UPDATE 1-Brazil's BRZ denies BTG bid report

* BRZ, controlling shareholder deny takeover bid

* Veja magazine reports BTG in talks to buy BRZ

* BRZ oversees around 3 billion reais in assets (Recasts with denial, background on BRZ, BTG, share price, byline)

By Guillermo Parra-Bernal

SAO PAULO, Dec 22 (Reuters) - Brazilian asset management company BRZ Investimentos denied it was the target of a takeover bid by BTG Pactual, a securities firm controlled by banking wunderkind Andre Esteves.

Veja magazine on Tuesday reported in its online edition that BTG Pactual, which has interests in investment banking, securities trading, private equity and asset management, was in talks to buy BRZ. A spokeswoman for Sao Paulo-based BRZ denied the report.

GP Investments, Latin America's largest private equity firm, controls about 60 percent of BRZ, with the remaining 40 percent belonging to a group of partners led by Brazilian investors Marcos Falcao and Nelson Rozental. A GP Investments spokeswoman also denied the Veja report.

Brazilian depositary receipts of Bermuda-based GP Investments (GPIV11.SA) jumped as much as 2 percent to 9.90 reais.

BRZ, which has about 3 billion reais ($1.7 billion) in assets under management, was born two years ago from the spin-off of GP Investments' asset management division. The companies split because investment strategies at the firms could clash in the long run, Falcao and Rozental said at the time.

Veja did not provide any details on the deal, such as a timetable or terms. BTG Pactual declined to comment on "market rumors," according to the firm's media relations office.

Esteves, who was UBS AG's (UBSN.VX) global head of fixed income, currencies and commodities until June 2008, is seeking to transform BTG Pactual into the largest independent emerging markets securities firm.

Four months after quitting his UBS job, Esteves and his partners at BTG Pactual moved to buy Lehman Brothers Inc's Brazil unit to expand its trading muscle. In April 2009 it bought back Banco Pactual from UBS for $2.5 billion.

Local media reported this month that BRZ had suspended redemptions on a 77 million real private credit fund it oversees following massive withdrawals. People familiar with the situation said BRZ and clients are close to resolving the impasse as the asset manager shed assets that are highly illiquid.

The size of the credit fund is too small to hamper BRZ's operations, said the sources, who declined to be quoted by name because they are not authorized to speak publicly on the matter. ($1=1.783 reais) (Reporting by Guillermo Parra-Bernal, Editing by Todd Benson and John Wallace)