UPDATE 2-Mediobanca's Cairn Capital buys distressed debt firm Bybrook

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MILAN, Feb 2 (Reuters) - Mediobanca has expanded its wealth management division with the acquisition of London-based distressed credit specialist Bybrook Capital via its local business Cairn Capital.

Cairn Capital will buy and merge with Bybrook to create a leading diversified alternative credit manager with around $8 billion in assets under management, the Italian bank said on Tuesday.

Mediobanca will retain a stake of around 64% in the new group, while the remaining 36% will be held by former Bybrook shareholders and Cairn Capital’s minority investors.

No other financial details were provided.

Backed since its creation in 2014 by the world’s largest manager of alternative assets Blackstone Group, Bybrook focuses on stressed and distressed debt and special situations in Europe and currently manages around $2.5 billion on behalf of top tier international institutional investors.

“One more piece in the Wealth Management puzzle,” Citi analysts said in a note. “The capital impact of the acquisition is within the group’s annual budget for M&A and in an area considered strategic to expand its offer.”

Citi said that Mediobanca had indicated the transaction would have a negative impact of around 15 basis points on its capital position.

Mediobanca’s Chief Executive Alberto Nagel said: “With the acquisition of Cairn Capital in 2015, RAM Active Investments in 2017 and Bybrook today, Mediobanca keeps building an Alternative Asset Management platform which today manages roughly $10 billion in AUM.”

Wealth management contributed 25% of Mediobanca’s group revenues and 46% of fee income as of June 30.

The deal, subject to the customary conditions, is expected to close in the second quarter of 2021.

additional reporting by Claudia Cristoferi, editing by Jason Neely and Jane Merriman