The Complicated Pioneer Deal Is Here: What Happens in the U.S.?
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Friday, April 24, 2015

The Complicated Pioneer Deal Is Here: What Happens in the U.S.?

Pioneer Investments' [profile] U.S. arm, led by Lisa Jones, is about to become half private-equity-backed, as expected.

Under the deal that Italian multinational bank UniCredit (Pioneer's current parent) and Spanish multinational bank Banco Santander unveiled yesterday, Pioneer in the U.S. will be wholly-owned by a new holding company, called Pioneer Investments. UniCredit will own half of that holding company, and private equity giants Warburg Pincus and General Atlantic will own the other half. Santander will have no stake in that holding company, and thus no stake in Pioneer's U.S. business. [See MFWire's living timeline of the Pioneer auction for more details and history.]

A Pioneer spokesman confirms that the U.S. arm has about 550 employees and has about $70 billion in assets under management. Worldwide, Pioneer's more than 2,000 employees work with about 225 billion euros (about $243 billion at current exchange rates).

The deal also entails the two giant banks combining their global asset management businesses. The new holding company (backed by UniCredit and the two PE firms) will own two-thirds of the combined non-U.S. asset management businesses, while Santander will retain a one-third stake. Santander Asset Management CEO Juan Alcaraz will lead the combined global asset manager as global CEO, and Pioneer worldwide CEO and group chief investment officer Giordano Lombardo will be the combined asset manager's global CIO.

Worldwide, Santander Asset Management has more than 755 employees and works with 172 billion euros (about $186B) in AUM. UniCredit revealed that the deal is based on valuing all of Pioneer worldwide at 2.75 billion euros (about $2.98 billion) and Santander Asset Management at 2.60 billion euros (about $2.82 billion). That translates into valuations of 1.22 percent of AUM for all of Pioneer and 1.51 percent of AUM for Santander Asset Management.

The official deal aligns with predictions reported within the past week. The FT reported that Banco Santander executive chairman Ana Botin changed the deal to keep Santander's out of the U.S. side of Pioneer to avoid furthering her bank's entanglements with U.S. regulators.

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