The acquisition will add around $18bn (£14bn, €16.4bn) in Source-managed assets to Invesco’s existing PowerShares offering, and an additional $7bn in externally managed assets.
Source will be combined with the existing PowerShares ETF business but it is not yet clear if the brand name will be survive.
Invesco, which runs Invesco Perpetual in the UK, said the acquisition enhanced its expertise, broadened its investment capabilities and strengthened its ETF presence in Eurpe, the Middle East and Africa.
Martin Flanagan, president and chief executive of Invesco, said: “We’re excited about this opportunity to build on Invesco’s 40 years of factor investing experience and our existing PowerShares ETF business, which will 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.”
Invesco’s Powershares businesses was valued at $110bn at the end of 2016.
Majority owner Warburg Pincus, a private equity firm, put Source up for sale in October 2016 just three years after first buying it.
Mike Paul, executive chairman of London-based Source, said: “Invesco and Source are extremely complementary, and the combined business will be a true leader in the ETF market across Europe.
“We are very proud to have built Source into one of Europe’s most competitive and innovative ETF providers with some of the most compelling products in the market. Our drive for new product excellence will remain at the heart of the combined business.”
The deal is expected to close in the third quarter of 2017.
Total AUM at Invesco rose by $21.9bn to $834.8bn in the first three months of the year according to results released on Thursday
Net flows into its passive offering were $2.3bn while the PowerShares business saw inflows of $1bn in three months.