(July 12 – 15:30 ET) – At the close of trading today Kansas City Southern Industries will spin off its financial assets, including the venerable Janus funds, to a separate company.

As a railway firm it never made much sense to investors for KCSI to hold its financial assets under the parent company. After all conglomerates usually suffer a hefty discount.

Today KCSI appeases investors by spinning off those assets as Stilwell Financial Inc., which will be traded on the NYSE under the symbol “SV”. Stilwell encompasses Janus Capital Corp., the top-selling fund manager in the U.S., along with Berger Associates Inc., Nelson Money Manager plc, and a 32% interest in DST Systems Inc.

The most interesting asset in the group is Janus, which KCSI took over in 1984. Janus currently has more than US$270 billion under management. In February, a couple of Janus funds became available in Canada through Maxxum Fund Management Inc. Well-known Janus manager, Marsico Capital Management, also manages a couple of funds for Synergy Mutual Funds.

While this spinoff is much anticipated, it is also much criticized, not least of all by Janus executives and fund managers. The complaint is that maximum value will only be realized by spinning Janus off entirely by itself. “I think investors will continue to push management to unlock the value of Janus,” said Henry McVey, an analyst at Morgan Stanley Dean Witter, who nonetheless starts Stilwell as an “outperform” today.

Stilwell will have a market cap of about US$9.8 billion when it begins trading, and some analysts, including Steven Eisman of CIBC World Markets, suggest that Janus alone could easily be worth double that.

KCSI says that Janus had to be bundled with Stilwell to ensure that the entire deal could be done on a tax-free basis.

Stilwell will replace KCSI in the S&P 500 after the close of trading today. Interestingly, CIT Group Inc., the firm that took over Newcourt, will replace Union Pacific Resources in the 500 today, too.