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UPDATE 2-Man Group boosts U.S. fund of funds business with Pine Grove deal

* Pine Grove manages portfolios with $1 bln in assets

* Credit-focused fund of hedge funds to add to FRM unit

* Two-thirds of assets from institutional investors

(Recasts top, adds analyst comment and share price)

LONDON, June 9 (Reuters) - British hedge fund manager Man Group said on Monday it is buying credit-focused privately held fund of hedge fund firm Pine Grove Asset Management, stepping up a push into the United States.

Pine Grove has around $1 billion in assets - less than 2 percent of Man Group's $55 billion - but the deal is being interpreted by analysts as evidence of a wish by Man Group to expand in the United States acquisition rather than gradual business growth.

Monday's announcement follows news in May that Man Group was in talks to buy another U.S. fund, Boston-based Numeric Holdings.

"It appears, with today's announcement of a U.S.-based asset manager and ongoing discussions with another U.S.-based asset manager, that's Man's strategy to penetrate the U.S. is more focused on acquisitions to gain entrance opposed to an organic approach," said RBC Capital Markets' Peter Lenardos.

"This is likely to yield a more immediate return."

Man Group shares were trading more than 1 percent higher following the announcement, outperforming Britain's FTSE 100 index which was up 0.3 percent.

Financial terms of the Pine Grove deal, which is expected to close in the third quarter, were not disclosed.

Founded in 1994, two-thirds of Pine Grove's assets are from primarily U.S. institutional investors, with the rest from U.S. high net worth individuals and family offices.

"Pine Grove has a long and accomplished track record of outperformance and is an excellent addition to the FRM (Man's fund of funds) business," said Luke Ellis, president of Man Group in a statement.

After the deal completes, Pine Grove President Matthew Stadtmauer will become FRM president, while Tom Williams, Pine Grove's chief investment officer, will continue to be responsible for all investment decisions relating to Pine Grove's portfolios and will join FRM's Investment Executive committee.

"We are now at the point in our evolution where the additional infrastructure, resources and support available at FRM will provide significant benefits to existing and future clients," Matthew Stadtmauer said in the statement.

(Additional reporting by Chris Vellacott Editing by Jeremy Gaunt)