Pioneer Investments, the fund-management arm of ItalyÆs biggest bank by assets UniCredit Group, has signed a joint venture agreement with state-run Bank of Baroda to set up an asset management company in India.

This marks Pioneer InvestmentsÆ return to IndiaÆs fund management industry after nearly five years. Pioneer Investments, which manages around 238 billion euros in assets worldwide, will own a 51% stake in the joint venture while Bank of Baroda will hold the rest.

The joint venture, Baroda Pioneer Asset Management, hopes to launch its first product by June after obtaining regulatory approvals from Italy and India. It plans to initially roll out equity, fixed income and balanced funds.

"Entering the Indian market is a strategic initiative for us and we had to get the right formula,ö says Dario Frigerio, global chief executive officer of Pioneer Investments, who highlights Bank of BarodaÆs strong reputation, deep understanding of the local market and extensive distribution network.

The fund company was operational in India as Kothari Pioneer Mutual Fund and later Pioneer ITI Mutual Fund until mid-2002, when it was bought by Franklin Templeton Asset Management.

India is now part of Pioneer Investments' Asia and emerging markets division headed by Angus Stening, who previously ran the group's operations in central and eastern Europe.

Pioneer Investments is the latest among a string of international fund managers that have set up operations in India, one of the world's fastest growing mutual fund markets in the world. Cerulli Associates valued IndiaÆs fund industry at $89 billion as of December 2006.

Earlier this year, the Netherlands-based Robeco Asset Management bought into Canbank Investment Management Services in India and formed the Canara Robeco fund management company, AXA Investment Managers entered into a joint venture agreement with Bharti Enterprises, while AIG avoided the JV route and formed AIG Global Asset Management Company India.

Anil Khandelwal, chairman and managing director of Bank of Baroda, says the joint venture will help enlarge the basket of investment products available to its existing 29 million clients.

ôWe recognized that it is time for us to offer our customers a mutual fund service which enables them to fulfill their investment requirements,ö says Khandelwal.

The new joint venture will focus on third-party distributions through existing relationships with private and foreign banks. The bank has 1,100 branches in India and more than 63 offices overseas.