Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q4 2021 Earnings Presentation
36 slides from Gcm Grosvenor's earnings presentation, Feb 15, 2022
Slide 1: 2021 Fourth Quarter and Full Year Results Earnings Presentation
Diluted EPS to be updated February 15, 2022 2021 Fourth Quarter and Full Year Results Earnings Presentation
Slide 2: Presenters
2 Presenters Michael Sacks Chairman and Chief Executive Officer Jonathan Levin President Pamela Bentley Chief Financial Officer Stacie Selinger Head of Investor Relations
Slide 3: Fourth Quarter and Full Year 2021 Results
3 Fourth Quarter and Full Year 2021 Results $ million December 31, 2020 December 31, 2021 % Change vs 4Q 20 AUM $ 61,943 $ 72,130 16 % FPAUM 51,969 58,655 13 % CNYFPAUM 7,057 7,683 9 % $ million Three Months Ended December 31, 2021 % Change vs 4Q 20 Year Ended December 31, 2021 % Change vs FY 20 GAA
Slide 4: Diversified and Strong 2021 Fundraising
$ billion 4 Diversified and Strong 2021 Fundraising Private Markets $7.0 $9.4 1.5 1.9 5.5 7.5 FY 2020 FY 2021 Absolute Return Strategies Absolute Return Strategies, 20% Opportunistic, 11% Private Equity, 22% Infrastructure, 37% Real Estate, 10% Specialized Funds, 35% Customized Separate Accounts, 65
Slide 5: Fundraising Robust Across Verticals
$2.1 $3.5 $0.9 $1.9 $1.0 0.6 3.0 0.9 0.9 0.2 0.4 0.6 0.5 0.4 1.0 0.8 Private Equity Infrastructure Real Estate ARS Opportunistic Fundraising Robust Across Verticals 5 Fund Strategy Closed in 4Q 21 ($mm) Closed Through 4Q 21 ($mm) Forecasted Next / First Closing Final Close Advance Fund PE Diverse Ma
Slide 6: ESG and Impact Remains a Core Driver of Growth
$12.8 $17.4 2020 2021 ESG and Impact Investments AUM ($bn) 4-6. See Notes towards the end of the document. 36% Diverse Managers Regionally Targeted Clean Energy Labor Impact Other ESG and Impact $11.0 billion $2.1 billion $1.7 billion $0.9 billion $3.7 billion A+ rating from UN Principles of Respons
Slide 7: Strong 2021 Growth in Revenue
Adjusted Revenue7 77. Excludes fund reimbursement revenue of $2.4 million and $3.2 million for the three months ended December 31, 2020 and December 31, 2021, respectively, and $8.4 million and $10.4 million for the years ended December 31, 2020 and December 31, 2021, respectively. 22% $421.6 $521.2
Slide 8: Revenue Growth and Operating Leverage Drove Strong Earnings
8 19% $67.9 $80.6 Q4 20 Q4 21 $26.8 $36.8 26.8 36.8 Q4 20 Q4 21 37% $46.1 $56.8 46.1 56.8 Q4 20 Q4 21 22% 31% $95.1 $120.4 95.1 120.4 FY 20 FY 21 $147.0 $179.1 147.0 179.1 FY 20 FY 21 $91.0 $118.8 91.0 118.8 FY 20 FY 21 27% 23% $ million Revenue Growth and Operating Leverage Drove Strong Earnings Ad
Slide 9: Increased Earnings Power From Growing AUM
$57.7 $61.9 $72.1 50.1 51.9 58.7 5.2 7.1 7.7 2.4 2.9 5.8 2019 2020 2021 $33.3 $36.7 $45.5 26.5 27.8 33.1 5.0 6.9 7.6 1.8 2.0 4.8 2019 2020 2021 CNYFPAUM Fees Charged on Scheduled Ramp-in $2.7 1.6 0.9 0.2 2022 2023 2024+ $24.4 $25.2 $26.6 23.6 24.1 25.6 0.2 0.2 0.1 0.6 0.9 1.0 2019 2020 2021 FPAUM Co
Slide 10: Growing and Diversified Incentive Fee Opportunity
$52 $174 $174 52 52 40 92 82 82 Annual Performance Fees Carried Interest Total $395 $788 133 331 261 457 34% 42% Unrealized Carried Interest - Firm Share Unrealized Carried Interest - Non-Firm Share Average Percent of Firm Share 2020 2021 Growing and Diversified Incentive Fee Opportunity $ million $
Slide 11: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers 11 • Robust pipeline of existing and new clients • Continued high re-up rates from Private Markets clients, both Customized Separate Accounts and Specialized Funds • Incremental capital from expanding client relationships into new strategies • Compounding capita
Slide 12: Key Cash, Investment and Debt Metrics
