Kansas City-based UMB Financial has agreed to sell its Scout mutual fund operations that have struggled in recent years to retain and attract investors.
Carillon Tower Advisers, which is part of Raymond James Financial, is paying $172.5 million for Scout Investments Inc., which manages $27.3 billion in customers’ assets. It had managed $31.2 billion at the end of 2014.
CEO Mariner Kemper acknowledged the sale of a business UMB started in 1982 comes with a sentimental pang but was the right business decision.
“It’s been a big part of my career here at UMB, helping build that. I’ll miss it,” Kemper said of Scout. “It’s the right strategic thing for UMB and for the Scout team to pick up a partner that’s got scale and is focused on their business.”
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Costs for marketing and managing funds requires a larger asset base than the Scout and Reams funds provided. Kemper said UMB would have had to acquire other funds to accomplish that scale.
Selling Scout Investments puts the Scout and Reams funds in a group with others Carillon Tower offers.
UMB did not sell its UMB Fund Services business that provides accounting, custody and other back-office services to investment managers such as mutual funds, hedge funds and private equity funds. It handles $200 billion in client assets.
Along with the sale agreement, UMB provided a $622,500 retention bonus to Scout Investments CEO Andrew Iseman. It will be paid around the time of the sale’s closing, which is expected later this year.
For more than 30 years, the Scout funds have been one of several businesses that generated fee income for UMB Financial, the parent company of UMB Bank. The Scout group has 10 funds including the Scout International Fund that had been a leader in its category for many years.