Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q3 2022 Earnings Presentation
41 slides from Gcm Grosvenor's earnings presentation, November 2022
Slide 1: 2022 Third Quarter Results Earnings Presentation
2022 Third Quarter Results Earnings Presentation
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: Third Quarter 2022 Results
Third Quarter 2022 Results • Third quarter 2022 fundraising of $2.9 billion • Private Markets FPAUM increased 14% over prior year and YTD Private Markets management fees increased 16% over prior year • GCM Grosvenor's Board of Directors approved increasing dividend to $0.11 per share payable on Dece
Slide 4: YTD 2022 Growth Drivers and Results
YTD 2022 Growth Drivers and Results $2.9b $6.3b YTD Strong, Fundraising Diversified Diversified by Fundraising Q3 2022 YTD Fundraising Channel and Fundraising Geography Private Markets 14% 16% 61% FPAUM and Fee Private Markets % YoY Growth in YTD Growth in Growth Private Markets Private Markets of T
Slide 5: Private Markets Experiencing Strong Growth and Mix Shift
Private Markets Experiencing Strong Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... ...And Private Markets Management Fee Earnings Power Has Grown Private Markets FPAUM (bn) Private Markets Management Fees (mm) 13% 14% CAGR CAGR $35.5 $49.3 $31.1 $43.6 $27.1 $38.6 Q3 2020 Q3 2021 Q
Slide 6: Fundraising: Year-to-Date Through Q3 2022
Fundraising: Year-to-Date Through Q3 2022 $ billion Closed in Closed Forecasted Next / Fund Strategy Q3 22 through Q3 Final Close $2.9 billion $6.3 billion ($mm) 22 ($mm) First Closing Q3 2022 Capital Raised YTD Capital Raised GSF III PE Secondaries $46 $912 4Q 2022 Late 2022 Diversified CIS III $23
Slide 7: Third Quarter 2022 Fundraising
Third Quarter 2022 Fundraising $ billion Specialized Absolute Return $2.9 Funds, 4% Strategies, 6% Real Estate, 43% By By Strategy Structure Private Equity, 44% Customized Separate Accounts, Infrastructure, 96% 2.7 7% Financial APAC, 3% Institutions, 2% EMEA, 1% Other, 7% Retail/Non- Institutional,
Slide 8: Year-to-Date 2022 Fundraising
Year-to-Date 2022 Fundraising $ billion Absolute Return $6.3 Strategies, 8% Specialized Opportunistic, Funds, 16% Real Estate, 6% 21% By By Strategy Structure Private Equity, 34% Customized Infrastructure, Separate 31% Accounts, 84% 5.8 Financial Other, 3% Institutions, 3% Insurance, 7% APAC, 24% Re
Slide 9: Q3 2022 Summary
Q3 2022 Summary $ million Fee-Related Revenue5 Fee-Related Earnings 2% $88.6 $86.6 1.1 1.0 1% (9)% 38.3 $31.0 $31.4 41.9 31.4 31.0 13% 43.6 49.3 Q3 21 Q3 22 Q3 21 Q3 22 Private Markets Absolute Return Strategies Administrative fees and other operating income Adjusted EBITDA Adjusted Net Income 10% $
Slide 10: YTD 2022 Summary
YTD 2022 Summary $ million Fee-Related Revenue6 Fee-Related Earnings 7% $270.8 14% $95.6 $254.2 3.1 95.6 5.4 $83.6 (1)% 121.1 122.5 83.6 126.4 16% 146.6 Q3 YTD 21 Q3 YTD 22 Q3 YTD 21 Q3 YTD 22 Private Markets Absolute Return Strategies Administrative fees and other operating income Adjusted EBITDA A
Slide 11: Assets Under Management
Assets Under Management $ billion CNYFPAUM Fees Charged on Scheduled Ramp-in 1.9 1.3 $3.6 Total AUM Fees Charged on 0.4 Invested Capital Remainder 2023 2024+ $4.4 of 2022 3% $72.6 $70.5 6.5 Private Markets AUM Absolute Return Strategies AUM 5.9 12% $49.1 8.0 (12)% 7.9 $26.6 5.6 $43.9 1.0 4.9 0.1 8.0
Slide 12: Highly Diversified Incentive Fee Opportunity
Highly Diversified Incentive Fee Opportunity $ million • Annual Performance Fees: $29 million annual run-rate performance fee opportunity10, from 52 programs • Carried Interest: 135 programs in unrealized carried interest Firm Share of Carried Interest9 Unrealized Carried Interest by Vintage Year9 5
Slide 13: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers Scale Core Capabilities New Channel Expansion15 High-Growth Strategies Grow with Existing Clients Non-institutional / Retail Private Markets Secondaries/Co-Invest/Direct 88%+ 50%+ > $24b 23% LTM Flows AUM Of clients have added Of top clients are 9% 6% AUM
Slide 14: Other Key Items
Other Key Items • In accordance with the firm's $65 million stock repurchase authorization, GCM Grosvenor repurchased $13.9 million of Class A common stock during the quarter ◦ $26.4 million remained in the approved share and warrant repurchase program as of September 30, 2022 • In November 2022, GC
Slide 15: GAAP Statements of Income
GAAP Statements of Income 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
Slide 16: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures21 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 Adjusted EBITDA Revenues Private markets strategies $ 43,643 $ 49,347 $ 126,376 $ 146,582 Absolute return strateg
Slide 17: Appendix
Appendix
Slide 18: 50+ Years of Alternative Asset Management Investing
