Back to Basics for Pioneer after UniCredito Takeover

May 15, 2000 ( - UniCredito Italiano of Milan agreed Monday to acquire Pioneer Group for $ 1.2 billion. Under the agreement, Pioneer will return to its fund management focus and shed its non-fund management businesses by the third quarter of this year.

UniCredito acquires the assets of the country’s fourth-oldest mutual fund, and the prestige of the Pioneer name. About 40% of Pioneer’s $24 billion in assets is managed for 401(k) and IRA plans. Its main focus was core value investing, which has lost much of its luster in the past years.

This acquisition follows four unsuccessful attempts by the Italian bank to boost the holdings of its Dublin money management unit EuroPlus Research and Management. Pioneer, UniCredito’s first U.S. holding, will bring in new assets of $24 billion and boost the bank’s overall funds to $105 billion.

Cogan non-exec

John F. Cogan, Jr., Pioneer’s chief executive officer, will become deputy chairman of the new entity, Milan-based Pioneer Global Asset Management, and non-executive chairman of Boston-based Pioneer U.S. Pietro Modiano of UniCredito will be appointed PGAM’s chairman, and EuroPlus’ Fabio Innocenzi will be appointed its chief executive officer.

“We saw very great complementarity with UniCredito,” said Cogan in a conference call Monday. “Our strongest bases are in the US and Germany: UniCredito’s is in Italy; and we both operate in Ireland and Eastern Europe.”

Gold, timber go

Cogan’s diversification strategy came under criticism last year for causing Pioneer to depart from its core mutual fund business. Gold mining in Ghana, timber in Siberia, and a Russian brokerage business created a loss of $82.97 million on revenues of $249.9 million, while the mutual fund business continued profitable.

Pioneer’s Siberia-based timber business, its Russian voucher fund, and its gold mining, venture capital and real estate interests will be spun off into an entity called Harbor Global Company before the transaction is finalized this fall.

– Ann Bidou