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Rating:UMB Stands By Fund Services While Selling Scout Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, April 20, 2017

UMB Stands By Fund Services While Selling Scout

Reported by Neil Anderson, Managing Editor

Even as UMB sells off a $27-billion AUM mutual fund and asset management business, it is standing by its $184-billion AUA mutual fund back office and series trust provider.

Today Kansas City, Missouri-based UMB unveiled a $172.5-million cash deal to sell Scout Investments [profile], and Scouts' fixed income Reams Asset Management unit, to St. Petersburg, Florida-based Raymond James. The deal will make Scout and Reams the two newest boutiques within RayJay's multiboutique asset management arm, Carillon Tower Advisers [profile].

Yet UMB Fund Services, which has $184 billion in assets under administration and is led by president Tony Fischer, "is not part of the sale," UMB chairman and CEO Mariner Kemper tells MFWire in an emailed statement.

"UMB is committed to Fund Services — its business model fits with UMB's core competencies," Kemper states. "They maintain a consistent growth profile, and their pipeline is strong."

The Scout sale comes after "a strategic review of [UMB's] businesses," Kemper explains. He describes "asset servicing" as one of UMB's "core businesses", along with "commercial and institutional banking, consumer banking, wealth management, ... and healthcare services."

"The divestiture allows us to focus more resources on our core businesses ... that are better aligned with our initiatives to improve long-term profitability," Kemper states.

While Scout has provided shareholder value over the years, it has limited connectivity with our relationship-based business model and lacks the required scale for continued growth at UMB. Although there is still a robust opportunity for active managers, the current environment requires a greater focus and scale to be competitive.

Kemper's sentiments on scale parallel the take of the chief of another shop, National Life, who is also selling off a mutual fund business.

Scout has 92 employees, Kemper confirms.

"This is an acquisition of a brand and a track record, not a consolidation," Kemper explains. "Any decisions regarding staffing will be made by [Carillon Tower Advisers]."

The RayJay deal, Kemper states, "provides Scout with a better long-term ownership model."

"Scout will benefit from partnering with a firm that has institutional-quality investment management at its core competency, as well as greater scale and diversification that allows them to better compete," Kemper states. "As a part of Carillon Tower Advisers (CTA), Scout will be able to leverage their competitive advantages to compete more effectively."

Meanwhile, UMB is also hanging on to a different asset management business.

"UMB is committed to our asset management business for individuals and institutions in our Private Wealth, Prairie Capital Management and Institutional Banking businesses," Kemper states. "Assets under management within the Bank segment were $13.9 billion at year-end." 

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