TMT attracting more investors, PwC says

China's telecommunications, media and technology industry's share of total private equity and venture capital investments has risen significantly, a PricewaterhouseCoopers report showed on Monday.

Although macroeconomic volatility led to a significant decline in both the volume and size of overall PE and VC deals in the first half of the year, investment showed a significant rise in the TMT sector from 2012, according to PwC's China MoneyTree Report 2013.

"An increasing number of traditional enterprises are beginning to leverage their competitive advantages and increase their market shares through the Internet," said Gao Jianbin, PwC China's technology industry leader.

"This is why the TMT industry has proved relatively robust in a generally unfavorable investment environment."

According to the report, in the first quarter of the year, there were 134 PE and VC transactions in the TMT sector, accounting for 52 percent of the total volume.

The total investment amount hit $1.07 billion, representing 33 percent of the total PE and VC deal value.

The TMT industry's share of deal volume grew to 66 percent in the second quarter, on the back of a sharp increase on the previous quarter, to 172 deals.

However, exit channels remain a concern. The A-share market was not open and overseas capital markets remained sluggish in the first quarter of the year.

"This had a big impact on TMT businesses that were reliant on IPOs for exit, and strategic sales have gradually overtaken IPOs as the main exit channel. But as exit channels diversified and capital markets started to recover in the second quarter, PE and VC exits gradually rose in the TMT industry," said Gao.

Among all industries within the TMT sector, the Internet performed significantly better than others.

In the first quarter of 2013, there were 67 deals in the Internet sector, accounting for 50 percent of the overall TMT sector.

The deal value in the sector totaled $888 million, 83 percent of the TMT sector. And the trend continued in the second quarter.

The telecommunications and mobile Internet segments have also benefited from the proliferation of smartphones, mobile apps and the technological transformation of traditional industries.

PwC forecasts that investment will pick up quickly in Internet services and E-commerce.

For instance, Charles Chao, chief executive officer of Sina.com, said at a forum on Monday that the company has an interest in building up an Internet financing platform.

"The substantial investment into these major industry players has resulted in consolidation in the industry, fierce competition between rivals, an expansion of market share, an enhancement of their business models, and an increase of capital market value," Gao said.