By Anton Bridge and Roushni Nair

(Reuters) -Nomura is acquiring Macquarie Group's U.S. and European public asset management businesses for $1.8 billion, marking the Japanese investment bank's most ambitious expansion abroad since its failed purchase of Lehman Brothers' assets.

Japan's largest investment bank and brokerage will take over the management of the publicly traded assets, the companies said on Tuesday. It will also take over the investment teams and operating platforms relating to the businesses, and retain the existing management team.

The Japanese company has had a troubled history in its attempts to expand overseas, including the acquisition of assets from the collapsed Lehman Brothers in 2008 which it later wrote down.

But the Macquarie assets deal, which Nomura said is its largest acquisition ever, comes as companies in Japan face a shrinking domestic market and are increasingly seeking growth opportunities abroad.

Asset management has become a core growth area for Japanese financial institutions looking to secure stable fee-based revenue that is less impacted by the ups and downs of market sentiment.

"The market now is very unstable but the biggest factor in our mid to long term plan is to have a robust investment management platform," Nomura CEO Kentaro Okuda told a press conference.

"This transaction had a very prudent due diligence process and should be durable against the volatility of the market," Okuda added.

The announcement of tariffs by U.S. President Donald Trump may lead to a rebalancing of sectors which would provide opportunities for active investment managers, Nomura's head of investment management, Yoshihiro Namura, told the briefing.

The deal is expected to close by the end of 2025 and will be settled entirely by cash with no financing directly related to the transaction planned, Okuda said.

Nomura's previous investments include buying boutique investment bank Greentech Capital Advisors in 2019 and acquiring a 41% stake in investment management firm American Century Investments for over $1 billion in 2016.

Upon the deal's completion, Nomura's total assets under management within its investment management franchise are expected to increase to around $770 billion from approximately $590 billion currently, Nomura said.

Nomura's shares climbed 0.6% on Tuesday morning while the benchmark Nikkei index was roughly flat. Macquarie shares rose around 1.5%.

Macquarie Group, Australia's biggest investment bank by assets, will retain its public investments business in its domestic market, where it plans to continue operating an asset management business spanning both public and private markets.

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The Australian financial conglomerate said that, as part of the deal, it would collaborate with Nomura on product and distribution.

Macquarie has been strategically reshaping its North American operations, having already withdrawn from several debt market segments.

It is shuttering its U.S. debt capital markets division, according to multiple media reports in February, pivoting instead to its private credit business, which has already deployed over A$22.5 billion in loans.

"Overall, the transaction sharpens the focus of Macquarie Asset Management back to its competitive strengths - private markets and its home market of Australia," Citi analyst Thomas Strong wrote in a report.

($1 = 1.5596 Australian dollars)

(Reporting by Roushni Nair in Bengaluru and Anton Bridge in Tokyo; Editing by Devika Syamnath, Mohammed Safi Shamsi, Aurora Ellis and Muralikumar Anantharaman)