ABN Amro to merge with Artemis

FUND manager ABN Amro, which recently had its two star fund managers poached, is to merge with rival Artemis for an undisclosed sum. The new company will take the Artemis name and have combined assets of £2bn under management. There is no immediate threat of job losses.

ABN bank, the UK company's Dutch parent, will own 58% of the company. Artemis management and staff will retain 37% but will keep day-to-day control. The remaining 5% is in the hands of private investors.

The merger follows the departure of ABN star managers Nigel Thomas and George Luckraft to Framlington, which resulted in a still unresolved legal wrangle. The pair, who ran £1.2bn of ABN's £1.5bn of retail funds, remain on 'gardening leave'.

ABN has told This Is Money that the company has seen £95m leave its funds since the managers left, adding to speculation that the fund management business had been fatally damaged by the departures.

Today Mark Tyndall, chief executive of Artemis, a niche investment house, said: 'We put together a structure that should give investors the confidence to feel that what we have achieved in the past we can achieve in the future.'

It is believed that Artemis hopes to merge ABN funds into its own within six months.

Brokers and advisers had previously warned investors to exit ABN funds, but now Bestinvest has switched its advice from sell to hold. 'Financially, it‘s a coup for Artemis – its makes the management rich guys,' said Jason Hollands, deputy managing director of Bestinvest. His concern was that merging the UK growth funds may create a fund too large to retain performance.

'A fund kissing £1bn will struggle to easily invest in small and mid-cap companies,' he added. 'That said, the Artemis managers are easily as good as the likes of Nigel Thomas.' Bestinvest is reviewing its recommendations on the ABN funds.

Last year, maverick fund manager John Duffield, founder of New Star Asset Management, was close to buying Artemis, but the deal fell apart.