Merrill Lynch Investment Managers, the firm with the largest market share of charity clients, is to merge with the US investment manager BlackRock.
The new company will operate under the BlackRock name, and will be one of the largest asset-management firms in the world.
According to figures from the Charities Aid Foundation, Merrill Lynch has 10 per cent of the top 700 fundraising charities and grant-makers. In total, it manages £3bn worth of investments for more than 5,000 clients. It also runs three common investment funds.
"We have a team of outstanding investment management professionals who look forward to becoming partners with the BlackRock team," said Bob Doll, president and chief investment officer at Merrill Lynch Investment Managers.
"Both firms have a culture emphasising teamwork, integrity, operational excellence and superior client service."
Merrill Lynch will have a 49.8 per cent stake in the new firm. The merger is expected to take place in the third quarter of this year.