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Commerce comes up with the finance

The Pounds 42.5 million museum is the first arts project launched under the Government's Private Finance Initiative (PFI) which encourages the public and private sectors to cooperate in funding major projects.

Six years ago Guy Wilson, Master of the Armouries, found the Royal Armoury collection at the Tower was becoming even more cramped because Historic Royal Palaces, the Government agency running the Tower, wanted to expand the Crown Jewels display.

He dreamed of establishing a new museum to house the bulk of the collection, but the Government was willing to contribute only half of the estimated cost of Pounds 40 m.

Much to the alarm of the RA's board of trustees he decided to enlist the help of the private sector to raise the extra money as the Government said it could not otherwise go ahead.

Eventually a suitable site was found in Leeds. The city council agreed to put in Pounds 3.5m and the development corporation, Pounds 5m. That left Pounds 14m to find.

In April 1993 the institutional investors, 3i, decided to lead a consortium to provide the cash which included Electra Investment Trust, Yorkshire Electricity, Gardner Merchant and the Bank of Scotland.

The investors formed a private company, Royal Armouries (International) plc to operate and develop the museum with Gardner Merchant, one of Europe's largest catering and service companies acting as commercial operator.

The Royal Armouries, under the direction of the Master, Guy Wilson, will continue to carry out its statutory duties under National Heritage Act 1983. These are to care for, preserve and add to the objects in their collections, secure that they are available for public view, study and research, maintain good records of the objects and generally promote the public's understanding and enjoyment of the collection.

The "project agreement" sets out the rights and responsibilities of both sides with an operating committee meeting monthly to resolve difficulties - there have been a few - and agree on policy.

The new company, RAI, is keen to use its PFI expertise to help other joint ventures especially heritage projects connected with the Millennium Fund as it reckons that the template it has created is transferable.

The entrance fees of Pounds 6.95 for adults, Pounds 5.95 for students and the elderly Pounds 3.95 for children and Pounds 3.50 for school groups have been criticised as too high, but investors need to make a quick return on their outlay to keep the banks happy.

Guy Wilson advises other museums considering the PFI route only to embark on the procedure if they are absolutely determined to make it happen as it's a long process which can be dispiriting.

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