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
2021 Fourth Quarter and Full Year Results Earnings Presentation February 15, 2022 Diluted EPS to be updated
Slide 2: Presenters
Presenters Michael Sacks Jonathan Levin Pamela Bentley Stacie Selinger Chairman and President Chief Financial Officer Head of Investor Relations Chief Executive Officer 2
Slide 3: Fourth Quarter and Full Year 2021 Results
Fourth Quarter and Full Year 2021 Results • Full year 2021 growth driven by strong fundraising of $9.4 billion in FY 2021 • GCM Grosvenor's Board of Directors approved a $0.10 per share dividend payable on March 15, 2022 to shareholders on record March 1, 2022 • In February 2022, GCM Grosvenor’s Boa
Slide 4: Diversified and Strong 2021 Fundraising
Diversified and Strong 2021 Fundraising $ billion 2021 Fundraising Composition $9.4 Real Estate, Specialized Absolute Return Customized 10% Funds, 35% Strategies, 20% Separate Accounts, 65% Infrastructure, 37% $7.0 By Opportunistic, By Strategy 11% Structure Private Equity, 7.5 22% 5.5 Other, 3% EME
Slide 5: Fundraising Robust Across Verticals
Fundraising Robust Across Verticals Closed in 4Q 21 Closed Through Forecasted Next / First 2021 Fundraising By Strategy ($bn) Fund Strategy ($mm) 4Q 21 ($mm) Closing Final Close Advance Fund PE Diverse Managers $191 $770 N/A Closed Q4 21 GSF III PE Secondaries $153 $565 Q2 2022 Late 2022 $9.4 billio
Slide 6: ESG and Impact Remains a Core Driver of Growth
4 ESG and Impact Remains a Core Driver of Growth ESG and Impact AUM by Strategy6 A+ rating $21.1B $17.4B Diverse Managers from UN Principles of Committed and invested in of ESG and Impact AUM Responsible Investing (PRI)5 ESG and Impact $11.0 billion Regionally Targeted ESG and Impact Investments AUM
Slide 7: Strong 2021 Growth in Revenue
Strong 2021 Growth in Revenue $ million Q4 21-over-Q4 20 FY 21-over-FY 20 Q3 21-over-Q3 20 Fee-Related Revenue7 12% 17% $93.2 $347.4 $79.4 1.2 $309.9 6.5 2.2 7.6 42.9 165.4 38.8 152.3 38.4 49.1 150.0 175.4 Q4 20 Q4 21 FY 20 FY 21 Private Markets Absolute Return Strategies Administrative fees and oth
Slide 8: Revenue Growth and Operating Leverage Drove Strong Earnings
Revenue Growth and Operating Leverage Drove Strong Earnings $ million Q4 21-over-Q3 Q3 21-over-Q4 20 20 FY 21-over-FY 20 Adjusted EBITDA 22% 19% $179.1 $80.6 $147.0 179.1 $67.9 147.0 Q4 20 Q4 21 FY 20 FY 21 Fee-Related Earnings 27% 37% $36.8 $120.4 $95.1 120.4 36.8 $26.8 95.1 26.8 Q4 20 Q4 21 FY 20
Slide 9: Increased Earnings Power From Growing AUM
Increased Earnings Power From Growing AUM $ billion CNYFPAUM Fees Total AUM Charged on Scheduled Ramp-in Fees Charged 1.6 $2.7 on Invested 0.9 $72.1 Capital 12% $5.0 0.2 2022 2023 2024+ ‘19–’21 CAGR 5.8 Private Markets AUM Absolute Return Strategies AUM $61.9 7.7 2.9 $57.7 $45.5 2.4 17% 7.1 4.8 5% ‘
Slide 10: Growing and Diversified Incentive Fee Opportunity
Growing and Diversified Incentive Fee Opportunity $ million Growing Firm Share of Carried Interest9,11 2021 Incentive Fees Firm Share9,10 Contractual and NCI 10 Unrealized Carried Interest - Firm Share Unrealized Carried Interest - Non-Firm Share Average Percent of Firm Share $122 $174 $174 42% 34%
Slide 11: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers • Full-year impact of 2021 FPAUM growth plus CNYFPAUM conversion net of distributions 2022 Fee-Related Revenue Growth Drivers • Private Markets FPAUM growth from 2022 fundraising - from both Customized Separate Accounts and Specialized Funds • 2022 fundraising c
Slide 12: Other Key Items
Other Key Items • In accordance with the firm's existing $25 million stock repurchase authorization, GCM Grosvenor repurchased $0.9 million of Class A common stock and $0.8 million of warrants during the quarter • GCM Grosvenor’s Board of Directors increased its existing stock repurchase authorizati
Slide 13: GAAP Statements of Income
GAAP Statements of Income 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 2,24
Slide 14: Summary of Non-GAAP Financial Measures
19 Summary of Non-GAAP Financial Measures 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 Adjusted EBITDA Revenues Private markets strategies $ 38,390 $ 49,071 $ 149,990 $ 175,447 Absolute return strategies 38
Slide 15: Appendix
Appendix
Slide 16: Only Alternative Solutions Provider Covering the Full Range of Strategies
