Chinese technology conglomerate LeEco is in talks to sell a prized property asset in the heart of Beijing it acquired in a $420 million deal last year, the latest effort by the electric car-to-smartphone company to raise funds amid a cash crunch, sources said.
The company plans to sell either all or a majority of its Shimao Gongsan retail property in a popular area on the east side of Beijing by divesting from two companies it owns, two people with direct knowledge of the matter said. LeEco has been in talks with potential investors for some months now, the first person reportedly said.
Reuters could not immediately ascertain the identity of the potential investors or the likely deal price, but one of the people said that the discussions are at an advanced stage and the price likely will be higher than what LeEco paid for it.
LeEco, centered around a Netflix-like video platform operated by its listed unit, has been one of China's boldest technology companies, pushing into the US market and looking to take on Elon Musk's Tesla Motors in high-end electric vehicles.
The company's wide spread, however, led its billionaire founder and Chief Executive Jia Yueting to admit in November that it was facing "big company disease" and battling a cash crunch after expanding too fast.
The company is now reining in its spending, looking to sell property in the U.S. and scrapping this month a $2 billion deal to acquire U.S. TV maker Vizio.
The two people said LeEco hoped to sell the 50,000 square meters Beijing property in the Sanlitun area by divesting from two companies it owns - Beijing Fortune Times Property Co and Beijing Baiding New Century Business Management Co.
LeEco bought those companies, which control the property, for a combined 2.92 billion yuan ($424.15 million) in May last year from Shimao Property Holdings.
The planned sale would free up funds to allow LeEco to revert focus to its core businesses, particularly its smartphones, TV, LeSports unit and auto segments, the two people said.
LeEco declined to comment when contacted by Reuters.
LeEco has investments from sports rights to taxi-hailing platform Yidao Yongche as well as business units focused on smartphones, online entertainment and household appliances.
Earlier this week Yidao's founder Zhou Hang said that he had left his managerial role of the ride-hailing unit and alleged LeEco, which owns a 70 percent stake in Yidao, had "misappropriated" 1.3 billion yuan ($188.84 million) of Yidao's funds to cover its debts.
LeEco later denied the allegation in a statement.