March 28, 2017 / 12:02 PM / 2 years ago

Compal takes stake in subsidiary of LeEco's Leshi Internet Information

TAIPEI, March 28 (Reuters) - Taiwan’s Compal Electronics, a supplier to Chinese technology conglomerate LeEco, has bought a 700 million yuan ($102 million) stake in a subsidiary of LeEco’s Leshi Internet Information and Technology Corp, the companies said on Tuesday.

After the investment, Compal will hold a 2.15 percent stake in the subsidiary, Leshi Zhixin, which is known for its smart Internet TVs.

Last year LeEco, which is involved in everything from smartphones to electric vehicles, said it was facing financial pressures due to the rapid pace of growth of its businesses.

A person familiar with the matter told Reuters in November that LeEco owed Compal money and that the two companies had worked out a repayment schedule.

In a stock exchange statement on Tuesday, Compal did not say whether its investment in Leshi was related to LeEco’s debt.

However, a LeEco spokesperson said: “The two things are separate.”

Compal is not the first supplier to invest in Leshi. In February, electronics gadget manufacturer Truly International invested 720 million yuan in Leshi Zhixin.

Yuanta Research analyst Vincent Chen said Compal’s investment was a good sign for LeEco.

“It’s much rarer to see a vendor invest in a customer, as it’s usually the other way around,” he said.

“But Compal’s not stupid, and there is likely some kind of guarantee from Leshi like for more orders,” Chen added. “I think it’s also based on a belief that Leshi can go on and survive, for this to make sense. For any non-believer, this move wouldn’t make sense, but it’s hard to judge.”

$1 = 6.8838 Chinese yuan renminbi Reporting by Jess Macy Yu; Editing by Mark Potter

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