Liberty Financial Cos. continued its acquisition spree Wednesday, announcing that it has agreed to buy a San Francisco pension fund management company that oversees $2.5 billion of assets.

The deal for Progress Investment Management Co., which specializes in state and corporate pension fund management through subadvisers, comes on the heels of Liberty's $150 million deal last month to buy Crabbe Huson Group, Portland, Ore., which manages $5.3 billion of assets.

The price of the Progress transaction, which is to close in the third quarter, was not disclosed. But Porter Morgan, senior vice president at Boston-based Liberty, called it a cash deal that is partly dependent on Progress' meeting growth targets over the next five years.

The acquisition would boost Liberty's institutional assets under management to $12 billion and its total managed assets to $62 billion.

Progress, which would be a separate operating subsidiary of Liberty, uses a multimanager approach to serve public and corporate pension funds, including state employee funds and companies such as Coca Cola and Shell Oil.

It uses young, nimble firms that manage less than $1 billion. Many of the subadvisers are women- or minority-owned and specialize in a narrowly defined investment niche.

Liberty was attracted to Progress' investment performance and asset growth that averages 20% a year, Mr. Morgan said; its emphasis on women- and minority-owned subadvisers was tangential.

"We think we can help them grow that at a nice clip in the years ahead" through cross-selling with other Liberty subsidiaries, he said.

One investment banker said that while attacking niche markets is a good strategy, it would be more profitable for Liberty to buy money managers "rather than managers of managers."

That's because companies like Progress split the fees with the subadvisers.

Liberty has become known for its forays into niche businesses. Crabbe Huson, for example, specializes in contrarian-style investing. Newport Pacific Management, which Liberty bought in 1995, specializes in Asian investing.

Louis Harvey, president of the Boston consulting company Dalbar Inc., said he had difficulty seeing how the deal would add much value to Liberty. "The synergy that will be revealed will be a surprise to me," he said.

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