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Rating:Scout Buys a Fixed-Income Specialist Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, September 02, 2010

Scout Buys a Fixed-Income Specialist

Reported by Armie Margaret Lee

Scout Investment Advisors has inked a deal to acquire fixed income specialist Reams Asset Management. Columbus, Indiana-based Reams focuses on institutional clients and sub-advises two Frontegra mutual funds.

"We've done a tremendous job of building a world-class equity money management firm," said Peter deSilva, president and chief operating officer of Scout's parent, UMB Financial Corp., in an interview with The MFWire.com. "We didn't really have a strong fixed-income competency."

The deal, expected to close at the end of November, will double SIA's AUM to $18 billion.

Scout will shell out an initial cash payment of $42 million "plus or minus a purchase price adjustment based upon Reams' accrued revenues, prepaid expenses and accrued expenses, less a certain amount of cash," according to an 8-K filing. Reams will also receive unregistered common stock worth $1 million if at least 95 percent of Reams' revenue is retained by Scout on a specified date. Reams may also be entitled to annual earn-out payments during the next five years.

Asked whether Reams will be doing work for Scout on the mutual fund side, deSilva said: "It remains to be seen." He added that Reams will continue to sub-advise the Frontegra funds.

The Reams deal is the third big announcement coming out of Scout in as many weeks. On August 11, the firm announced the hiring of Andrew Iseman as CEO and last week, it recruited David Lubchenco as executive vice president of sales, marketing and client services.

"SIA is a very important part of UMB and will continue to be," deSilva said. 

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