Henderson has agreed terms to buy New Star Asset Management for £115m.

The fund manager said this morning it would £22m, or 2p a share, for New Star’s ordinary shares and £73m for its preference shares, while paying off £200m of its debt.

The deal will be partly funded by Henderson issuing 72.3m new shares, representing 9.9% of the its existing shares, to raise £40m.

Henderson will become the fifth largest UK retail fund manager with more than £15bn of funds under management.

‘Very rarely will you find an opportunity to significantly enhance your strategic position at compelling financial terms,’ said Henderson’s chief executive Andrew Formica. ‘New Star represents such an opportunity for Henderson and enables us to expand our footprint in our key markets notably the UK retail market. Our top priority is to provide security and stability to New Star’s clients.

New Star’s funds include New Star’s £850m UK Property Trust Fund and its £470m International Property Trust Fund which halted redemptions in November.