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Strategic sales to be main Internet investment exit channel

By XIE YU in Shanghai ( Updated: 2014-05-29 20:07

Internet investment will increasingly exit through strategic sales in 2014, according to a report issued by PwC on Thursday.

"IPO currently remains the number one exit channel in the Internet sector for PE and VC. But we expect it will be replaced by strategic sales in 2014. Internet companies can obtain core technology, exponentially expand their user base, diversify their business and achieve new income growth through strategic sales," the report said.

Strategic sales can also help enterprises achieve online offline integration rapidly, and it is also a way for them to develop through penetration, the report said.

Investment towards TMT rebounded significantly, with deal volume increasing by 82 percent compared to H1, and total deal value increasing by 49 percent, said Gao Jianbin, PwC China Technology Industry Leader.

In Q3 2013, there were 230 PE/VC transactions in the TMT industry, accounting for 48 percent of the total volume of all industries. The total investment amount reached $1,908 million, taking up 25 percent of PE/VC deal value. In Q4 2013, the number of TMT investments reached 269, accounting for 58 percent of total PE/VC volume. The deals were worth a total of $3,449 million, which consisted of 47 percent of the total PE/VC deal size.

The report also examined details concerning different sectors within the TMT industry. The technology sector remains strong, with the single deal size figure on an upward curve. Investments towards Mobile subsegment, under Telecommunications, are active, but due to factors such as return on investment and risk management the single deal size in the Mobile subsegment has been on the decline.

"Innovation is the driving force for the development of the TMT industry," said Gao.

He added that – compared to other industries - the TMT industry is more vibrant and appealing to investors. Generally speaking, investments in this industry have always been relatively steady, and have not been substantially affected by volatility in the overall economic and investment environment.

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