Zhang Yang

    nicolezyyy@163.com

    PRIVATE equity and venture capital (PE/VC) investments in China’s Telecommunications, Media and Technology (TMT) industry increased steadily in the second half of 2015, despite the downturn in the domestic economy, according to a report released by PwC on Thursday.

    The report said that investments in the TMT industry saw a sharp jump in the second half of 2015, with the deal value rising by 8 percent to US$19.01 billion and the deal volume growing by 11 percent to 1,435 deals compared with the first half of 2015. The deal value and volume both hit a record high since 2012, accounting for 46 percent and 40 percent of the overall industry investments in the second half of 2015, respectively.

    Notably, the report said, there were 71 TMT deals each with value exceeding US$100 million in 2015, an upsurge compared with only nine deals in 2012. The highest single deal value reached US$3 billion, marking a historical high since 2012.

    Wilson Chow, PwC China and Hong Kong TMT leader, said the TMT industry has an increasing appeal to investors. “China’s TMT industry, particularly the Internet sector, is acting as the main force driving the industry consolidation,” Chow said, adding that more large deals are expected in 2016.

    In the second half of 2015, the Internet sector once again gained the most investments in deal volume and value, with most deals with a single-deal-value over US$100 million. The telecom and mobile sector ranked second in deal value, with an investment of US$3 billion being offered to a ride-hailing app’s operating company, marking the highest single deal value since 2012.

    Regarding the four stages of investment, both the deal volume and value for early-stage investments reached the highest levels since 2012 in the third quarter of 2015. Over 70 percent of total investments were made in the first round during the second half of 2015. “This reflects investors’ increasing willingness to invest in new projects,” said Chow.

    In the second half of 2015, there were 122 PE/VC exiting the TMT industry. Among them, 47 percent exited through M&A and 20 percent through IPOs. Alex Chan, PwC China and Hong Kong TMT partner, said the temporary suspension of A-share IPOs in the second half of 2015 led to M&A and management buy-out exceeding IPO as the main forms of exit.

    “As a result of the economic slowdown, more enterprises are considering expanding businesses through M&A with other enterprises,” Chan said.