May 30, 2012 / 4:07 PM / 6 years ago

UPDATE 1-Rivals eye $1 bln Dexia Asset Management -sources

* Affiliated Managers Group, Federated Investors consider bids -sources

* New York Life, Macquarie also eye binding bids -sources

* Permira in second round of auction process -sources

* Dexia hopes for 750 million euros for asset manager -source

By Simon Meads and Victoria Howley

LONDON, May 30 (Reuters) - Private equity firm Permira is up against U.S. asset managers and an insurance group in the race to buy the $1 billion asset management arm of bailed-out Franco-Belgian bank Dexia, people familiar with the situation said.

Affiliated Managers Group, Federated Investors and New York Life Insurance are considering binding bids for Dexia Asset Management, three people said.

Australia’s Macquarie is also sizing up the asset management group, which has centres in Brussels, Luxembourg, Paris and Sydney, the people said.

The planned sale is part of massive asset disposal programme by Dexia after it was bailed out by the French and Belgian governments last year.

The bank recently agreed the sales of Banque International a Luxembourg, its half of RBC Dexia Investor Services, and is attempting to sell Turkish lender Denizbank.

Dexia is hoping the business will fetch about 750 million euros, one of the people said.

Dexia’s chief executive Pierre Mariani flagged the start of the sale of the asset management arm in January, saying it had received more than 30 expressions on interest.

After initial interest from a number of buyout groups, Permira is the only private equity firm left in the hunt, the people said.

Private equity firms have long been attracted to asset management, drawn by its regular fee income and relatively low overheads.

However, in competitive sales processes as banks jettison non-core divisions, they have regularly been beaten by rival asset managers who have the firepower to pay more and can make savings thanks to synergies with existing businesses.

Dexia Asset Management presents itself as a specialist in responsible investment, offering 20 funds based on sustainable and responsible investment principles. It ended 2011 with 78 billion euros ($98 billion) assets under management, generating 54 million euros pretax income.

Final bids are due in mid-June, with Dexia planning to select a buyer before July, chief executive Pierre Mariani said in an interview with Les Echos earlier this week.

Dexia was not available for comment. Permira declined to comment, while the other companies named declined to comment or were not immediately available for comment.

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