Only Alternative Solutions Provider Covering the Full Range of Strategies Client Value Proposition Strong Business Momentum Unparalleled flexibility Highly visible incremental revenue ◦ Customized solutions and specialized funds Absolute Real Estate ◦ Revenue from prior year FPAUM growth Return ◦ Pr
Slide 17: Strong Value Proposition Drives Diversified, Long-Tenured Client Base
Strong Value Proposition Drives Diversified, Long-Tenured Client Base Our client base is Our client base is Our client base is institutional and stable global diversified % of AUM % of AUM % of management fees No single client contributes more than High Net Worth/ Endowments 5% of our management fee
Slide 18: Illustrative Client Economic Value Proposition: Absolute Return Strategies
Illustrative Client Economic Value Proposition: Absolute Return Strategies Example: $300M Fee Paying; $300M Non-Fee Paying. Assuming 0% gross return. Fee Paying30 Non-Fee Paying ◦ GCM Grosvenor offers large $300 million $300 million Absolute Return Strategies clients a ‘hybrid model’ Management fee
Slide 19: Absolute Return Strategies Has Solid Year-Over-Year Results
Absolute Return Strategies Has Solid Year-Over-Year Results Growth in Earnings Power From Management Fees Stable to Expanding Fee Rates Strong Performance + Incentive Fee Earnings Power Absolute Return Strategies Fee-Paying AUM (bn) Absolute Return Strategies Average Fee Rate33 Absolute Return Strat
Slide 20: Illustrative Client Economic Value Proposition: Private Markets
Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. Direct Primary + GCM Grosvenor-Managed Co-Investment Program GCM Grosvenor Direct Primary Only Direct Primaries Managed Co-Investment Program Program Program $1.0 billion $650 million
Slide 21: GAAP Balance Sheets
GAAP Balance Sheets $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 Intangibl
Slide 22: Components of GAAP Expenses
Components of GAAP Expenses 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 incenti
Slide 23: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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,
Slide 24: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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) attribu
Slide 25: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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 expens
Slide 26: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share 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 sha
Slide 27: Quarterly Growth in FPAUM and AUM
Quarterly Growth in FPAUM and AUM Three Months Ended December 31, 2021 Private Markets Absolute Return Contracted Not Yet $mm Strategies Strategies Total FPAUM 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
Slide 28: Management Fee Detail
39 Management Fee Detail 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 Accoun
Slide 29: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics Realized and Partially Realized Investments ($bn) Investment Investment Strategy Commitments Contributions Distributions Current Value PME IRR PME Index Net TVPI Net IRR Private Equity Primary Fund Investments42 $ 11,477 $ 12,583 $ 20,508 $ 3,008 1.87 1
Slide 30: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics All Investments ($bn) Investment Investment Strategy Commitments Contributions Distributions Current Value PME IRR PME Index Net TVPI Net IRR Private Equity Primary Fund Investments42 $ 21,810 $ 19,610 $ 23,731 $ 9,574 1.70 13.2 % 11.0 % S&P 500 Seconda
Slide 31: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended Dec 31, 2021 One Year Three Year Five Year Since Inception Assets Under Management as of Gross Net Gross Net Gross Net Gross Net Dec 31, 2021 (Bn) Absolute Return Strategies (Overall) $ 26.6 7.2 % 6.4 % 9.3 % 8.5 % 6.8 % 6.0 % 7
Slide 32: Notes
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 pe
Slide 33: Notes (continued)
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 $1.1 m
Slide 34: Certain Definitions and Use of Non-GAAP Financials and Key Performance Indicators
Certain Definitions and Use of Non-GAAP Financials and Key Performance Indicators 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) n
Slide 35: Certain Definitions and Use of Non-GAAP Financials and Key Performance Indicators (continued)
Certain Definitions and Use of Non-GAAP Financials and Key Performance Indicators (continued) 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 base
Slide 36: Disclaimer
Disclaimer 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 incrementa