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Money Management

Invesco expected to complete deal for Guggenheim ETF unit later this month

Invesco (IVZ) is close to finalizing a deal to buy Guggenheim Partner's ETF division with an expected announcement at the end of September, sources close to the transaction said.

Sources said they expect Invesco to pay around $1 billion for the division.

The acquisition would be the second ETF transaction for Invesco in 2017, the fourth-largest ETF provider in the U.S. with $127.4 billion in assets under management, expanding its presence in the fast-growing ETF market.

In April, Invesco purchased London-based Source, a European ETF provider with about $18 billion in its own ETFs and around $7 billion in subadvised assets. Guggenheim has around $36 billion in AUM in its ETF business.

Jeaneen Terrio, a spokeswoman for Invesco, said in a phone call that the company would have no comment. Seth Lubove, a spokesman for Guggenheim, said the money manager was declining comment.

Christopher Shutler, William Blair equity analyst, said in an Aug. 28 report that the acquisition, if it were to occur, would "make sense given the focus both companies have on non-market-cap-weighted solutions."

"The scale benefits, particularly the cost synergies, would be undeniable," he said.

He said Guggenheim generated $2.6 billion in net ETF inflows this year through July 31.

Even with the acquisitions, Invesco's AUM is still dwarfed by the three largest ETF firms — BlackRock (BLK), with $1.2 trillion in ETF assets; Vanguard, $758.5 billion; and State Street Global Advisors, $551.2 billion, show Morningstar statistics as of July 31.