13. Reflects GAAP cash including $15 million of cash held at consolidated carry plan entities. 14. Represents firm share of Net Asset Value as of December 31, 2021. 15. Debt principal at pricing of L+250bps as of December 31, 2021, subject to a LIBOR floor of 50bps. 16. Excludes all outstanding lett
Slide 13: Consolidated Statements of Operations
13 Three Months Ended Year Ended $000, except per share amounts and where otherwise noted Dec 31, 2020 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Revenues Management fees $ 79,639 $ 95,201 $ 310,745 $ 351,216 Incentive fees 73,602 94,234 111,650 173,853 Other operating income 2,247 1,160 7,586 6,523 Tot
Slide 14: Adjusted EBITDA and Fee-Related Earnings Reconciliation
1419, 21-25. See Notes towards the end of the document. 20. Excludes fund reimbursement revenue of $2.4 million and $3.2 million for the three months ended December 31, 2020 and December 31, 2021, respectively, and $8.4 million and $10.4 million for the years ended December 31, 2020 and December 31,
Slide 15: Appendix
Appendix
Slide 16: Client Value Proposition and Business Momentum
Unparalleled flexibility ◦ Customized solutions and specialized funds ◦ Primary, secondary, co-invest, and direct ◦ 45%+ of top 50 clients by AUM in multiple investment strategies26 Deeply embedded with our clients ◦ 74% of AUM in customized programs ◦ Cornerstone of clients’ alternative programs ◦
Slide 17: Diversified, Long-Tenured Client Base
17Note: AUM as of December 31, 2021. Management fees for the twelve months ended December 31, 2021. Strong Value Proposition Drives Diversified, Long-Tenured Client Base 42% 14% 8% 16% 6% 7% 6% 1% Our client base is institutional and stable % of AUM Our client base is global % of AUM Our client base
Slide 18: Illustrative Client Economic Value Proposition: Absolute Return Strategies
18 Illustrative Client Economic Value Proposition: Absolute Return Strategies Example: $300M Fee Paying; $300M Non-Fee Paying. Assuming 0% gross return. 30. This hypothetical portfolio has an annual performance fee component of 5% over a hurdle (capped at 5%) of 90-day U.S. T-Bill plus 2%. 31. Fee s
Slide 19: Absolute Return Strategies Has Solid Year-Over-Year Results
Absolute Return Strategies Has Solid Year-Over-Year Results $39 $45 2020 2021 15% Run-Rate Annual Performance Fees (mm)33 Growth in Earnings Power From Management Fees 19 Strong Performance + Incentive Fee Earnings Power 7.2% 9.3% 6.8% YTD Ending 12/31/21 3Yrs Ending 12/31/21 5Yrs Ending 12/31/21 Ab
Slide 20: Illustrative Client Economic Value Proposition: Private Markets
20 Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. Direct Primary + GCM Grosvenor-Managed Co-Investment Program Direct Primary Only Program $1.0 billion Management fee at the underlying fund level 200 bps Management fee at the GCM
Slide 21: Consolidated Balance Sheets
21 $000 Dec 31, 2020 Dec 31, 2021 Assets Cash and cash equivalents $ 198,146 $ 96,185 Management fees receivable 14,524 21,693 Incentive fees receivable 69,424 91,601 Due from related parties 11,326 11,777 Investments 166,273 226,345 Premises and equipment, net 7,870 5,411 Intangible assets, net 8,5
Slide 22: Components of GAAP Expenses
22 Three Months Ended Year Ended $000 Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net34 $ 38,467 $ 39,200 $ 39,144 $ 158,194 $ 159,791 Cash-based incentive fee related compensati
Slide 23: Net Incentive Fees Attributable to GCM Grosvenor
23 Three Months Ended Year Ended $000 Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 51,105 $ 316 $ 42,627 $ 52,726 $ 51,947 Carried interest 22,497 28,862 51,607 58,924 121,906 Total Incentive Fees
Slide 24: Adjusted Pre-Tax Income and Adjusted Net Income
24 Three Months Ended Year Ended $000 Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ 4,049 $ 4,056 $ 14,223 $ 4,049 $ 21,482 Plus: Net income (loss) attributable to noncontrolling interest
