Two hedge funds launched by former star traders at Goldman Sachs have agreed to merge in a deal that will bring their combined assets under management to more than $10 billion, the Financial Times said on Tuesday.

TPG-Axon, one of the world's biggest hedge funds, has agreed to merge with Montrica Investment Management, the UK-based hedge fund that specializes in takeovers, the newspaper said.

No money will change hands in the merger, the FT said, but all three founders will become partners at TPG-Axon.

In a letter seen by the FT, Montrica told its investors that the deal would enable it to scale up its existing operations.

TGP-Axon believes the deal will help it enter the European markets, the FT said.

(Reporting by Karolina Tagaris; editing by Phil Berlowitz)