On Thursday, Leo Group announced that Tomales Bay Capital Andril III GP, LLC, a general partner of Tomales Bay Capital Andril III, L.P. (TBCA), sent an email to the company saying that they could not accept Leo Group’s continued holding of LP shares, and planned to refund the contribution. The company responded immediately after receiving the email to express its objection.
As of November 24, 2021, TBCA has refunded the capital contribution of $50 million to Leo Group. “Leo Group believes that there is no legal basis for TBCA to terminate the agreement, and it will not accept its return of investment funds and recovery of LP shares held by Leo Investments. The company reserves all rights to safeguard the interests, including but not limited to judicial proceedings.”
This news has also caused many Chinese investors to complain about information uncertainty on a Chinese stock information exchange platform.
Previously, on the evening of November 16, Leo Group announced that its subsidiary Leo Investments Hong Kong Limited plans to invest $50 million in TBCA to participate in a partnership investing in SpaceX. According to the announcement, SpaceX is a leading space technology company, engaged in rocket launching, satellite communication, space transportation and other space exploration related businesses. The company was founded by Tesla founder Elon Musk in 2002.
As soon as the above news came out, it immediately attracted the attention of investors. On November 17 and November 18, Leo Group shares went up for two consecutive days, and hit a short-term new high of 3.08 yuan ($0.48) on November 19.
However, Leo Group also attracted regulatory attention. On November 18, the Shenzhen Stock Exchange sent a letter of concern to Leo Group regarding this investment, asking it to explain the specific arrangements and progress of investing in SpaceX. The informed questions include whether other approval procedures need to be performed, whether relevant agreements have been signed, and whether there are major uncertainties in the investment. The Shenzhen Stock Exchange required the company to reply to the letter in writing before November 22, 2021.
However, it was not until November 24 that Leo Group responded to the letter of concern from the Shenzhen Stock Exchange. In the reply, Leo Group stated that the company, as a limited partner, is currently unable to know the follow-up investment progress and arrangement, as well as the investment time and amount of other limited partners, and the company is uncertain whether it can finally complete the investment in the target company.