Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q1 2023 Earnings Presentation
38 slides from Gcm Grosvenor's earnings presentation, May 10, 2023
Slide 1: 2023 First Quarter Results Earnings Presentation
2023 First 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: First Quarter 2023 Results
First Quarter 2023 Results • First quarter 2023 fundraising of $940 million • 2023 Private Markets FPAUM increased 12% and Private Markets management fees increased 11% over prior year • GCM Grosvenor's Board of Directors approved a $0.11 per share dividend payable on June 15, 2023 to shareholders o
Slide 4: Fundraising: Last Twelve Months Through Q1 2023
Fundraising: Last Twelve Months Through Q1 2023 $ billion Closed in Closed Forecasted Next / Fund Strategy Q1 23 through Final Close $0.9 billion $7.4 billion ($mm) Q1 23 ($mm) First Closing Q1 2023 Capital Raised LTM Capital Raised Diversified CIS III $72 $653 2Q 2023 Mid 2023 Infrastructure MAC II
Slide 5: First Quarter 2023 Fundraising Drivers
First Quarter 2023 Fundraising Drivers $ billion Absolute Return $0.9 Strategies, 16% Specialized Funds, 19% Opportunistic, 4% By By Strategy Structure Customized Separate Infrastructure, Accounts, 80% 81% 0.8 Retail/Non- Other, 4% APAC, 12% Americas, 25% Institutional, 3% Pension, 73% Corporation,
Slide 6: Q1 2023 Summary
Q1 2023 Summary $ million Private Markets Absolute Return Strategies Fee-Related Revenue1 Management Fees2 Management Fees3 (1)% $90.6 $90.0 11% (13)% $51.8 $46.8 $42.7 $37.1 Q1 22 Q1 23 Q1 22 Q1 23 Q1 22 Q1 23 Fee-Related Earnings Adjusted EBITDA Adjusted Net Income (12)% (4)% $37.2 37.2 $32.9 (17)
Slide 7: Private Markets Experiencing Growth and Mix Shift
Private Markets Experiencing Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... ...And Private Markets Management Fees Have Grown Private Markets FPAUM (bn) Private Markets Management Fees (mm) 13% 15% CAGR CAGR $38.0 $51.8 $33.8 $46.8 $28.9 $40.4 Q1 21 Q1 22 Q1 23 Q1 21 Q1 22 Q1 23 Q
Slide 8: Assets Under Management
Assets Under Management $ billion CNYFPAUM Fees Charged on Scheduled Ramp-in 1.3 $2.5 0.6 0.6 Total AUM Fees Charged on Invested Capital Remainder 2024 2025+ $3.9 of 2023 5% $75.3 $71.3 9.1 Private Markets AUM Absolute Return Strategies AUM 6.9 13% $52.5 6.4 6.5 8.1 $46.3 6.0 (9)% 6.4 $25.0 6.5 0.9
Slide 9: Highly Diversified Incentive Fee Opportunity
Highly Diversified Incentive Fee Opportunity $ million • Annual Performance Fees: $29 million annual run-rate performance fee opportunity8, from 55 programs ◦ $16 million performance fee potential in 20238 • Carried Interest: 135 programs with unrealized carried interest Firm Share of Carried Intere
Slide 10: Key 2023 and Long-Term Growth Drivers
Key 2023 and Long-Term Growth Drivers Scale Core Capabilities New Channel Expansion13 High-Growth Strategies Grow with Existing Clients Non-institutional / Retail Private Markets Secondaries/Co-Invest/Direct 88% 50%+ > $26b 21% LTM Flows AUM Of clients have added Of top clients are 5% 4% AUM Y
Slide 11: Other Key Items
Other Key Items • In accordance with the firm's $90 million stock repurchase authorization, GCM Grosvenor repurchased $22.7 million of Class A common stock during the quarter14 ◦ $22.8 million remained in the approved share and warrant repurchase program as of March 31, 2023 Key Cash, Investment and
Slide 12: GAAP Statements of Income
GAAP Statements of Income Three Months Ended $000, except per share amounts and where otherwise noted Mar 31, 2022 Mar 31, 2023 Revenues Management fees $ 92,110 $ 92,245 Incentive fees 11,992 5,815 Other operating income 1,026 1,056 Total operating revenues 105,128 99,116 Expenses Employee compensa
Slide 13: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures20 Three Months Ended $000, except per share amounts and where otherwise noted Mar 31, 2022 Mar 31, 2023 Adjusted EBITDA Revenues Private markets strategies $ 46,841 $ 51,802 Absolute return strategies 42,711 37,136 Management fees, net21 89,552 88,938 Administr
Slide 14: Appendix
Appendix
Slide 15: 52 Years of Alternative Asset Management Investing
52 Years of Alternative Asset Management Investing 1971 74% 543 178 26 First year of investing of AUM in customized separate accounts Employees Investment professionals Real Estate Absolute $5.6bn Return $22.8bn Primary Alternative Private Credit Direct $75bn Co- Equity $12.2bn Assets under Invest $
Slide 16: Our Strategic Advantage is Our Breadth and Flexibility
Our Strategic Advantage is Our Breadth and Flexibility One Platform That Spans the Alternatives Investing Universe $75bn Absolute ESG and Assets under Private Equity Infrastructure Real Estate Return Credit Management27 Strategies Impact Private Across All Markets Strategies Multiple Implementation
Slide 17: Flexible Delivery Formats Fuel Client Extension Opportunities
Flexible Delivery Formats Fuel Client Extension Opportunities • 74% of AUM • Specifically tailored program to client objectives and constraints • Extension of staff • Provide value-add ancillary services, including administering capital, on behalf of certain of our clients • Evergreen and closed-end
