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McKinsey is considering spinning off its in-house asset manager MIO Partners, which invests the private wealth of the consulting firm’s senior staff and alumni.
The firm said it had hired Ardea Partners, a boutique investment bank founded by former Goldman Sachs dealmakers, for a strategic review of MIO, which has been dogged by years of controversy over potential conflicts of interest with McKinsey’s consulting work.
MIO has grown to manage $23bn in assets. That includes the retirement nest-eggs of current McKinsey partners but the unit also handles the wealth of a wide network of alumni and their families.
In 2021, the US Securities and Exchange Commission fined MIO $18mn, alleging that it had inadequate internal controls and that partners who oversaw MIO’s investment choices routinely had access to confidential information about their clients’ financial results, deals and funding plans.
The SEC fine followed reporting by the Financial Times in 2016 that revealed details of MIO’s secretive operations, and raised questions about how information gleaned from consulting was influencing investment decisions.
The business has since revamped its governance and says MIO’s operations are “intentionally separated” from the consulting arm.
McKinsey said its strategic review would consider the relationship between MIO and the firm “to ensure that it aligns with the best long-term interests of McKinsey and MIO’s clients”.
It said it would “evaluate various strategic directions and alternative ownership structures” but also ensure “continuity of its management, investment, and advisory teams”.
“A successful outcome will enable MIO to expand its field of operations and leverage its ability to create value for its investors,” it added.
In recent years, governance rules designed to prevent potential conflicts of interest have meant MIO does not invest in individual stocks or bonds of any public or private company.
Instead it pursues macro trading strategies involving trading asset classes such as sovereign debt, commodities, foreign exchange, equity indices and credit indices, according to its website, and regulatory filings show it invests heavily in externally managed funds.
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