Investments made by private equity (PE) and venture capitalists (VC) in the telecommunications, media and technology (TMT) sectors have reached a new record high in the first half of the year and it is expected to continue in the second half, a report by PricewaterhouseCoopers (PwC) showed on Wednesday, Sept. 28.
China Daily cited the report which showed that in the first six months, about 1,351 deals were made by PE and VC firms in the TMT sector, which totalled $34 billion, up by 93.8 percent year-on-year. The report also noted a record high of $20.1 billion for the second quarter.
In addition, 45 deals made in the TMT sector during the first half of the year have a single deal value of more than $100 million.
During the first quarter, Meituan, the group-buying firm, has the highest single deal value at $3.3 billion, while in the second quarter, ride-hailing company Didi Chuxing and financial group Ant Financial Services Group, made two deals, each with investment value of $4.5 billion, which is 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," Amanda Zhang, PwC North China technology industry and private equity group leader, said.
The report also showed that in the TMT sectors, the most popular sub-sector is the Internet, which has a deal value of $21.3 billion, followed by technology, telecommunications and mobile Internet.
According to Sunny Dong, PwC China assurance partner, smart modern lifestyles, which involved Internet finance, e-commerce and mobile services, were closely related to the TMT sectors' core investment areas.
"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," Dong noted.
During the first six months, private equity and venture capitalists engaged also used, for the first time, mergers and acquisitions as the most popular way to exit in TMT deals, which totaled 57 exits through M&As.
"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," Zhang said.