The second half of 2016 saw overall private equity and venture capital (PE/VC) investment volume as well as total PE/VC investment volume in Telecommunications, Media and Technology (TMT) both reach their highest levels since 2012. Investment values in both categories dropped, however, as investors adopted a rational response to the market, according to the MoneyTreeTM Q3/Q4 2016 Report.
In Q3 2016, the proportion of TMT deal value to overall industry investment value hit the highest mark since 2012, peaking at 84%.
2. In Q4 2016, TMT deal value dropped dramatically from the record high of Q3 2016, accounting for only 29% of overall industry investment and falling back to the level in 2014.
In H1 2016, TMT industry investment value was greatly boosted by sizeable investments in a number of super-sized unicorns. The market continued to thrive in H2 2016 after the super-sized company investment spree, and deal volume saw a rise due to market expectations. But there was no blockbuster company during the period; therefore, single-deal value declined dramatically, which directly dragged down the deal value in H2 2016. Internet remained the most attractive sector in the TMT industry, with both deal volume and deal value much higher than those of other sectors.
In Q3 2016, the proportion of IPOs surpassed that of strategic sales for the first time since Q3 2015, and a trend that continued in Q4 2016. As market expectations for the regulatory authorities to expand direct financing channels and to deal with the pent-up IPO demand for IPOs, IPOs, especially IPOs on A-share exchanges, saw accelerated growth in H2 2016 and became the principal form of gaining liquidity for private investors. This trend will continue as long as the Chinese capital market continues to support this momentum.