Slide 18: Strong Value Proposition Attracts Tenured and Diversified Clients
Strong Value Proposition Attracts Tenured and Diversified Clients Our client base is Our client base is Our client base is institutional and stable global diversified % of AUM % of AUM % of management fees No single client contributes more than 5% of our management fees Financial Institutions Rest o
Slide 19: ESG and Impact Remains a Core Driver of AUM Growth
ESG and Impact Remains a Core Driver of AUM Growth9 ESG and Impact Investments AUM ($bn) ESG and Impact AUM by Strategy29 $23.5 Diverse Managers 31% $14.5 billion Regionally Targeted / Inclusive Finance $17.9 $1.8 billion Clean Energy $4.1 billion Workforce Standards / Labor Impact $1.7 billion Othe
Slide 20: 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 Paying30 Non-Fee Paying large Absolute Return $300 million $300 million Strategies clients a ‘hybrid model’ through which t
Slide 21: 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 22: Supplemental Information
Supplemental Information
Slide 23: GAAP Balance Sheets
GAAP Balance Sheets $000 Dec 31, 2022 Mar 31, 2023 Assets Cash and cash equivalents $ 85,163 $ 61,873 Management fees receivable 18,720 19,962 Incentive fees receivable 16,478 14,327 Due from related parties 13,119 13,509 Investments 223,970 231,799 Premises and equipment, net 4,620 4,182 Lease righ
Slide 24: Components of GAAP Expenses
Components of GAAP Expenses Three Months Ended $000 Mar 31, 2022 Dec 31, 2022 Mar 31, 2023 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net33 $ 40,863 $ 38,080 $ 39,890 Cash-based incentive fee related compensation 1,594 821 737 34 Carried inte
Slide 25: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended $000 Mar 31, 2022 Dec 31, 2022 Mar 31, 2023 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 1,001 $ 299 $ 244 Carried interest 10,991 6,904 5,571 Total Incentive Fees $ 11,992 $ 7,203 $ 5,815 Less incentive fee
Slide 26: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended $000 Mar 31, 2022 Dec 31, 2022 Mar 31, 2023 Adjusted Pre-Tax Income & Adjusted Net Income Net income (loss) attributable to GCM Grosvenor Inc. $ 4,726 $ 4,390 $ (1,230) Plus: Net income (loss) attributable to noncontrolling interests in GCMH 13,6
Slide 27: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended $000 Mar 31, 2022 Dec 31, 2022 Mar 31, 2023 Adjusted EBITDA Adjusted Net Income $ 23,770 $ 21,946 $ 19,623 Plus: Adjusted income taxes4 7,714 6,626 6,266 Depreciation expense 399 364 347 Interest expense 5,284 6,642 6,655 Adjusted EBITDA $ 37,167
Slide 28: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share Three Months Ended $000, except per share amounts and where otherwise noted Mar 31, 2022 Dec 31, 2022 Mar 31, 2023 Adjusted Net Income Per Share Adjusted Net Income $ 23,770 $ 21,946 $ 19,623 Weighted-average shares of Class A common stock outstanding
Slide 29: Change in FPAUM and AUM
Change in FPAUM and AUM Three Months Ended March 31, 2023 Private Markets Absolute Return Contracted Not $mm Strategies Strategies Total FPAUM Yet FPAUM Total AUM Fee-Paying AUM Beginning of Period (January 1, 2023) $ 36,876 $ 21,980 $ 58,856 $ 7,603 $ 73,667 Contributions from CNYFPAUM 955 3 958 Co
Slide 30: Management Fee Detail
Management Fee Detail36 Three Months Ended $000 Mar 31, 2022 Dec 31, 2022 Mar 31, 2023 Management Fees Private Markets Specialized Funds $ 17,088 $ 19,616 $ 19,450 Average Fee Rate37 0.76 % 0.78 % 0.79 % Customized Separate Accounts 29,753 31,069 32,352 Average Fee Rate 0.48 % 0.46 % 0.47 % Private
Slide 31: 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 Investments39 $ 13,057 $ 14,244 $ 23,448 $ 2,906
Slide 32: 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 Investments39 $ 23,764 $ 21,963 $ 26,645 $ 9,842 1.66 13.0 % 10.5 % S&P 500 S
Slide 33: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended Mar 31, 2023 Three Months Ended One Year Three Year Five Year Since Inception Assets Under Mar 31, 2023 Management as of Mar 31, 2023 (Bn) Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $
Slide 34: Notes
Notes 1. Excludes fund reimbursement revenue of $2.6 million and $3.3 million for the three months ended March 31, 2022 and 2023, respectively. 2. Excludes fund reimbursement revenue for private markets of $1.0 million and $1.6 million for the three months ended March 31, 2022 and 2023, respectively
Slide 35: Notes (continued)
Notes (continued) 24. Excludes immaterial impacts of non-cash carried interest expense of $0.3 million and $(0.3) million for the three months ended March 31, 2022 and 2023, respectively. 25. Investment income or loss is generally realized when the Company redeems all or a portion of its investment
Slide 36: 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 37: Certain Definitions and Use of Non-GAAP Financials and KPIs (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 38: 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