Salomon Buys J.P. Morgan’s Australian Investment Unit

Salomon Smith Barney Inc. on Tuesday bought the Australian investment operations of J.P. Morgan & Co., becoming the latest U.S. investment bank to increase its operations in the rapidly expanding Australian fund management industry.

The Travelers Group Inc. unit declined to reveal what it paid for J.P. Morgan Investment Management Australia Ltd., which has about $4.8 billion in funds under management, describing it as a “critical” part of its global growth strategy.

“It is our feeling that in order to become a true asset management powerhouse we have got to have a presence in this market,” said Salomon Smith Barney Vice President Nir Yarden.

Australia is the fifth-largest pension fund market in the world. Salomon Smith Barney estimates the local investment market will grow by about 22% a year for the next four years, then slow to 16%, fueled by compulsory retirement contribution laws introduced in 1992.

The industry also faces deregulation beginning in July 1999, when changes to the laws will allow new employees to choose their pension funds. Existing employees won’t be given the option until 2000.

Other U.S. companies recently expanding in Australia include Vanguard Group, America’s second-biggest mutual fund company, which formed its first joint venture with fund manager and property developer Lend Lease Corp.

Fidelity Investments formed an alliance with Perpetual Trustees Australia Ltd. to allow the local fund manager to use the Fidelity brand on its international funds.