MoneyTree™ China TMT Report - Q3/Q4 2015

In the second half (H2) of 2015, investment in the Telecommunications, Media and Technology (TMT) industry in China increased steadily despite the downturn of the domestic macro-economy. In fact, deal value increased 8% half over half to US$19.01 billion and deal volume increased by 11% to 1,435 deals. Both the deal value and volume in the TMT industry in H2 2015 reached the highest levels since 2012. 

Q3 2015 saw a continuation of the strong momentum seen in the first half of the year, with the TMT industry seeing US$13.29 billion invested across 954 deals, an increase of 65% in deals and 48% in value compared with Q2 2015. In contrast, Q4 represented a downward trend, with both deal value and volume about half of what was seen in Q3.  While Q3 saw 21 deals valued at over US$100 million, Q4 had only 11 such deals.

Internet companies continued to be an investor favorite in the second half of 2015, with the sector seeing the largest number of deals and the largest value of investment in both quarters.  Technology came in second in terms of deal volume in both quarters and it was third and second in terms of deal value in Q3 and Q4, respectively.  

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Overall, despite the fluctuation of the stock market and the downturn of the traditional economy, investment in the TMT industry further increased in Q3 2015, with the deal value accounting for half of the overall industry investment. In Q4, this enthusiasm cooled down as investors turned cautious. However, from the point of financial investment, strategic investment and outbound acquisition, the TMT industry will continue to be a hot spot.

The large volume of single deals with a value over US$100 million reflects a distinctive characteristic of China’s TMT industry currently. As the traditional economy has not yet seen the degree of industry consolidation observed in developed countries, China’s TMT industry, and particularly the Internet sector, act as the main force driving industry consolidation and connecting traditional industries with the Internet. More large deals are expected in 2016.

With the fast development of Internet, though the direction of Internet investment is mainly focused on the consumer side, many Internet companies that service small and medium enterprises attracted more and more investors. The year 2015 was a turning point for the Technology sector and more and more investors will pay attention to it in the future.

Driven by the “Internet +” strategy and led by the currently hottest subsector, Mobile Internet, traditional enterprises are entering a new stage, where various platforms such as services, entertainment and social media are emerging one after another. The business model represented by O2O (online to offline) is an innovation highlight driven by Mobile Internet. In 2015, enterprises in some areas of the Mobile subsector stepped into a relatively steady development stage. An expansion-stage deal of US$3 billion in H2 was the best example of this. Whether the capital market faces turbulence or downturn in the future, we believe that we will still see strong investments in the Mobile subsector.