Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q3 2022 Earnings Presentation
41 slides from Gcm Grosvenor's earnings presentation, Nov 9, 2022
Slide 1: 2022 Third Quarter Results Earnings Presentation
2022 Third Quarter 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: Third Quarter 2022 Results
3 Third Quarter 2022 Results $ billion September 30, 2021 September 30, 2022 % Change vs Q3 21 AUM $ 70.5 $ 72.6 3 % FPAUM 56.6 58.1 3 % Private Markets FPAUM 31.1 35.5 14 % Absolute Return Strategies FPAUM 25.5 22.6 (12) % CNYFPAUM 7.9 8.0 2 % $ million Three Months Ended September 30, 2022 % Chang
Slide 4: YTD 2022 Growth Drivers and Results
YTD 2022 Growth Drivers and Results Strong, Diversified Fundraising 14% YoY Growth in Private Markets FPAUM $6.3b YTD Fundraising YTD Fundraising Diversified by Channel and Geography Private Markets FPAUM and Fee Growth $2.9b Q3 2022 Fundraising 16% YTD Growth in Private Markets Management Fees 61%
Slide 5: Private Markets Experiencing Strong Growth and Mix Shift
Q3 2020 39% Private Markets Experiencing Strong Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... 5 $27.1 $31.1 $35.5 Q3 2020 Q3 2021 Q3 2022 $38.6 $43.6 $49.3 Q3 2020 Q3 2021 Q3 2022 Private Markets Management Fees (mm) ...And Private Markets Management Fee Earnings Power Has Grown
Slide 6: Fundraising: Year-to-Date Through Q3 2022
$2.1 $2.0 $1.4 $0.5 $0.3 0.3 0.7 0.1 0.2 0.6 1.1 — 0.1 0.3 1.2 0.2 1.3 0.2 — Q1 2022 Q2 2022 Q3 2022 Private Equity Infrastructure Real Estate Absolute Return Strategies Opportunistic 6 Fund Strategy Closed in Q3 22 ($mm) Closed through Q3 22 ($mm) Forecasted Next / First Closing Final Close GSF III
Slide 7: Third Quarter 2022 Fundraising
$ billion 7 Third Quarter 2022 Fundraising Private Markets $2.9 0.2 2.7 Q3 2022 Absolute Return Strategies Absolute Return Strategies, 6% Private Equity Infrastructure, 7% Real Estate, 43% Specialized Funds, 4% Customized Separate Accounts, 96% Americas, 96% EMEA, 1% APAC, 3% Pension, 83% Corporatio
Slide 8: Year-to-Date 2022 Fundraising
$ billion 8 Year-to-Date 2022 Fundraising Private Markets $6.3 0.5 5.8 Q3 YTD 2022 Absolute Return Strategies Absolute Return Strategies, 8% Opportunistic, 6% Private Equity, 34% Infrastructure, 31% Real Estate, 21% Specialized Funds, 16% Customized Separate Accounts, 84% Americas, 71% EMEA, 5% APAC
Slide 9: Q3 2022 Summary
$86.6 $88.6 43.6 49.3 41.9 38.3 1.1 1.0 Private Markets Absolute Return Strategies Administrative fees and other operating income Q3 21 Q3 22 $37.6 $41.4 Q3 21 Q3 22 $23.8 $26.6 23.8 26.6 Q3 21 Q3 22 9 10% $31.0 $31.4 31.0 31.4 Q3 21 Q3 22 1% 11% $ million Q3 2022 Summary Adjusted Net Income Fee-Rel
Slide 10: YTD 2022 Summary
$62.0 $72.4 62.0 72.4 Q3 YTD 21 Q3 YTD 22 $83.6 $95.6 83.6 95.6 Q3 YTD 21 Q3 YTD 22 $98.5 $113.8 98.5 113.8 Q3 YTD 21 Q3 YTD 22 10 15% 17% 14% $ million YTD 2022 Summary $254.2 $270.8 126.4 146.6 122.5 121.1 5.4 3.1 Private Markets Absolute Return Strategies Administrative fees and other operating i
Slide 11: Assets Under Management
$43.9 $49.1 31.1 35.5 7.8 8.0 4.9 5.6 Q3 2021 Q3 2022 $70.5 $72.6 56.6 58.1 7.9 8.0 5.9 6.5 Q3 2021 Q3 2022 CNYFPAUM Fees Charged on Scheduled Ramp-in $3.6 0.4 1.3 1.9 Remainder of 2022 2023 2024+ $26.6 $23.5 25.5 22.6 0.1 0 1.0 0.9 Q3 2021 Q3 2022 FPAUM Contracted not yet FPAUM ("CNYFPAUM") Other7
Slide 12: Highly Diversified Incentive Fee Opportunity
297 351 434 420 Unrealized Carried Interest - Firm Share Unrealized Carried Interest - Non-Firm Share Q3 21 Q3 22 42 87 222134 108 178 Firm Share of Carried Interest by Vintage Year 2013 or Earlier 2014-2016 2017+ Highly Diversified Incentive Fee Opportunity Unrealized Carried Interest by Vintage Ye
Slide 13: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers 11-15. See Notes towards the end of the document. International Geographies Insurance Solutions Non-institutional / Retail ESG / Impact11 Private Markets Secondaries/Co-Invest/Direct Infrastructure & Real Estate Scale Specialized Funds Grow with Existing Clients
