The announcement last month that UniCredit Group and Banco Santander are set to merge their money management divisions put an end to months of speculation over the future of Pioneer Investments.
The non-binding, preliminary agreement, announced April 23, is between Pioneer parent firm UniCredit and Santander Asset Management's owners — 50% Banco Santander, and 50% between private equity managers Warburg Pincus LLC and General Atlantic LLC.
The deal includes the creation of a holding company — Pioneer Investments — that will own 100% of Pioneer's U.S. operations, and the combined non-U.S. operations of Pioneer and SAM.
The overarching holding company will be owned 50% by UniCredit, and 50% by Warburg Pincus and General Atlantic. These three firms also will own 66.7% of the newly combined Pioneer ex-U.S. business and SAM; Banco Santander will directly own the remaining 33.3% of that combined firm.
A money manager with almost e400 billion ($447.4 billion), it is set to pose serious competition to the money management landscape - particularly in Europe.
“The planned merger will create a huge player with global reach thanks to substantial synergies, especially in terms of geographic distribution,” said Francesco Paganelli, Milan-based fund analyst at Morningstar Inc. “A higher scale will likely provide an edge compared with smaller, local players in terms of geographic diversification, product offering, costs and margins, whereas from a fund investor point of view it remains to be seen whether the overall quality of the fund range will actually improve.”
Erwin van Lumich, Barcelona-based managing director, responsible for non-bank financial institutions at Fitch Ratings, said the firm estimates the combined Pioneer Investments “would be a top 20 asset manager in Europe in terms of AUM — so a touch of consolidation, but the industry is still very fragmented. Therefore, we feel that while it gives the entities involved a stronger position, it does not change the composition of the landscape in a very material matter.”
Juan Alcaraz, London-based CEO of SAM, will become CEO of the new entity, while Giordano Lombardo, CEO and group chief investment officer of Pioneer Investments, will become global CIO for the new firm.
“As both firms boast a large asset pool, (with SAM bringing e172.5 billion of assets under management, and Pioneer e225 billion) it makes sense (to have) a split of the top-level management positions (of) CEO and CIO,” said Mr. Paganelli.