American asset management giant Invesco has agreed to buy European exchange-traded fund (ETF) provider Source.

The deal – due to close in the third quarter of this year – would see Invesco take on an additional $25bn (€23bn) in assets under management: $18bn managed directly by Source, and $7bn in ETFs built by Source and managed by third parties such as PIMCO.

Invesco already runs $110bn through its PowerShares ETF business. These products are primarily listed in the US, while Source’s ETFs are based in Europe. PowerShares is the fourth-biggest ETF provider in the world, after BlackRock’s iShares, Vanguard, and State Street Global Advisors.

Source is currently majority-owned by private equity firm Warburg Pincus, which bought its stake in 2014 from Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley, and Nomura. The five banks remained minority stakeholders.

The parties involved did not reveal the price of the transaction.

Martin Flanagan, president and CEO of Invesco, said the acquisition would “significantly enhance our ability to deliver meaningful solutions to institutional and retail clients in Europe and around the world”.

“The addition of Source will help us meet increasing demands from clients who want to work with investment organisations that can deliver across the full range of investment capabilities and provide the outcomes they seek,” he added.

Mike Paul, executive chairman of Source, said the two firms were “extremely complementary” and claimed that “the combined business will be a true leader in the ETF market across Europe”.