Amvescap plc is getting into the exchange-traded funds business, as it has agreed to acquire PowerShares Capital Management LLC, an Illinois-based provider of ETFs.

PowerShares currently manages more than US$3.5 billion in assets in a family of 36 different ETFs. The initial purchase price of US$60 million is payable at closing for 100% of the fully diluted equity of PowerShares Capital Management. However, this price could rise significantly (at least another US$170 million in contingent payments is planned) based on subsequent earn-out provisions for the business.

The transaction, subject to certain conditions including approvals from the board of directors and the shareholders of PowerShares’ ETFs, is expected to close in the second or third quarters of 2006.

“The addition of PowerShares ETFs is a natural extension of our core mission to provide a broad range of investment management solutions to our diverse clients across the globe,” said Marty Flanagan, president and chief executive officer of Amvescap. “Our combination with PowerShares, one of the fastest-growing companies in today’s financial marketplace, immediately establishes Amvescap as a significant emerging player in exchange-traded funds. PowerShares ETFs and our broad range of actively managed investment products will provide our clients with one of the industry’s most robust and comprehensive product lines.”

“PowerShares ETFs and the AIM mutual funds will serve as complementary investment solutions for investors and their advisors,” said Mark Williamson, president and chief executive officer of AIM Investments. AIM expects to begin distribution of PowerShares ETFs following completion of certain required regulatory steps.

“Amvescap is an outstanding organization and an excellent fit for PowerShares. We are very excited about our future together,” said Bruce Bond, president and CEO of PowerShares Capital Management. “This is a very important event for investors because, for the first time, a leading investment management company with tremendous institutional and retail distribution capabilities is embracing ETFs. I believe the result will be a tremendous opportunity for PowerShares, Amvescap, and our clients.”