November 13, 2007 / 2:57 PM / 11 years ago

UPDATE 3-Bank of New York Mellon to buy Brazil's ARX Capital

(Adds analyst comments, byline, share closing)

By Dilipp S. Nag

BANGALORE, Nov 13 (Reuters) - Bank of New York Mellon Corp (BK.N), one of the world’s biggest asset managers, said on Tuesday it agreed to acquire ARX Capital Management, a Rio de Janeiro-based asset management firm, to expand its operations in the Brazilian market.

Terms of the deal were not disclosed. But Bank of New York Mellon spokesman Jamie Brookes said in an e-mail that the transaction is payable in cash.

Sandler O’Neill + Partners analyst Mark Fitzgibbon said this is a tiny acquisition for Bank of New York Mellon. “It really should not impact the company’s financial statements at all.”

The deal, however, is consistent with the company’s strategy of building its asset management business outside the United States, Fitzgibbon, who has a “sell” rating on the stock, said by phone.

The deal is expected to close in the first quarter of 2008 and Bank of New York Mellon sees the purchase adding to its cash earnings per share in the first year.

ARX specializes in Brazilian multi-strategy, long/short and long only investment strategies and has more than $2.6 billion in assets under management, a company statement said.

ARX will be integrated with BNY Mellon Asset Management Brasil, Bank of New York Mellon said.

The Brazilian asset management industry has grown on average at 27 percent per annum over the last five years, Bank of New York Mellon said.

When asked about the job cuts at ARX Capital, the spokesman said, “We expect ARX Capital Management employees to remain involved in the growth of its business.”

“This acquisition is not driven by cost savings; it’s all about continued revenue generation,” Brookes said.

Jose Tovar, currently chief executive of ARX Capital, will head the asset management business in Brazil. Zeca Oliveira will lead the integrated group, BNY Mellon Brasil.

Founded in 2001, ARX Capital manages 20 equity and hedge funds in domestic and offshore versions. BNY Mellon DTVM Brasil is the administrator for the majority of the funds.

BNY Mellon Brasil has assets under management and administration now at more than $26 billion. Its asset management arm focuses on Brazilian fixed income, hedge funds and long-only equity funds.

Shares of Bank of New York Mellon closed up more than 2 percent at $47.29 Tuesday on the New York Stock Exchange. They have gained more than 13 percent so far this year. (Editing by Gopakumar Warrier, Deepak Kannan)

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