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Rating:RayJay Buys a $27B Pair of Asset Managers For $172.5MM Not Rated 5.0 Email Routing List Email & Route  Print Print
Thursday, April 20, 2017

RayJay Buys a $27B Pair of Asset Managers For $172.5MM

Reported by Neil Anderson, Managing Editor

Paul Reilly is further expanding Raymond James' multiboutique asset management umbrella, Carillon Tower Advisers, by buying a pair of Midwestern asset managers with a combined $27 billion in AUM, as of December 31, 2016. The $172.5-million cash deal is expected to effectively double Carillon Tower's size to more than $60 billion in assets under advisement and management.

Paul Reilly
Raymond James Financial
Chairman and CEO
This morning Reilly, chairman and CEO of St. Petersburg, Florida-based RayJay, confirms that the publicly-traded broker-dealer plans to acquire Kansas City, Missouri-based Scout Investments [profile] and Columbus, Indiana-based Reams Asset Management from UMB Financial Corp. The deal is expected to close by the end of the year.

The $172.5-million price tag translates into 0.64 percent of Scout and Reams' $27 billion in AUM.

RBC Capital Markets advised UMB on the deal, while Stradley Ronon Stevens & Young provided legal counsel.

Dave McKinney, president of Reams, did not immediately return a call for comment on the deal.

Reilly puts the deal in the context of building RayJay's "strong foundation of asset management expertise," which he describes as "a key component of the firm's growth strategies."

Cooper Abbott, president and chairman of Carillon Tower, states that buying Scout and Reams "is a natural extension of [Carillon Tower's] long-term growth strategy," an extension that translates into his team team offering "a broader set of investment solutions."

Andy Iseman, CEO of Scout, praises RayJay and Carillon Tower as partners who "can work to broaden [Scout's] reach."

"Complementary management philosophies and similar cultures will ensure a smooth transition," Iseman states.

On the UMB side, chairman and CEO Mariner Kemper, calls Carillon Tower "the right partner" for Scout. He notes that Carillon Tower's "sole focus is on institutional-quality investment management," and he sees the acquirer bringing "enhanced distribution capabilities and scale to Scout."

"The decision to sell Scout Investments comes at a time when our company has evolved. This transaction allows us to invest more time, energy and capital resources into our core businesses," Kemper states. "At the core of our business model is diversified revenue, with noninterest income from the Bank and Fund Services representing 44.7 percent of their combined total revenue in 2016, compared to 27.9 percent median from our peers."

"Scout has been an integral part of our company for more than 30 years," Kemper adds.

Scout, founded in 1982 as a division of UMB, focuses on equity investing. In 2010 it bought fixed income specialist Reams.

As for Carillon Tower, RayJay created the multi-boutique in 2016 as the parent of three RayJay subsidiaries: San Diego, California-based institutional asset manager ClariVest Asset Management, Toronto-based ETF strategist Cougar Global Investments, and St. Petersburg-based mutual fund shop Eagle Asset Management [profile]. The deal will make Reams and Scout into wholly owned subsidiaries of Carillon Tower. 

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