Chinese internet services firm Leo’s planned $50m SpaceX investment hits a wall

Founded by Musk in 2002, California-based SpaceX designs, manufactures and operates advanced rockets and spacecraft

A Chinese internet services and manufacturing company’s high-profile plan to invest in billionaire Elon Musk’s aerospace company SpaceX hit a wall as a partnership formed for the investment fell apart.

Shanghai-based Leo Group said Thursday that it received a $50 million refund from Tomales Bay Capital Anduril III L.P., its partner for the planned investment in SpaceX, without elaborating.

Leo said it thinks “there is no legal basis” for termination of the agreement, and it will not accept the return of funds. Leo “reserves all rights to safeguard the interests, including but not limited to judicial proceedings,” the company said in a statement.

On Nov. 16 Leo announced its planned investment in SpaceX. The plan was for Leo as a limited partner to pour $50 million into TBCA, which was to pool $600 million to $750 million from partners to invest in SpaceX.

TBCA is general partner of the fund, which is under management by American investment firm Tomales Bay Capital. A Caixin call to Tomales Bay Capital on the matter was not answered.

Leo’s Shenzhen-traded stock plunged by the 10% daily limit Thursday following the news. The shares surged more than 20% after Leo announced the investment plan.

Founded by Musk in 2002, California-based SpaceX designs, manufactures and operates advanced rockets and spacecraft, aiming to offer commercial space travel at lower costs. In September, the company sent its first all-civilian crew into Earth orbit for a three-day trip.

The Leo investment plan attracted the attention of the Shenzhen bourse regulator. Two days after Leo’s announcement, the Shenzhen Stock Exchange ordered the company to explain the investment in detail, including more information about TBCA’s funding, structure and exit mechanism, as well as any pending issues related to the investment.

Leo responded in a brief letter saying it was unable to provide key information related to the partnership and the progress of the investment.

Starting with a water pump manufacturing business, Leo sold shares on Shenzhen’s small and medium-sized enterprises board in 2007. The company later became famous with a slew of investments in digital marketing and technology sectors.

In 2020, Leo invested 450 million yuan ($70.4 million) in electric vehicle startup Li Auto Inc. The investment generated 4.5 billion yuan of net profit for Leo that year after Li Auto’s initial public offering on Nasdaq, according to Leo’s 2020 financial report.

The article was first published on Caixinglobal.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.