In the first half (H1) of 2018, China ramped up efforts to encourage mass innovation and entrepreneurship and rolled out a number of supportive industry policies. High-quality projects with strong growth potential and good prospects for exit were still the most sought-after by investors. On the other hand, the private equity and venture capital (PE/VC) market showed signs of reaching an inflection point this year after a frenzied 2017 as regulators strengthened the supervision of the financial markets. Investors became more cautious.
In Q1 2018, there were 2,398 PE/VC industry investments overall, with a total value of US$31.909 billion. Compared with Q4 2017, total deal volume fell 21%, and total deal value dropped 2% in Q1 2018.
In Q2 2018, there were 2,626 PE/VC investments, with a total value of US$55.674 billion. Compared with Q1 2018, total deal volume rose 10% and total deal value increased 74% in Q2 2018.
Comparison of total PE/VC investments and TMT investments from Q3 2015 to Q2 2018 (Deal value)
Internet and Mobile internet
Its deal volume was the highest among all sub-sectors. Average single-deal value was close to US$23 million. There were 28 investments valued at over US$100 million each, accounting for 64% of investments valued at over US$100 million each in TMT overall. Investment in an emerging mobile e-commerce platform marked the highest single-deal value at US$3 billion.
Its deal volume was second only to that of the Internet and Mobile Internet sub-sector. Average single-deal value was close to US$13 million. 21 investments were valued at over US$100 million each, with electronics, photovoltaic, IT service, and software companies being highly sought after by investors.
Investment kept declining in H1 2018, with deal value plummeting to a three-year low. Average single-deal value was around US$9 million, down 95% from H2 2017. There were no investment deals over US$100 million in H1 2018.
Entertainment and Media
Deal volume kept declining from the peak in H1 2017. Deal value rose from its H2 2017 low with average single-deal value close to US$13 million. There were seven investments valued at over US$100 million each in H1 2018. Film and television production and distribution and outdoor media received the most attention from investors.
Deal value comparison in TMT sub-sectors from Q3 2015 to Q2 2018
Q1 2018 recorded 60 exits.
Q2 2018 recorded 26 exits.
H1 2018 saw a 75% decline in the number of exits from H2 2017.
Exit volume in the TMT industry from Q3 2015 to Q2 2018
Global, Mainland China and Hong Kong Technology, Media and Telecommunications Industry Leader, PwC China
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