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The firm that grew to become Iowa’s largest independent investment adviser in the 1980s is poised to again become independent under its former owner, David Miles, who is now repurchasing the company.

Last month, Miles reached a definitive agreement with West Bancorporation Inc. to buy its investment advisory arm, WB Capital Management Inc. It’s a deal that’s worth up to $3.17 million to West Bancorporation, but in Miles’ view, the opportunity to return to run his own investment firm is priceless.

“It is (coming) full circle,” said the 52-year-old entrepreneur. “I’m coming back to some friends that I worked with before, some clients that are still clients of the firm. That’s exciting and fun, and gratifying that we’ve had such loyalty among our clients and with the folks who work here. It’s a chance to come back and build on a very strong foundation and to take it all up another notch.”

Miles led the early growth of the firm’s predecessor organization, becoming president and principal owner of Investors Management Group (IMG) in 1991, just four years after joining the firm. In 1998, he sold IMG to AMCORE Financial Inc., an Illinois-based financial services firm. West Bancorporation acquired AMCORE in 2005, which West Bancorporation merged with another firm it bought, VMF Capital, to form WB Capital.

With more than $4.6 billion in investments currently under management, WB Capital, under the new name of Miles Capital Inc., will again become the largest independent asset management company in the state once the sale is completed.

According to documents filed with the U.S. Securities and Exchange Commission, Miles Capital Holdings Inc. will pay West Bancorporation $2 million for the business, with additional payments totaling up to $1.17 million contingent upon the firm meeting certain performance milestones over the next five years. The transaction is expected to close by the end of the year.

Three years ago, after working for a year and a half for Principal Financial Group Inc. as executive vice president of its mutual fund group, Miles left Principal to pursue a deal with Des Moines venture capitalist John Pappajohn to consolidate farmer-owned ethanol plants. They shut down that venture two years ago due to unfavorable market conditions.

“Since then, I’ve been investing in various private-equity projects and looking at businesses to buy,” Miles said.

Abiding passion

In addition to his investment advisory career, Miles has for years represented the interests of higher education. He served for 11 years on Drake University’s board of trustees, three of those as its president. He was appointed to the Iowa Board of Regents two and a half years ago and currently serves as its president.

“My abiding passion has been higher education,” said Miles, who has a law degree and a master of public policy degree from Harvard University in addition to his bachelor of arts in public administration from Drake. “My college education at Drake University was really transformative for me; I just couldn’t have imagined when I showed up there as a freshman in 1975 the worlds that would open to me because of that experience.”

Experience of a different kind came from his sale of IMG to AMCORE. Through that sale, “I came to appreciate the value of having a strong, independent investment adviser in the state,” he said.

“West Bank is very committed to local ownership and I thought that they might be open to making this independent once again so that it could chart its own course, with local ownership, and with someone who would not just own it but roll up his sleeves and be involved day-to-day and provide for opportunities for employee ownership as well.”

Miles has spent the past several weeks meeting with investors to outline his plans. Under federal securities law, he must obtain the consent of at least 90 percent of WB Capital’s largest clients for the sale to be completed.

“We do not take (those consents) for granted,” he said. “I have been on the road almost constantly for the last three weeks, meeting face-to-face with clients, describing to them the transaction, how excited we are, how it will affect their account – which we think is all for the better – and our plans for the future.”

Clarity of focus

Those plans include adding more investment advisers to the 24-person staff. Just two advisers have chosen to leave the firm for other opportunities, he said.

“I am investing first of all in the talent that we have, and in attracting new talent,” Miles said. “We’ve already hired three top-notch professionals; they’re all chartered financial analysts, all M.B.A.s. One has 23 years’ experience, another one 14 and another one 12. They’re great additions.

“I’m very anxious to move the firm forward, but very patient about getting a return on my investment,” he added. “We can invest first in top-quality talent to take care of our clients. And if we take care of our clients, everything else will take care of itself.”

As an independent firm, Miles Capital will have better focus, Miles said.

“As soon as a company becomes a subsidiary of another organization, no matter how fine an organization, you get drawn into other issues,” he said. “So I think that clarity of focus we’ll have to manage our clients’ investments will be very valuable,” he said.

“Second, when you’re independent, it’s much easier to provide equity opportunity for the top managers of the firm,” Miles said. “I am of course acquiring the firm, but I have already made written commitment to four of our senior people to provide equity ownership for them. They in turn have made a commitment back to me. We expect to broaden that list further.”

With one year remaining on its lease at 1415 28th St., Suite 200 in West Des Moines, the firm will remain at its present space for now, which has some room for expansion, Miles said.

As a significant third-party asset manager for insurance companies, the firm has “a great foundation to build on,” Miles said. Eighty-four percent of the firm’s revenues come from institutional clients, which also include local-government investment pools in five states. The firm serves as a sub-adviser to banks’ trust department holdings and investment portfolios. It also advises investment accounts for foundations, endowments and high-net-worth individuals, primarily through a network of 24 sub-advisory relationships.

The firm’s newest piece of business will be to manage a fund sponsored by the National Corn Growers Association that will invest in renewable-energy projects.

“That fund has not come to market yet; the money has not been raised because it’s been so volatile in the public markets,” Miles said. It will be “a very natural extension” of the firm’s strengths in fixed-income investments and private placements, plus his expertise in evaluating renewable-energy projects, he said.

“That is more than enough to keep our hands full for now; we’ll look at other opportunities as time goes by,” he said. “This is the great value of rejoining a firm that’s 27 years old, as we have established market segments that we serve, we have people who are experienced in doing it, and we have well-developed and proven processes for managing money within those segments.”