Closing of the transaction, the terms of which have not been not disclosed, is expected to occur at the end of April, subject to regulatory approval.

The establishment of Augustus at the beginning of 2007 sought to enable the business to develop as an independent asset manager, while continuing to service Julius Baer branded funds, the firm's largest client.

The firms say the majority of the Augustus mandates, mutual and hedge funds performed well through the 2008 calendar year and have continued to perform well during the first quarter of 2009. However, given the new market environment, all parties consider that the franchise and clients will be better served as part of a larger organisation backed up by GAM and the Julius Baer Group.

Augustus had assets of USD7.6bn at the end of 2008, the majority of which relates to the Julius Baer branded Absolute Return Bond and Local Emerging Markets Bond funds, but also includes the JB Global Rates Hedge Fund among other hedge funds.

'Augustus is a strong addition to our Group's investment expertise at a time of increased investor interest in specialised fixed income and currency-related investments,' says GAM chief executive David Solo (pictured).

Tim Haywood, chief executive of Augustus, says: 'The importance of Julius Baer, as both brand sponsor and promoter to what became our key products, grew dramatically during a period when we were not wholly-owned by the group.

'Following the transaction, we believe that we can swiftly expand our customer base and create an even stronger platform for delivering attractive results for our clients across an expanding range of mandates, courtesy of the global reach of both GAM and the Julius Baer Group.'