Royal Bank of Canada and London-listed BlueBay Asset Management have reached a deal under which the Canadian banking and wealth management firm will buy all the issued share capital of the UK fund manager.

Under the terms of the acquisition, BlueBay shareholders will be entitled to receive 485 pence in cash for each BlueBay Share, valuing the entire issued share capital of BlueBay at approximately £963 million ($1.5 billion), according to a statement today.

BlueBay Asset Management oversees a mix of long-only and alternative investment management funds.

In addition, BlueBay shareholders on the register at 5 November 2010 will be entitled to receive the proposed dividend of 7.5 pence per BlueBay Share in respect of the financial year ended 30 June 2010, the statement said. The total amount per BlueBay share receivable by BlueBay shareholders entitled to both the offer consideration and the dividend is 492.5 pence.

The acquisition agreement is subject to BlueBay shareholders' approval.

"BlueBay is an ideal fit with RBC's growing asset management business and we are confident that this transaction will benefit the clients, employees and shareholders of both firms,” said George Lewis, group head of RBC Wealth Management.

Meanwhile, BlueBay said its assets under management at 30 September - $40 billion - had surged by 16.6 per cent from the end of June.

The increase in assets under management for the quarter can be broken down into net subscriptions of $1.2 billion, net market appreciation of $1.5 billion and favourable foreign exchange translation differences of $3.0 billion resulting from the translation of mainly euro-denominated assets into dollars.