Photo: CFP

The sports affiliate of Leshi Internet Information and Technology Corp (Letv) raised 8 billion yuan ($1.23 billion) in its series B round of funding - more than double what it aimed for - a media report said on Sunday.

The funding takes the company's valuation to about 21.5 billion yuan.

CEO Jia Yueting disclosed the deal on Sunday during the 2016 China (Shenzhen) IT Leadership Summit, the National Business Daily reported. Jia said around 30 institutional and individual investors including HNA Capital Holding Co, one of the three core divisions of the HNA Group, participated in the most recent round of investment.

Lei Zhenjian, CEO of Letv Sports Culture Develop (Beijing) Co, confirmed the information on the unit's Sina Weibo account on Sunday, saying that Chinese TV stars such as Sun Honglei, Jia Nailiang and Liu Tao were also among the investors. Lei said Letv Sports will reveal more names of investors and more details about the investment in mid-April.

"The large scale of this fundraising enables Letv Sports to expand its presence in the sports field and gain some first-mover advantage," Xu Zhipeng, research director for Beijing-based market information provider Zero2IPO Group, told the Global Times on Sunday.

"Letv Sports will spend a considerable portion of the funding in developing original content," Chen Wei, an analyst with Beijing-based investment consulting firm China Venture, told the Global Times on Sunday.

Chen said doing so will help Letv create a more complete ecosystem covering video, music, sports and films. "The synergy among the different sectors will give Letv a voice and pricing power in various related fields."

Letv Sports was separated from Letv in 2014, and it has been working to expand across the entire span of the sports field. The unit achieved rapid growth after its series A round of funding, which amounted to 800 million yuan in May 2015, at which time it had a valuation of about 2.8 billion yuan.

The sports unit now holds copyrights to more than 310 top international sports events, of which 72 percent are exclusive, State media portal news.gmw.cn reported over the weekend.

The 8 billion yuan just raised was far above its target of 3 billion yuan, jiemian.com reported on Sunday, citing Letv Sports' financing plan document.

Letv Sports has said it expects to break even sometime this year and begin to make a profit from 2017, the media report said, citing the document. It also aims to get listed within three to five years.

If it doesn't do so, investors can demand that the major shareholder buy back the shares at an annualized yield of 8 percent, according to the document.

"The large sum shows that investors are not only bullish on Letv but also on the whole sports industry in China," Xu said.

Xu noted that China's sports industry is still developing, but it has great potential thanks to the nation's huge population base and rising incomes.

"People pay more attention to sports and health when they become rich," Xu said.

"And the industry is poised for a breakout in the next two to three years," Xu noted.

The central government has set a target of having the sports industry create value of more than 5 trillion yuan by 2025, according to a government document released in October 2014.

Chen said that the domestic entertainment industry including sports already commands high valuations.