ABN Amro buys fund manager Artemis

ABN Amro, the Dutch investment bank, yesterday agreed to merge its fund management business with smaller rival Artemis, creating a company with £2.4bn of assets under management.

The combined business will operate under the Artemis name and will be 58 per cent owned by ABN. Artemis' management will retain 37 per cent. Further financial details of the deal were not disclosed.

The move comes after weeks of speculation that ABN would make a move on Artemis, the small asset manager which last year rejected a bid approach from New Star, which is run by John Duffield.

ABN has been particularly keen to secure the deal since it lost two star fund managers, Nigel Thomas and George Luckraft. Mr Thomas and Mr Luckraft are suing ABN, alleging constructive dismissal.

Since their departure to rival Framlington two months ago, ABN is understood to have suffered a withdrawal of £95m of funds under management. Funds in the new business will be run entirely by Artemis managers, who are respected in the investment community and have six funds in the top quartile.

ABN can offer a large research department and a sales force to push the funds.

Mark Tyndall, chief executive of Artemis and one of its co-founders, said: "Artemis was founded five years ago on the concept of managers running and controlling the company. This deal does not change that." The main reason Artemis rejected New Star was that the Edinburgh-based company felt a merger would involve having to conform too much to Mr Duffield's management style.

Mr Tyndall said that he was "as confident as he could be" that the six managers at Artemis would stick with the merged business.

Under the deal, Artemis will retain the right to appoint a majority on the company's management board and will be responsible for the business' investment management decisions.

Tom Cross Brown, the head of ABN's asset management business, said he wanted the company to become one of the largest asset managers in the UK. Artemis will go from managing six funds to handling 10.