BEIJING - The second half of 2016 saw investment volume from private equity and venture capital in Telecommunications, Media and Technology (TMT) in China reach its highest level since 2012, according to accounting firm PricewaterhouseCoopers (PwC).

According to a report by the firm released Wednesday, 1,478 private equity and venture capital deals in the TMT industry, with a total value of $25.02 billion, were recorded in the second half of 2016, including 33 deals exceeding $100 million in the third quarter, a record high.

Investment values dropped, however, as investors adopted a rational response to the market.

The report said investment in TMT accounted for more than half of all private equity and venture capital deals in the second half of 2016, while a TMT deal worth $4 billion marked the largest single-deal.

"Despite the overwhelming popularity of the TMT industry among investors, the investments are highly polarized," said Sandy Xu, PwC China TMT Partner. "Many of the deals are under $100 million, while the number of unicorn companies with large-scale financing decreased. The trend reflects that valuations of unicorn companies are still high, which frightens away investors."

The Internet was again the most popular sector of China's TMT industry, with a total investment value of nearly $18.2 billion, with 39 deals exceeding $100 million during the six months. New business models such as shared bikes emerged, luring many investors.

Beijing continued to outnumber other provinces and cities by a large margin in terms of TMT investment volume and value, with 583 deals worth a total of $13.5 billion.

In Q3, 95 percent of capital exits in the TMT sector were through IPOs, while the ratio in Q4 exceeded 60 percent.

The report noted that the proportion of IPOs exceeded mergers and acquisitions for the first time since the third quarter of 2015.

"As the A-share market is growing steadily amid expectations that regulators will act to expand direct fund-raising and cater to companies waiting in the pipeline for listings, IPOs are becoming the major channel for capital to exit the market," said Walter Zhang, PwC China assurance partner. "As long as the momentum is sustained in China's capital market, this trend will last for quite a long period of time."