Colonial announced on Wednesday that its international funds management arm would acquire the Asian and British funds management business of San Diego-based Nicholas-Applegate for US$15.8 million or A$24.76 million.

The institutional and retail funds business that Colonial would buy had US$400 million in funds under management, which would push Colonial's total funds under management in Asia to about A$1.4 billion.

``We would love to be a very large Australasian player. So this is just the beginning of the strategy,'' Polson told reporters in a teleconference from Hong Kong.

``The strategy has to be organic growth, plus, if we can find at a fair price other acquisitions, we would look at those,'' he said, adding that Colonial would definitely be interested in a larger acquisition than Nicholas-Applegate.

While the Nicholas-Applegate international business was small, absorbing its people, back office systems and products would give Colonial a solid platform for growth, Polson said.

``It puts us in a very strong position to manage money, distribute products and be a player in the Asian region.'' The latest buy, subject to regulatory approval, was minute compared to Colonial's takeover of Prudential Corp Plc's Australian and New Zealand units and Legal and General Plc's Australian unit last year for more than A$2.2 billion.

But like Colonial's announcement on Tuesday that it would buy a 51 per cent stake in the National Bank of Fiji for A$7.8 million, the move fit with Colonial's strategy to build mass rapidly through acquisition instead of internal growth.

Analysts see Colonial itself as ripe for a takeover by one of Australia's four major banks as long as they remain barred by the government from merging with each other.

Up to now, Colonial in Asia has had small funds management operations in Hong Kong, Beijing and the Philippines, making up a tiny portion of Colonial First State Investments' total of A$42 billion of funds under management.

Nicholas-Applegate, which would trade under Colonial's Asian brand, CMG First State Investments, would give it entry to Singapore and expand its presence in Hong Kong ahead of the introduction of mandatory superannuation there.

One analyst said the price Colonial was paying looked a bit steep, but said it would look better in the long run.

The funds, which Polson said had a very good track record compared to their peers, lost half their value over the past two years because of the Asian downturn, so Colonial was effectively buying them on the cheap.

``Any rebound in that (market) would make the price look reasonable,'' said a Melbourne-based banking and insurance analyst, adding there were also strategic benefits.