July 8 (Bloomberg) -- BlackRock Inc., Invesco Ltd. and Wellington Management Co. were selected to take part in the U.S. government’s program to spur the purchase of mortgage-backed securities from banks, people familiar with the matter said.

The companies are among the eight to 10 asset managers the U.S. Treasury is set to announce this week for the Public- Private Investment Program, according to the people, who asked not to be named because the information isn’t public. Other probable winners include Pacific Investment Management Co. and a partnership of General Electric Co.’s finance arm and Angelo Gordon & Co. Officials at the firms declined to comment.

PPIP will start with about $20 billion, half raised by the money managers and half from the Treasury, people familiar with the plan said last week. The firms will have access to $10 billion in financing backed by the government. That will enable money managers to offer enough to persuade banks to sell their troubled assets, said Wilbur Ross, chairman and chief executive officer of WL Ross & Co., the New York-based Invesco subsidiary that will lead that company’s PPIP efforts.

“Because of the very favorable leverage, we’ll be able to pay between 5 and 10 percentage points closer to par than we would have been able to without PPIP,” he said yesterday in an interview with the CNBC television network.

The government unveiled the program in March when losses tied to home loans hobbled banks such as Citigroup Inc. and Bank of America Corp. and threatened to choke off lending needed to revive the economy. Treasury Secretary Timothy Geithner initially said PPIP may channel as much as $100 billion in private investments and Treasury funds into purchases of mortgage-backed securities.

Changing Circumstances

Since then, the 19 largest U.S. banks raised more than $100 billion by selling equity and assets, swapping preferred shares for common and offering debt, easing concern that the lenders couldn’t handle a deeper, longer recession.

A separate portion of PPIP, run by the Federal Deposit Insurance Corp. and designed to aid the sale of whole loans from banks to investors, was postponed indefinitely last month. Geithner said then that interest in such U.S. programs may be waning as market confidence improves.

Treasury officials have said the program could be rolled out in stages and expanded over time. Andrew Williams, a spokesman for the department in Washington, declined to comment.

AAA Rated Securities

The funds will initially purchase U.S.-based commercial and residential mortgage-backed securities issued before 2009 and originally rated AAA or an equivalent by at least two ratings firms, according to material posted on the Treasury’s Web site. Sellers must be financial institutions.

BlackRock, based in New York, is the largest publicly traded money manager, with $1.28 trillion in assets as of March 31. Atlanta’s Invesco managed $348 billion, while closely held Wellington of Boston, oversaw $396 billion.

Newport Beach, California-based Pimco, a unit of the Munich-based insurer Allianz SE, managed $756 billion, including the world’s largest bond fund. GE Capital, based in Stamford, Connecticut, is the largest non-bank finance company in the U.S. New York-based Angelo Gordon, with $15 billion in assets, is an investment firm that focuses on hard-to-value debt and real estate.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

Last Updated: July 8, 2009 14:38 EDT