TMT Industry Investment Observation: Investment And Exit Record High In The Second Half Of 2020

Recently, PricewaterhouseCoopers released the moneytree report, which shows that in the second half of 2020, the investment of private equity and venture capital (PE / VC) in the technology, media and communication (TMT) industry has rebounded significantly, and the investment amount has reached a new high since the second half of 2018. In the second half of 2020, the total number of investment in TMT industry is 2063, which is 74% higher than that in the first half of 2020.

In terms of investment amount, according to the investment projects with disclosed investment amount, the investment amount of TMT industry was 34.685 billion US dollars, up 148% month on month. Among them, there were a large number of star projects with large amount of transactions, and the number of single investment over 100 million yuan was 55, up 120% month on month.

"The science and technology industry continues to maintain the first position in all sub industries of TMT since the first half of 2020, with 67% and 63% of the total investment amount respectively, and there have been a number of large star investment projects, mainly in the semiconductor industry supported by the state." In an interview with media including the 21st century economic report, Ni Jing'an, the managing partner of China's mainland technology industry of PricewaterhouseCoopers, shared that "the strength of the science and technology industry benefits from the strong support of the state for scientific and technological innovation, especially in the" neck area ", semiconductors, 5g construction, big data centers, artificial intelligence The Internet of things center and the upstream and downstream industrial chain have become investment hotspots. "

Looking forward to the future, Ni Jingan pointed out that thanks to the policies issued by the Ministry of industry and information technology to promote the high-quality development of the integrated circuit industry and software industry, the semiconductor, it service, electronic and photoelectric equipment industries will continue to receive the attention of capital. At the same time, due to the obstacles of the new epidemic situation to offline activities, new investment opportunities have also been bred in the fields of remote office, online education, telemedicine, network live broadcast and online consumption.

Investment rebounded

The performance of domestic private venture capital market in the second half of 2020 is remarkable, and the total industry investment volume has reached a new high since the second half of 2018.

Among them, the investment in domestic private venture capital market increased significantly in the third quarter. The total amount of investment reached 2077, with a month on month increase of 38%. The investment amount reached 42.323 billion US dollars, with a month on month increase of 98%. Although there is a slight decline in the fourth quarter of 2020, the total investment and the investment volume decrease by 21% and 5% respectively, the private venture capital market shows strong activity in the second half of 2020.

TMT industry is in line with the overall market trend. In the TMT fine molecule industry, the investment enthusiasm of science and technology industry continued to grow. In the second half of 2020, the investment amount of science and technology industry accounted for 63% of the total investment amount of TMT industry. The amount and amount of investment in Internet and mobile Internet industry also increased significantly, up 141% and 44% respectively on a month on month basis.

In the second half of the year, with the control of the epidemic situation, the entertainment and media industry also achieved a rapid recovery. The investment amount increased by 416% month on month, and the investment amount increased by 218% month on month. However, the performance of the communication industry, whose main investment direction is telecommunication equipment and terminals, has declined in the second half of 2020. Since the first half of the year, there has been no single investment case of more than 100 million yuan in a communication terminal enterprise.

From the perspective of PWC, the investment heat in the technology sub industry largely comes from the investment heat of semiconductors. In addition, there are investment hotspots combined with emerging technology trends.

"With the strong support of the state for the science and technology innovation industry, there are 11 and 6 enterprises with more than US $100 million investment in the IT service industry and the semiconductor industry respectively, of which the largest single investment amount has been invested in the semiconductor industry." "In addition to the semiconductor industry, 5g construction, big data center, artificial intelligence, Internet of things and other fields are still and will continue to be investment hotspots in the future," Ni said

In terms of mobile Internet, there are still a lot of investment opportunities in the subdivision fields related to residents' life services. According to the report data, affected by the epidemic situation, residents' dependence on the Internet has increased. In the second half of 2020, there have been more than US $100 million investment in e-commerce and network services.

Record high number of exits

Due to the consideration of risk aversion and the requirement of return on capital, as in previous years, capital firepower is still concentrated in the expansion period of enterprises.

From the perspective of star projects, in the second half of 2020, a total of 31 companies in the expansion period have obtained financing of over 100 million yuan, accounting for 67% of the total investment in the expansion period, of which two investments with an amount of more than 2 billion US dollars were invested in semiconductor companies, boosting the total investment amount and amount in the whole stage.

In contrast, in the second half of 2020, after years of decline, the investment in TMT's start-up period ushered in a short rebound in the third quarter. The total investment increased by 78% month on month, and the total investment increased by 79%. However, it fell back in the fourth quarter. The total investment decreased by 21% month on month and the total investment decreased by 37%. The total investment for mature enterprises increased by 230% in the third quarter and decreased by 32% in the fourth quarter. In the second half of 2020, the investment volume of fixed increase projects decreased by 37% in the third quarter and increased by 67% in the fourth quarter.

"With the effective prevention and control of the epidemic, the investment market vitality rebounded significantly in the second half of 2020, and the number and amount of project investment in the start-up period and mature stage increased year-on-year. However, due to the consideration of risk aversion and the requirement of return on capital, capital firepower is still focused on enterprises in expansion period. " Liu yuou, partner of PwC's mainland audit practice, pointed out.

In terms of investment regions, Beijing ranked first in terms of investment volume in the second half of 2020, with a total of 504 investments, Shanghai ranked second with 341, Shenzhen 320, Jiangsu 231 and Zhejiang 222. In terms of investment amount, Beijing ranked first with us $11.183 billion, and Shanghai ranked second with us $7.285 billion. Zhejiang Province, Shenzhen and Jiangsu Province ranked third, fourth and fifth, with a total investment of 8.772 billion US dollars.

In terms of exit, in the second half of 2020, the overall exit market also showed a significant recovery, with a total of 324 investment exits, which increased by 203% month on month, reaching a new high. In terms of exit type, the number of equity transfer is still the first, accounting for 46%, which is the first choice for most projects to withdraw.

In addition, in the second half of 2020, the capital market continued to be active, and the number of IPOs increased significantly, up 53% month on month“ In the future, with the continuous promotion of the reform of the capital market registration system, more and more domestic enterprises will consider listing in the domestic capital market. At the same time, the Hong Kong market in China will continue to be the preferred place for China capital shares to seek secondary listing. " Liu said.