Subject to FCA approval, the new business will operate under the brand River and Mercantile Group and will draw on the asset allocation and derivative management skills of PSL.
Pacific Investments and Punter Southall will remain strategic shareholders while all management and key staff will retain equity interests in the group.
Mike Faulkner will be chief executive of the combined group and current R&M chief executive James Barnham will head the equity management business and will take on a new role of group head of distribution.
R&M will now be able to offer structured equity, multi-asset class and derivatives capabilities.
The new business will also explore the possibility of an IPO to raise capital for further investment in its growth strategy.
“James Barham, R&M CEO, said: “This merger ensures that we are true to our founding principles, aims and objectives. This will accelerate our plans to develop a broad-based, diversified business where investment sits at the heart of our firm. We will have a strengthened platform from which to work and support our clients and consultants and I look forward to working with the new management team to achieve our common goals."
Mike Faulkner, PSL CEO, said: “This takes us forward significantly in our ability to continue enhancing the level of service we provide to our clients. This is both in terms of the expanded flexibility it will give us in developing investment solutions, and the depth of investment thinking that will exist in the combined business.”