Montagu, which will run the law school as a commercial enterprise, will pay for the acquisition with a contribution to a new legal education fund endowed with over £200 million ($318.5 million), according to a joint statement.

A source said that, while the statement left open the possibility of future funding from elsewhere, the initial contribution would in fact come solely from the proceeds of Montagu's acquisition.

College of Law's sole shareholder is the existing charitable trust and it has no debt, so it would be broadly correct to assume that Montagu is paying in excess of £200 million to acquire the business.

Montagu declined to elaborate and did not disclose how it will fund or structure the acquisition.

College of Law is one of a small number of higher education institutions that fall outside the U.K. government funding net. Originally set up by a charitable trust promoting legal education, it has since developed along commercial lines, while still under the control of the trust.

But huge commercial and government-led changes in British higher education forced the trust to consider strategic options for both its charitable functions and its commercial arm. Since it came to power in 2010, the Conservative-led coalition has rammed through policy changes creating more of a competitive market in the university sector.

It has switched much of its funding from the traditional system of direct grants to universities to loans made to individual students. While there are caps on the fees which the public sector universities may charge domestic undergraduate students, private colleges like the College of Law or its rival, BPP University College (owned by private equity firms Apollo Global Inc. and Carlyle Group), can charge whatever fees they like, although their students will not benefit from bigger loans than their peers.

Montagu's investment will give The College of Law the freedom and support to continue to build its position as a leading professional legal education institution in the UK and internationally.

The College will retain the right to award degrees, and will be free to set up overseas campuses and conduct profit-making business, eventually enabling Montagu to deliver returns to its investors.

At one point the College was reportedly in talks with Pearson plc, the newspaper and educational publishing group, which has long coveted the power to award degrees. British degrees from reputable institutions are especially valued in many emerging markets and a business based on College of Law degrees would be valued by any buyer.

Critics have pointed out that Montagu has no experience in the education sector, but the College of Law board said "The Governors were clear in their views that Montagu would be an excellent guardian of the College, ensuring a continuation and enhancement of the focus on academic excellence, exceptional teaching and client service that has long characterized the College's work."

The charity will be renamed The Legal Education Foundation and will be among the biggest charitable bodies in the U.K. The statement said it will promote "the advancement of legal education and the study of law for future generations of students through bursaries, scholarships and grants."

The source added that College of Law would not be a preferred provider and the new foundation would have a much wider remit than merely providing funding for the students of a specific institution.

Montagu will separately establish a College Scholarship Fund with an investment of £2 million for the benefit of the College's students. Montagu will also place 2% of the fully diluted share capital in the ultimate holding company of the College into the scholarship fund.

The governors of the College of Law were advised on the sale and the strategic review by Hawkpoint Partners Ltd. and took legal advice from Allen & Overy LLP. Montagu was advised by Deloitte LLP and by the law firm Linklaters LLP.