50+ Years of Alternative Asset Management Investing 1971 74% 532 168 28 First year of investing of AUM in customized separate accounts Employees Investment professionals Real Estate Absolute $5.3bn Return $23.5bn Primary Alternative Private Credit Direct $73bn Co- Equity $13.5bn Assets under Invest
Slide 19: Our Strategic Advantage is Our Breadth and Flexibility
Our Strategic Advantage is Our Breadth and Flexibility One Platform That Spans the Alternatives Investing Universe $73bn Absolute ESG and Assets under Private Equity Infrastructure Real Estate Return Credit Management29 Strategies Impact Private Across All Markets Strategies Multiple Implementation
Slide 20: Flexible Delivery Formats Fuel Client Extension Opportunities
Flexible Delivery Formats Fuel Client Extension Opportunities • 74% of AUM • Specifically tailored program to client objectives and constraints • Extension of staff • Provide value-add ancillary services, including administering capital, on behalf of certain of our clients • Evergreen and closed-end
Slide 21: Strong Value Proposition Attracts Tenured and Diversified Clients
Strong Value Proposition Attracts Tenured and Diversified Clients Our client base is Our client base is Our client base is institutional and stable global diversified % of AUM % of AUM % of management fees No single client contributes more than Financial 5% of our management fees Institutions Rest o
Slide 22: ESG and Impact Remains a Core Driver of AUM Growth
ESG and Impact Remains a Core Driver of AUM Growth11 ESG and Impact Investments AUM ($bn) ESG and Impact AUM by Strategy31 Diverse Managers $20.2 25% $12.6 billion Regionally Targeted / Inclusive $16.2 $2.3 billion Clean Energy $1.9 billion Labor Impact $1.2 billion Other ESG and Impact $6.2 billion
Slide 23: 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. ◦ GCM Grosvenor offers Fee Paying32 Non-Fee Paying large Absolute Return $300 million $300 million Strategies clients a ‘hybrid model’ through which t
Slide 24: Illustrative Client Economic Value Proposition: Private Markets
Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. GCM Grosvenor Primary + Co-Investment Program GCM Grosvenor GCM Grosvenor Direct Primary Only Managed Primaries Managed Co- Program vs. Program Investment Program $1.0 billion $650 mi
Slide 25: Supplemental Information
Supplemental Information
Slide 26: GAAP Balance Sheets
GAAP Balance Sheets $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 rig
Slide 27: Components of GAAP Expenses
Components of GAAP Expenses 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
Slide 28: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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
Slide 29: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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 attribut
Slide 30: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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 ex
Slide 31: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share 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 $ 72,4
Slide 32: Quarterly Change in FPAUM and AUM
Quarterly Change in FPAUM and AUM Three Months Ended September 30, 2022 Private Markets Absolute Return Contracted Not $mm Strategies Strategies Total FPAUM 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 9
Slide 33: Management Fee Detail
Management Fee Detail38 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
Slide 34: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics Realized and Partially Realized Investments ($ billion) Current Investment Investment Strategy Commitments Contributions Distributions PME IRR PME Index Value Net TVPI Net IRR Private Equity Primary Fund Investments41 $ 12,455 $ 13,564 $ 22,449 $ 2,764
Slide 35: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics All Investments ($ billion) Current Investment Investment Strategy Commitments Contributions Distributions PME IRR PME Index Value Net TVPI Net IRR Private Equity Primary Fund Investments41 $ 23,210 $ 21,177 $ 25,768 $ 9,562 1.67 13.1 % 10.5 % S&P 500 S
Slide 36: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended Sept 30, 2022 Three Months Assets Under Ended Sept 30, Year to Date One Year Three Year Five Year Since Inception Management as 2022 of Sept 30, 2022 (Bn) Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Retu
Slide 37: Notes
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, resp
Slide 38: Notes (continued)
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, 202
Slide 39: 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 40: 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) 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 customi
Slide 41: 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