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