Germany's leading companies are to launch an elite university for young managers in Berlin in October, which they hope will compete with Harvard University and the London Business School.

Eighteen companies and the non-profit Hertie Foundation have invested €125 million (?78 million) endowment capital in the school.

Gerhard Cromme, head of Thyssen-Krupp, said: "Our aspirations are high. Within ten years it will rank among the continent's most important teaching and research institutes in its field."

The European School of Management and Technology will be a private, state-approved university, operated by a non-profit limited company.

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The school will have a president, dean, managing director and a supervisory board with representatives from science and industry.

Fees will be about €30,000 a year, and selection will be by entrance exam.

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The ESMT is expected to be housed in the former GDR government building in Berlin, with a further branch in Munich also planned.

Although privately funded, the sponsors hope to receive the building in Berlin free of charge from its owner, the government.