Friends Ivory & Sime, a subsidiary of Friends' Provident life office is buying the two asset management subsidiaries of the London and Manchester Group in a deal worth £40m.
An initial £35m will be paid up front in the form of shares and a loan. The remaining £5m is payable on the achievement of revenue targets.
Friends Ivory & Sime chairman Sir David Kinloch says: "This acquisition will add over £5 billion of funds under management and will enhance our pool of investment management talent and expertise."
The new increased fund will top £29bn.