Newton Management will buy Royal Bank's investment management subsidiary, Capital House, while Royal Bank will retain a 33 per cent shareholding in the enlarged Newton group. The rest of the shares will be held by Newton management and staff.
The new business will trade under the Newton name. The company, based in London, is ranked the top-performing British pension fund manager by WM Company, consultants, over five years, to December 1992 and 1993.
Stewart Newton, chief executive, founded it in 1977 in partnership with Reed Stenhouse, the insurers, to provide tailor-made pension fund management for companies. He started with Reed's own staff pension fund.
'This transaction will strengthen and broaden the business of Newton in the interests of all our clients,' Mr Newton said. 'Our objective of providing investment excellence remains undiminished.'
In 1986 Reed was taken over by Alexander & Alexander, and Stewart Newton's management colleagues bought a stake so that management held a controlling interest.
In December 1992 Newton management bought the remaining minority stake from Alexander & Alexander.
More than pounds 3bn of Newton's funds are segregated pension funds. Another pounds 1bn is in pension funds, pounds 490m in private clients' funds and pounds 380 in retail.