A China CYTS Tours Holding Co Ltd booth at an exhibition in Beijing. Edmond De Rothschild Asset Management Hong Kong Ltd bought a 5.06-percent stake in the Chinese tour operator.[Photo / China Daily]

European asset manager plans to increase holdings in next 12 months

SHANGHAI - The asset management arm of Edmond De Rothschild Group, owned by the Rothschild family, said it had bought more than 5 percent of China CYTS Tours Holding Co Ltd, worth $54 million at present, and plans to increase its stake over the next 12 months.

Edmond De Rothschild Asset Management Hong Kong Ltd owns 21 million shares of CYTS Tours, or 5.06 percent of the Shanghai-listed company, as of Tuesday, and plans to buy more shares to gain investment returns, the company said in a statement to the Shanghai Stock Exchange.

In line with Chinese regulations, upon acquiring more than 5 percent of a listed company, an investor is required to fully disclose its holdings.

The statement comes a week after CYTS Tours said it had failed to receive regulatory approval to spin off its profitable Wu Zhen tourism unit for a Hong Kong listing - a plan that had raised investor concern over the future profitability of the company.

Rothschild and other foreign investors have been investing in China's capital markets under the Qualified Foreign Institutional Investor (QFII) policy, seeking exposure to the world's fastest-growing major economy.

Rothschild said it had been gradually buying shares of CYTS Tours since February. Rothschild Group's banking unit obtained $100 million in QFII quotas in 2006.

Rothschild has also bought more than 5 percent of chemical producer Liuzhou Chemical Industry Co Ltd.

Hong Kong-listed mainland companies in which Rothschild owns more than 5 percent include China Tycoon Beverage Holdings Ltd, the investment holding company CNNC International Ltd, NetDragon Websoft Inc and Tianjin Capital Environmental Protection Group Co Ltd.

Established in 1953 by Baron Edmond de Rothschild, Rothschild Group specializes in private banking and asset management.

Established in 1980, CYTS Tours went public on the Shanghai Stock Exchange in 1997. Shares of CYTS Tours rose 0.75 percent to 16.18 yuan ($2.54) on Wednesday.

Headquartered in Beijing, the company is a major Chinese tour operator that basks in a booming tourism market.

According to a report released by the China Tourism Academy in April, mainland tourists made more than 57 million overseas trips and spent $48 billion last year.

It is estimated that mainland tourists will make 65 million outbound trips and spend $55 billion overseas this year.

Meanwhile, China has also become a hot tourist destination.

According to the 12th Five-Year Plan (2011-2015), the country hopes to attract 3.3 billion tourists by 2015, up from 2 billion last year.

The Boston Consulting Group said in a report in March that China is expected to overtake Japan and become the world's second-largest travel market by 2013.

China currently accounts for 6 percent of global tourism revenue.

That proportion will increase to 8 percent in 2013 and 14 percent in 2020, the report said.

Travel revenue in China is projected to grow by 14 percent annually to reach 5.5 trillion yuan in 2020. Tourism generated revenue of 1.55 trillion yuan last year, according to figures from the National Tourism Administration.

Reuters