There must be something special about Chinese entrepreneur Jia Yueting that enables him to keep finding financial backers one after another despite his poor record and appalling credit.
Jia founded Leshi Internet Information and Technology in Beijing back in 2004, and started his streaming video and online TV service.
The company was listed on the Shenzhen stock exchange in 2010, and its market value at one point surged to over 100 billion yuan.
But Jia began to indulge in overly aggressive expansion on all fronts, burning cash at an alarming rate. He also ventured into a completely unrelated area—electric cars, subsequently pushing his business empire into crisis in 2016.
I have met Jia a few times. He may not be very good at expressing himself, but he sure knows how to pitch his dreams.
It is said that Chinese property developer Sunac’s chairman Sun Hongbing decided, over the course of a six-hour dinner, to inject 15 billion yuan to help Jia save Leshi, only to discover later that Leshi’s accounting was a huge mess and that the firm was facing a much more serious cash crunch than Sun had expected.
As one of the top property tycoons, Sun is not the kind of person that can be easily fooled. But he admitted tearfully in a press meeting that he had made a bad call. Sun wrote off the entire investment in Leshi.
Escaping a mountain of debt, Jia fled to the US.
While everybody thought this was the end of Jia’s career, surprisingly, Faraday Future, the California-based electric car start-up controlled by Jia, announced in June that Evergrande Health Industry (00708.HK),a subsidiary of top property developer China Evergrande Group agreed to inject US$2 billion into the company in phases.
That means somehow Jia managed to convince another property tycoon to back his venture.
The deal has now taken an unexpected turn, with Evergrande Health Industry saying in a regulatory filing Sunday that Faraday is attempting to cancel the deal (through an arbitration) which would give a 45 percent ownership stake to Evergrande in return for the US$2 billion infusion.
According to the filing, Faraday had already spent the first US$800 million and was asking for another US$700 million before meeting the required payment conditions.
This article appeared in the Hong Kong Economic Journal on Oct 9
Translation by Julie Zhu
[Chinese version 中文版]
– Contact us at [email protected]