Pioneer Investments signed today a joint venture agreement in the asset management business with Bank of Baroda in India, in a major strategic move to extend its presence in one of the world's fastest growing mutual fund markets.
The Memorandum of Understanding was signed in February 2007.
Bank of Baroda - the 4th state-owned bank in India with over 29 million of clients - offers a powerful brand in the marketplace and the important distribution reach of 2,700 branches.
Pioneer Investments' CEO Dario Frigerio explained the Group strategy In India and anticipated the plan for the Company's entry into Russia: "We are one of the fastest growing asset management companies over the last 10 years and already a leading global player. Our commitment is to foster growth. A significant presence in countries such as India and Russia is thus essential. This is a further step in this direction and once again we have demonstrated that we can be innovative in creating our business opportunities."
The joint venture agreement between Pioneer Investments and Bank of Baroda, already shared with the Indian Government/Finance Ministry, is the first of its kind in India and implies that Pioneer Investments acquires a 51% stake in the existing Bank of Baroda local asset management company, which will be consequently renamed Baroda Pioneer Asset Management Company. The closing of the deal and, consequently, the completion of the joint venture are subject to the approval of regulatory authorities, including Bank of Italy and Securities and Exchange Board of India.
Frigerio added: "We bring the asset management expertise together with a deep investment resource and a solid globally consistent process which will be applied by the investment team in India. Together we have the necessary ingredients for success: market demand which can be satisfied with strong product delivered through effective distribution."
The company will be jointly branded and initially the business will create locally domiciled Indian mutual funds for the Indian market. A regional team of people is being defined and the joint venture business, though independent, will leverage on the knowledge and resources of Pioneer Investments worldwide operations and on the established fundamental and quantitative research capabilities. The Indian investment group will be connected with Pioneer Investments' global investment team under the control of the Global CIO. The same will apply to other functions within the business. In the future the competences acquired on the Indian market will further enrich the Pioneer Investments mutual funds global offer.
Targets for the Indian business:
- Business launch in Q1 2008
- Top 5 player in 3 years
- Initial product offering of Indian equity and fixed income funds
- Bring broader investment opportunities to the Indian market using investment capabilities in Pioneer Investments' global hubs in Dublin, Boston and Singapore.
In Russia, Pioneer Investments recently formed a Greenfield asset management company. Plans are well advanced, with some local appointments already made, and, at the end of September, the Russian regulator registered the UIF's rules and approved 3 local funds for distribution.
Dario Frigerio commented the business development plans for Russia: "In many respects it is similar to India as we intend to leverage the brand awareness and distribution reach of a Russian bank, but here we will work with the UniCredit Group trough IMB. The asset management will thus be 100% Pioneer Investments and we will work with our colleagues in IMB to offer products through the banking channel. We are well on track and we plan to launch the business in December by selling our first funds."
Goals in Russia:
- Business launch in Q4 2007
- Top 5 player in 3 years
- Product offering of Russian balanced, equity and fixed income funds
- Bring international investment opportunities to the Russian market in local product
There are also opportunities in the 3rd party channels in both India and Russia. "We hold relationships with global private banks and they are keen to have access to a wider range of managers. We will develop distribution through the banking channels in both countries, as well as we are looking to 3rd party distribution to quickly make a contribution to our business development," said Frigerio.
For more details:
Head of Media Relations
Pioneer Investment Management SGRpA