Slide 25: Adjusted EBITDA and Fee-Related Earnings
25 Three Months Ended Year Ended $000 Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Adjusted EBITDA Adjusted Net Income $ 46,057 $ 23,836 $ 56,758 $ 90,963 $ 118,806 Plus: Adjusted income taxes25 15,351 7,945 17,871 30,321 38,553 Depreciation expense 542 408 400 2,314 1,688 Intere
Slide 26: Adjusted Net Income Per Share
26 Three Months Ended Year Ended $000, except per share amounts and where otherwise noted Dec 31, 2020 38 Dec 31, 2021 Dec 31, 2020 38 Dec 31, 2021 Adjusted Net Income Per Share Adjusted Net Income $ 46,057 $ 56,758 $ 90,963 $ 118,806 Weighted-average shares of Class A common stock outstanding - bas
Slide 27: Fee-Paying AUM Rollforward
27 $mm Private Markets Strategies Absolute Return Strategies Total FPAUM Contracted Not Yet FPAUM Total AUM Fee-Paying AUM Beginning of Period (October 1, 2021) $ 31,113 $ 25,505 $ 56,618 $ 7,921 $ 70,485 Contributions from CNYFPAUM 562 9 571 Contributions from New Capital Raised 1,749 602 2,351 Wit
Slide 28: Management Fees and Average Fee Rates
28 Three Months Ended Year Ended $000 Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Management Fees Private Markets Specialized Funds $ 11,678 $ 15,265 $ 20,015 $ 45,727 $ 62,677 Average Fee Rate40 0.73 % 0.75 % 0.78 % 0.71 % 0.80 % Customized Separate Accounts 26,712 28,378 29,05
Slide 29: Private Markets Strategy Returns
29 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments42 $ 11,477 $ 12,583 $ 20,508 $ 3,008 1.87 14.2 % 9.4 % S&P 500 Secondaries Investments43 292 266 331 79 1.54 19.0 % 11.5 % S&P 500 Co-Inv
Slide 30: Private Markets Strategy Returns Since Inception
30 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments42 $ 21,810 $ 19,610 $ 23,731 $ 9,574 1.70 13.2 % 11.0 % S&P 500 Secondary Investments43 1,186 1,052 519 1,101 1.54 21.3 % 15.3 % S&P 500
Slide 31: Absolute Return Strategies Performance
31 Annualized Returns Periods Ended Dec 31, 2021 Assets Under Management as of Dec 31, 2021 (Bn) One Year Three Year Five Year Since Inception Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $ 26.6 7.2 % 6.4 % 9.3 % 8.5 % 6.8 % 6.0 % 7.3 % 6.1 % GCMLP Diversified Multi-S
Slide 32: Notes
3. Diverse Manager investments include investments managed by or sponsored by a diverse manager, based on GCM Grosvenor’s definition of a diverse manager, which is determined by thresholds of manager economic ownership by diverse parties (race, gender, sexual orientation, veterans, disabled persons)
Slide 33: Notes (continued)
33 Notes (continued) 27. Defined by improved fee structures and capacity constrained funds. 28. Represents top 25 clients by AUM. 29. For Private Markets customized separate accounts from January 1, 2017 through December 31, 2021. 34. Excludes severance expenses of $4.6 million, $0.6 million and $1.
Slide 34: Non-GAAP Measure Definitions
34 Adjusted Net Income is a non-GAAP measure that we present on a pre-tax and after-tax basis to evaluate our profitability. Adjusted Pre-Tax Income represents net income attributable to GCM Grosvenor Inc. including (a) net income (loss) attributable to GCMH, excluding (b) provision (benefit) income
Slide 35: Definitions of AUM Terms
35 Contracted, Not Yet Fee-Paying AUM (“CNYFPAUM”) represents limited partner commitments during or prior to the initial commitment or investment period where fees are expected to be charged in the future based on invested capital (capital committed to underlying investments) or on a scheduled ramp-
Slide 36: Forward-Looking Statements
36 Forward-Looking Statements This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected future performance of GCM Grosvenor’s business, including anticipated incremental revenu