Tele­com, me­dia, tech lure PE, VC in­vestors

China Daily (USA) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

Pri­vate eq­uity and ven­ture cap­i­tal in­vest­ment in the telecom­mu­ni­ca­tions, me­dia and tech­nol­ogy (TMT) sec­tors reached a new high in the first half of 2016, and the trend will con­tinue in the sec­ond half, ac­cord­ing to a re­port is­sued by Price­wa­ter­house­Coop­ers on Wednes­day.

There were 1,351 PE and VC deals made in the TMT sec­tors in the first six months, and their in­vest­ment amount to­taled $34 bil­lion, in­creas­ing 93.8 per­cent year-on-year. The sec­ond quar­ter proved par­tic­u­larly notable, with their value hit­ting a record high of $20.1 bil­lion, ac­cord­ing to the re­port.

The TMT sec­tors saw a to­tal of 45 deals with a sin­gle deal value of more than $100 mil­lion dur­ing the first half of the year.

The high­est sin­gle deal value in the first quar­ter was $3.3 bil­lion by group-buy­ing player Meituan, while the sec­ond quar­ter in­cluded two deals of ride-hail­ing com­pany Didi Chux­ing and fi­nan­cial com­pany Ant Fi­nan­cial Ser­vices Group, each with in­vest­ment value of $4.5 bil­lion, mark­ing the high­est sin­gle-deal value on record.

“We are see­ing an in­crease in the scale and range of in­vest­ments in the TMT sec­tors, which can be seen in the emer­gence of uni­corn com­pa­nies, as well as re­cently es­tab­lished com­pa­nies de­vel­op­ing into more ma­ture or­ga­ni­za­tions,” said Amanda Zhang, PwC North China tech­nol­ogy in­dus­try and pri­vate eq­uity group leader.

With re­gard to ac­tiv­ity by TMT sec­tors, the in­ter­net was the most pop­u­lar sub­sec­tor, gen­er­at­ing deal value of $21.3 bil­lion. Other pop­u­lar

IPOs in A-shares are still fac­ing a long wait­ing pe­riod at present, which is a big chal­lenge for TMT com­pa­nies.”

PwC North China tech­nol­ogy in­dus­try and pri­vate eq­uity group leader

Amanda Zhang, ones in­clude tech­nol­ogy, telecom­mu­ni­ca­tions and mo­bile in­ter­net.

Sunny Dong, PwC China as­sur­ance part­ner, said core in­vest­ment sec­tors in the TMT sec­tors were all closely linked to smart mod­ern life­styles, such as in­ter­net fi­nance, e-com­merce and mo­bile ser­vices.

“This trend in­di­cates that in­vestors pay at­ten­tion to new com­pa­nies with in­no­va­tion and en­trepreneur­ship in fields that are chang­ing peo­ple’s life­styles and liv­ing en­vi­ron­ments,” said Dong.

Merg­ers and ac­qui­si­tions for the first time be­came the most pop­u­lar way to exit by pri­vate eq­uity and ven­ture cap­i­tal in­vestors in TMT deals in the first half. There were 57 ex­its through M&As in the first six months.

“IPOs in A-shares are still fac­ing a long wait­ing pe­riod at present, which is a big chal­lenge for TMT com­pa­nies that have seen rel­a­tively big fluc­tu­a­tions and this is a key fac­tor un­der­pin­ning the re­cent trends by TMT com­pa­nies con­sid­er­ing strate­gic sales, and other exit meth­ods,” said Zhang.

In­vest­ments in China's TMT sec­tor (2015-16)

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