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Overall private equity and venture capital (PE/VC) investment continued to rise over the first half (H1) of 2016. Total PE/VC investment in Telecommunications, Media and Technology (TMT) also remained positive, accounting for 55% of overall industry investment by value, and 39% by volume over the period, according to the MoneyTreeTM Report released by PwC China.

 

Key findings and outlook

 

In the first half (H1) of 2016, private equity and venture capital (PE/VC)investment in the Telecommunications, Media and Technology (TMT) industry maintained the strong momentum ofH2 2015, and remained on an upward trajectory. In H1 2016, total TMT deal value surpassed all other industries, accounting for over 50% of overall industry value. The proportion of total deal volume in H1 2016 matched that recorded in H2 2015. Actual deal volume decreased slightly, but remained high compared to recent years.

 

During the winter of 2015,investments in the TMT industry were unexpectedly active and the trend continued in H1 2016. In Q2 2016, total deal value exceeded US$20 billion for the first time, with an increase of 44% quarter over quarter (QoQ). The trend is closely related to a higher frequency of substantial investments in unicorns, and buoyed by strategic investors making investments in order to occupy stronger positions in the market. Also of note, in H1 2016, there were more than 20 investments that had a single deal value of over US$100 million, with several of these involving an investment value above US$1 billion.

 

In H1 2016, the Internet continued to be the best performing TMT sector, with the highest deal volume and value. Both the Technology and the Telecommunications and Mobile sectors had investments with single deal value of over US$1 billion. In light of the major investments, the performance of the Entertainment and Media sector was comparatively modest. Investments in TMT during H1 2016 tended to be concentrated in Internet Finance, E-commerce and Mobile Services, each of which pertain to smart, modern lifestyles.

 

With the resumption of IPOs in H2 2015, the number of IPOs increased gradually, though the proportion didn’t exceed strategic sales, which proved to be the most popular type of exit in H1. The proportion of strategic sales in H1 2016 exceeded 60%, an increase of approximately 16% from the prior period, and representing the highest level reached by that category of exit since 2012. Regarding exit by sector, Entertainment and Media stood out in particular in H1 2016, having reached the highest number recorded since 2012, and exceeding the Technology sector for the first time.

 

moneytree_q1q2_2016.pdf

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