Friday, 3 August 2007

Pioneer sets up shop in Moscow

Financial News

Jason Corcoran in Moscow
03 August 2007

Pioneer Investments, the funds arm of Italian bank UniCredit, is setting up an asset management operation in Moscow after failing to buy domestic player PioGlobal.

Pioneer, which has more than $326bn (€236bn) in assets, will launch four investment funds by September after being granted an asset management licence from the Federal Financial Markets Service, the Russian regulator.

The move to set up on its own follows Pioneer's failure to buy back PioGlobal Asset Management, which it established in 1995. Pioneer withdrew as a shareholder in PioGlobal following the former’s merger with Italy's UniCredit in 2000.

PioGlobal was subsequently acquired by US invsestors Harbor Global in 2000 before being sold to Russian bank CIT Finance last August for $71m. The business was sold this year to Russia's Antanta Capital for $80m so CIT could focus on its joint venture with Belgium's Fortis.

A banker close to the Harbor sale: "Pioneer made an offer to Harbor but it offered less than half than the eventual sale price."

Michael Vasileff, a business development director, is recruiting investment managers, having moved to Moscow to head Pioneer's Russian office.

One local fund executive suggested Vasileff would need to hire a minimum of 50 staff, including fund managers and back office personnel.

"They will need to spend heavily on marketing and public relations and it is much tougher to find good fund managers than bankers here. There are only four or five with any kind of record over the medium term," said the source.

A Pioneer spokesman declined to comment on its Russian plans.

UniCredit, Pioneer's Italian parent, is also making a push into retail and investment banking in Russia. Chief executive Alessandro Profumo said the group will double the number of branches belonging to its subsidiary International Moscow Bank to more than 100.

The eastern European arm of UniCredit last month completed the acquisition of Russian brokerage Aton Capital. It plans to offer underwriting and merger advice in addition to corporate lending.

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