UPDATE 1-US Treasury to say 3 more funds to buy toxic assets

(Recasts lead with official announcement, adds background)

WASHINGTON Oct 5 (Reuters) - Three more investment funds have raised the capital needed to receive government funds that will let them begin purchasing troubled mortgages and mortgage securities from banks, the Treasury Department said on Monday.

That means five out of nine money-management firms that were tapped to buy so-called toxic assets have now raised the minimum $500 million each and Treasury expects the rest to do so by the end of October.

On Monday, it confirmed that AllianceBernstein LP (AB.N) and its sub-advisors Greenfield Partners LLC and Rialto Capital Management LLC; BlackRock Inc (BLK.N) and Wellington Capital Management had closed deals for $1.94 billion of private financing.

Two others, Invesco Ltd (IVZ.N) and Trust Company of the West, or TCW (TSI.N), were named last week as the first public-private investment funds to raise the necessary capital to launch the program for buying toxic assets.

The Public-Private Investment Program, known as the PPIP, has been scaled back as banks have shown they can raise capital in the private sector without first unloading troubled assets, many of which are tied to bad mortgages.

When the plan was announced in March, Treasury hoped the funds could take up to $1 trillion of toxic assets from banks' balance sheets. But that target is now around $40 billion, made up of private and public investment plus debt financing.

Treasury provides debt financing for up to 100 percent of the total capital commitments of funds in the program, representing about $12.25 billion of total debt and equity commitments from the first five funds now participating in the program.

For more information on the program's mechanics, please see [ID:nN08415665]

Treasury initially approved nine funds to participate in the PPIP; it expects the remaining four to complete closings by the end of October. It said then that funds would have until Oct. 8 to raise their required initial capital amounts.

Treasury now says timing of the closures depends partly on how funds raise the required $500 million of capital they need in order to get matching government funds, with some taking longer to complete public offerings targeted to public investors. (Reporting by Glenn Somerville; Editing by Chizu Nomiyama)