During H2 2016, deal volume in the technology, media and telecommunications (TMT) industry reached the highest six-month level since 2012, reflecting investors’ belief that TMT is a disruptive force that touches all industries. In fact, the TMT industry accounted for over half of overall industry investment in H2 2016.
In Q3, while deal volume rose sharply over the previous quarter, TMT deal value experienced a decline, with average single-deal value dropping 44% on a quarter-on-quarter basis. The volume of investments with single value over US$100 million reached 33, 1.4 times as many as that of the previous quarter, representing the highest level since 2012. On the other hand, TMT deal value in Q4 plummeted from the investment spree seen in Q2 and Q3, falling in line with expectations. As compared with the previous quarter, average single-deal value decreased by 22%.
Analysed by sector, Internet remained the most attractive sector in the TMT industry during H2 2016, with both deal volume and deal value much higher than those of other sectors. The Internet sector was most sought after as investors were attracted by the continued influence of ‘Internet Plus’ on traditional fields and emerging businesses such as bike sharing.
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During H2 2016, deal volume in the TMT industry hit the highest six-month level since 2012 and reached 1,478, reflecting investors’ confidence in the TMT industry. However, deal value for H2 went down by around 30% as compared with that of H1 due to overly disperse investments and a decrease in the number of unicorns seeking high finance, which, in turn, indicated that the high valuation of unicorns had deterred investors from new targets.
The Internet sector was most sought after as investors were attracted by the continued influence of ‘Internet Plus’ on traditional fields and emerging businesses such as bike sharing; therefore, the Internet sector remained unshaken as the largest one within the TMT industry. Technology remained the second, while Entertainment and Media overtook Telecommunications and Mobile to take third place.
We have seen a continual emergence of new companies that have contributed to innovation and entrepreneurship in fields that are changing people’s lifestyles and living environments. This is the trend of the times, and so new projects in this arena have attracted attention from investors. Deal volume of initial investments took up over 60% in Q3 2016, but the proportion slid to 46% in Q4 because of an overall downward trend.
Listing on Chinese markets became mainstream in H2 2016. But as Hong Kong and US equity markets continued to rally, companies, especially those that have not yet become profitable, will choose these markets as IPO destinations.