Tom Walkinshaw, a former engineering director for Benetton who took control of the Arrows team in 1996, has formed a new partnership with Morgan Grenfell Private Equity (part of Deutsche Bank) and the Nigerian businessman, Prince Malik Ado Ibrahim.
Morgan Grenfell, which bought the Coral bookmakers chain from Ladbroke for pounds 390m last month, will emerge with a 45 per cent stake in Arrows, while Prince Malik will own a further 25 per cent.
Mr Walkinshaw, who has run Arrows from his TWR group based near Oxford, will retain a 25 per cent stake. The remaining 5 per cent has been reserved for management and employees.
This is the second time a City institution has bought into a motor racing team. Late last year the US-based venture capital and fund management group, Warburg Pincus, acquired a 40 per cent stake in the Jordan team.
Observers said the Arrows deal had been driven by Mr Walkinshaw's need to bring cash into the business. At the end of last season its leading driver, Pedro Diniz, left the team, taking with him a reported pounds 8m in sponsorship. The year before the former world champion, Damon Hill, left to join Jordan.
Prince Malik, 38, is the third son of a Nigerian tribal king. He holds licences to operate mobile phone and Internet services in Nigeria and recently brokered the sale of Lotus cars of Norwich to Proton of Malaysia.
Mr Walkinshaw said the buy-out would provide financial security and allow the Arrows team to remain in Britain. Its leading driver this season is the Finn, Mika Salo, and there is speculation it will sign a Japanese driver, Toranosuka Takagi.