Little-Known Investor Takes Yidao Off LeEco’s Troubled Hands

LeEco has sold car-hailing service Yidao to a little-known private equity firm, as another piece of the troubled tech giant is divested.

To-Win Capital closed an acquisition deal for a majority stake in the private car service, the former said in a statement on Friday. To-Win is a Beijing-based investment company that has backed bike-sharing firm Beijing Mobike Technology Co., real estate giant Evergrande Group, and JD.com Inc.’s financial services arm.

The divestment will at least temporarily prevent further indebtedness for LeEco, which has been in turmoil since revealing a liquidity crisis brought about by excessive spending in too many ventures.

The price of the transaction was not revealed, nor did either company clarify whether LeEco still retains a minority stake in Yidao.

Earlier this year, disgruntled drivers working for Yidao stormed the company’s offices demanding payment, but the financial woes of then-parent company LeEco — which at that time held a 70% stake — strained the car-hailing firm’s books.

The stakeholder replacement with a company that seems on more sound financially footing may assuage the frustrations of unpaid drivers. Late last month, Yidao announced that a new controlling stakeholder was in place, and assured drivers that they would be able to collect overdue payments beginning June 30.

In a statement Friday, Yidao send a nod of appreciation to its new investor, saying, “To-Win Capital has lent a helping hand during this time of need, providing sufficient funds that will help with payment difficulties.”

To-Win says it has a history of betting on LeEco’s affiliates, having already purchased 33.4 million yuan ($4.92 million) worth of convertible bonds issued by LeEco’s Car division, and invested 32 million yuan in LeEco’s sports arm, LeSport. It also bankrolled the company’s film production unit, LeVision Pictures.

One of the first Chinese apps in car-hailing, Yidao’s relationship with LeEco in recent months has been tense. Three of Yidao’s top executives, including its founder, departed in April, after a spat with LeEco over 130 million yuan in funds that the founder said were “misappropriated” and used to fuel LeEco’s car-making ambitions instead of meeting Yidao’s needs — especially painful during the midst of a subsidies war in the car-hailing sector.

The new stakeholder said that Yidao’s user base of 40 million and its services will fill an important gap in the To-Win business line as the company strives to make inroads in the tourism industry.

Contact reporter April Ma (fangjingma@caixin.com)