Slide 14: Key Cash, Investment and Debt Metrics as of 9/30/22
16. Reflects GAAP cash including $47 million of cash held at consolidated carry plan entities. 17. Represents firm share of Net Asset Value as of September 30, 2022. 18. Debt principal at pricing of L+250bps as of September 30, 2022, subject to a LIBOR floor of 50bps. 19. Excludes all outstanding le
Slide 15: GAAP Income Statement
15 Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Revenues Management fees $ 87,796 $ 90,715 $ 256,015 $ 275,655 Incentive fees 29,178 45,467 79,619 67,964 Other operating income 1,101 1,032 5,363 3,08
Slide 16: Adjusted EBITDA and Fee-Related Revenue
16 21, 23-27. See Notes towards the end of the document. 22. Excludes fund reimbursement revenue of $2.3 million and $3.1 million for the three months ended September 30, 2021 and September 30, 2022, respectively, and $7.2 million and $8.0 million for the nine months ended September 30, 2021 and Sep
Slide 17: Appendix
Appendix
Slide 18: 50+ Years of Alternative Asset Management Investing
50+ Years of Alternative Asset Management Investing 18 Primary Direct Secondary Co- Invest Real Estate $5.3bn Absolute Return $23.5bn Private Equity $28.2bn ESG / Impact $20.2bn Alternative Credit $13.5bn Infrastructure $10.5bn 28-29. See Notes towards the end of the document. $73bn Assets under Man
Slide 19: One Platform That Spans the Alternatives Investing Universe
One Platform That Spans the Alternatives Investing Universe Multiple Implementation Options Co-Investments Custom Structures Direct Investments Primary Investments Secondaries Seeding Real Estate Absolute Return Strategies Private Equity Infrastructure Credit ESG and Impact Our Strategic Advantage i
Slide 20: Flexible Delivery Formats Fuel Client Extension Opportunities
Flexible Delivery Formats Fuel Client Extension Opportunities • 74% of AUM • Specifically tailored program to client objectives and constraints • Extension of staff • Provide value-add ancillary services, including administering capital, on behalf of certain of our clients • Evergreen and closed-end
Slide 21: Strong Value Proposition Attracts Tenured and Diversified Clients
21 Note: AUM as of September 30, 2022. Management fees for the twelve months ended September 30, 2022. 30. Institutional clients as of June 30, 2022. Strong Value Proposition Attracts Tenured and Diversified Clients Our client base is institutional and stable % of AUM Our client base is global % of
Slide 22: ESG and Impact Remains a Core Driver of AUM Growth
$16.2 $20.2 Q3 2021 Q3 2022 ESG and Impact Investments AUM ($bn) 11, 31. See Notes towards the end of the document. 25% Diverse Managers Regionally Targeted / Inclusive Clean Energy Labor Impact Other ESG and Impact $12.6 billion $2.3 billion $1.9 billion $1.2 billion $6.2 billion ESG and Impact Rem
Slide 23: Illustrative Client Economic Value Proposition: Absolute Return Strategies
23 Illustrative Client Economic Value Proposition: Absolute Return Strategies Example: $300M Fee Paying; $300M Non-Fee Paying. Assuming 0% gross return. 32. 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%. 33. Fee s
Slide 24: Illustrative Client Economic Value Proposition: Private Markets
24 Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. GCM Grosvenor Primary + Co-Investment Program Direct Primary Only Program $1.0 billion Management fee at the underlying fund level 200 bps Management fee at the GCM Grosvenor portf
Slide 25: Supplemental Information
Supplemental Information
Slide 26: Balance Sheet
26 $000 Dec 31, 2021 Sep 30, 2022 Assets Cash and cash equivalents $ 96,185 $ 101,575 Management fees receivable 21,693 17,249 Incentive fees receivable 91,601 27,219 Due from related parties 11,777 11,927 Investments 226,345 223,969 Premises and equipment, net 5,411 5,589 Lease right-of-use assets
Slide 27: Components of GAAP Expenses
27 Three Months Ended Nine Months Ended $000 Sep 30, 2021 Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net35 $ 39,200 $ 40,520 $ 39,412 $ 120,647 $ 120,795 Cash-based incentive fee related com
