [focusing on making money via an integrated ecosystem instead of only from hardware or content] is more advanced than other counterparts," Liu told the Global Times Sunday.
Upon the completion of the deal, Sunac will become the second-largest shareholder of LeEco. LeEco said it will work with Sunac to explore new growth engines in Internet-plus real estate and smart communities, which Chinese technology powerhouses are also eyeing.
Jia reiterated that he will not get involved in the property business.
Ma Jihua, an IT analyst at Beijing Daojing Consultant Co, expressed pessimism about the moves.
"LeEco should stop expanding and return to focus on its core and profitable online video businesses, otherwise the capital issue would emerge again," Ma told the Global Times Sunday, adding that Internet firms may all meet their Waterloo in the smart cities or smart communities battle.