Slide 28: Net Incentive Fees Attributable to GCM Grosvenor
28 Three Months Ended Nine Months Ended $000 Sep 30, 2021 Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 316 $ 317 $ 1,006 $ 9,320 $ 2,324 Carried interest 28,862 10,188 44,461 70,299 65,640 Total Incentive Fees
Slide 29: Adjusted Pre-Tax Income & Adjusted Net Income
29 Three Months Ended Nine Months Ended $000 Sep 30, 2021 Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ 4,056 $ 7,605 $ 3,099 $ 7,259 $ 15,430 Plus: Net income attributable to noncontrolling interests
Slide 30: Adjusted EBITDA and Fee-Related Earnings
30 Three Months Ended Nine Months Ended $000 Sep 30, 2021 Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Adjusted EBITDA Adjusted Net Income $ 23,836 $ 22,083 $ 26,567 $ 62,048 $ 72,420 Plus: Adjusted income taxes27 7,945 7,166 8,621 20,682 23,501 Depreciation expense 408 395 382 1,288 1,176 In
Slide 31: Adjusted Net Income Per Share
31 Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2021 June 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Adjusted Net Income Per Share Adjusted Net Income $ 23,836 $ 22,083 $ 26,567 $ 62,048 $ 72,420 Weighted-average shares of Class A common
Slide 32: Quarterly Change in FPAUM and AUM
32 $mm Private Markets Strategies Absolute Return Strategies Total FPAUM Contracted Not Yet FPAUM Total AUM Fee-Paying AUM Beginning of Period (July 1, 2022) $ 34,773 $ 22,679 $ 57,452 $ 6,669 $ 71,204 Contributions from CNYFPAUM 956 17 973 Contributions from New Capital Raised 18 173 191 Withdrawal
Slide 33: Management Fees and Average Fee Rates
33 Three Months Ended Nine Months Ended $000 Sep 30, 2021 Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Management Fees Private Markets Specialized Funds $ 15,265 $ 19,282 $ 17,670 $ 42,662 $ 54,040 Average Fee Rate39 0.75 % 0.79 % 0.78 % 0.74 % 0.78 % Customized Separate Accounts 28,378 31,11
Slide 34: Investment Performance by Strategy
34 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments41 $ 12,455 $ 13,564 $ 22,449 $ 2,764 1.86 14.1 % 10.4 % S&P 500 Secondaries Investments42 415 387 457 150 1.57 17.5 % 11.9 % S&P 500 Co-I
Slide 35: Investment Performance by Strategy (Since Inception)
35 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments41 $ 23,210 $ 21,177 $ 25,768 $ 9,562 1.67 13.1 % 10.5 % S&P 500 Secondary Investments42 1,374 1,252 751 1,181 1.54 19.9 % 9.8 % S&P 500 C
Slide 36: Absolute Return Strategies Performance
36 Annualized Returns Periods Ended Sept 30, 2022 Assets Under Management as of Sept 30, 2022 (Bn) Three Months Ended Sept 30, 2022 Year to Date One Year Three Year Five Year Since Inception Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $ 23.5 1.4 %
Slide 37: Notes
1. Excludes fund reimbursement revenue of $3.1 million and $8.0 million for the three and nine months ended September 30, 2022, respectively. 2. Excludes fund reimbursement revenue for private markets of $0.8 million and $2.7 million for the three and nine months ended September 30, 2022, respective
Slide 38: Notes (continued)
38 Notes (continued) 25. Excludes the impact of non-cash carried interest expense of $0.3 million and $(0.5) million for the three months ended September 30, 2021 and September 30, 2022, respectively, and $1.3 million and $(0.1) million for the nine months ended September 30, 2021 and September 30,
Slide 39: Non-GAAP Measure Definitions: Adjusted Net Income
39 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) for in
Slide 40: Fee-Paying Assets Under Management Definition
40 Fee-Paying Assets Under Management (“FPAUM” or “Fee-Paying AUM") is a key performance indicator we use to measure the assets from which we earn management fees. Our FPAUM comprises the assets in our customized separate accounts and specialized funds from which we derive management fees. We classi
Slide 41: Forward-Looking Statements
41 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