Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q4 2022 Earnings Presentation
41 slides from Gcm Grosvenor's earnings presentation, Feb 14, 2023
Slide 1: 2022 Fourth Quarter and Full Year Results Earnings Presentation
2022 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: 2022 Results
3 2022 Results $ billion December 31, 2021 December 31, 2022 % Change vs Q4 21 AUM $ 72.1 $ 73.7 2 % FPAUM 58.7 58.9 — % Private Markets FPAUM 33.1 36.9 11 % Absolute Return Strategies FPAUM 25.6 22.0 (14) % CNYFPAUM 7.7 7.6 (1) % $ million Year Ended December 31, 2022 % Change vs FY 21 GAAP Revenue
Slide 4: Fourth Quarter and Full Year 2022 Fundraising
$3.1 $2.1 $1.6 $0.5 $0.5 0.3 0.7 0.1 0.2 0.6 1.1 — 0.1 0.3 1.2 0.2 1.3 0.2 — 1.0 0.1 0.2 — 0.2 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Private Equity Infrastructure Real Estate Absolute Return Strategies Opportunistic 4 Fund Strategy Closed in Q4 22 ($mm) Closed through Q4 22 ($mm) Forecasted Next / First C
Slide 5: Elevate Strategy Launched in Q4 2022
Elevate Strategy Launched in Q4 2022 We launched the GCM Grosvenor Elevate strategy with a $500 million anchor investment as a natural extension of our existing platform to provide high-value sponsor solutions to small, emerging and diverse investor entrepreneurs We are uniquely positioned as a firm
Slide 6: Fourth Quarter 2022 Fundraising Drivers
$ billion 6 Fourth Quarter 2022 Fundraising Drivers Private Markets $1.5 — 1.5 Q4 2022 Absolute Return Strategies Absolute Return Strategies, 2% Opportunistic , 8% Private Equity, 65% Infrastructure , 7% Real Estate, 18% Specialized Funds, 44% Customized Separate Accounts, 56% Americas, 71% EMEA, 10
Slide 7: 2022 Fundraising Drivers
$ billion 7 2022 Fundraising Drivers Private Markets $7.8 0.5 7.3 2022 Absolute Return Strategies Absolute Return Strategies, 7% Opportunistic, 6% Private Equity, 39% Infrastructure , 27% Real Estate, 21% Specialized Funds, 22% Customized Separate Accounts, 78% Americas, 71% EMEA, 6% APAC, 23% Pensi
Slide 8: Fiscal Year 2022 Summary
$118.8 $94.4 118.8 94.4 FY 21 FY 22 $120.4 $128.5 120.4 128.5 FY 21 FY 22 $179.1 $149.3 179.1 149.3 FY 21 FY 22 8 (17)% (21)% 7% $ million Fiscal Year 2022 Summary $347.4 $360.5 175.4 197.3 165.4 159.1 Private Markets Absolute Return Strategies Administrative fees and other operating income FY 21 FY
Slide 9: Strong Growth Over Years as Public Company
Strong Growth Over 2 Years as Public Company Strong, Diversified Fundraising 32% Growth in Private Markets FPAUM $9b Fundraising from Fee- Accretive Strategies (Secondaries, Co-Invest, Direct Investments) Private Markets Growth (2020-22) $17b Fundraising 2021 and 2022 32% Growth in Private Markets M
Slide 10: Private Markets Experiencing Growth and Mix Shift
2020 39% Private Markets Experiencing Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... 10 $27.8 $33.1 $36.9 2020 2021 2022 $150.0 $175.4 $197.3 FY 2020 FY 2021 FY 2022 Private Markets Management Fees (mm) ...And Private Markets Management Fees Have Grown Private Markets FPAUM (bn) 2
Slide 11: Assets Under Management
$45.5 $50.7 33.1 36.9 7.6 7.5 4.8 6.3 2021 2022 $72.1 $73.7 58.7 58.9 7.7 7.6 5.8 7.2 2021 2022 CNYFPAUM Fees Charged on Scheduled Ramp-in $2.9 1.1 0.6 1.2 2023 2024 2025+ $26.6 $23.0 25.6 22.0 0.1 0.1 1.0 0.9 2021 2022 FPAUM Contracted not yet FPAUM ("CNYFPAUM") Other6 6. Includes mark to market, i
Slide 12: Unrealized Carried Interest and Performance Fees
$788 $789 331 368 457 421 Unrealized Carried Interest - Firm Share Unrealized Carried Interest - Non-Firm Share 2021 2022 $162 $190 $437 40 85 243 122 105 194 Firm Share of Carried Interest by Vintage Year 2013 or Earlier 2014-2016 2017+ Highly Diversified Incentive Fee Opportunity Unrealized Carrie
Slide 13: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers 10-14. See Notes towards the end of the document. International Geographies Insurance Solutions Non-institutional / Retail ESG / Impact10 Private Markets Secondaries/Co-Invest/Direct Infrastructure & Real Estate Scale Specialized Funds Grow with Existing Clients
Slide 14: Key Cash, Investment and Debt Metrics
15. Reflects GAAP cash including $14 million of cash held at consolidated carry plan entities. 16. Represents firm share of Net Asset Value as of December 31, 2022. 17. Debt principal at pricing of L+250bps as of December 31, 2022, subject to a LIBOR floor of 50bps. 18. Excludes all outstanding lett
Slide 15: Consolidated Results of Operations
15 Three Months Ended Year Ended $000, except per share amounts and where otherwise noted Dec 31, 2021 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Revenues Management fees $ 95,201 $ 91,587 $ 351,216 $ 367,242 Incentive fees 94,234 7,203 173,853 75,167 Other operating income 1,160 1,038 6,523 4,121 Total
Slide 16: Adjusted EBITDA and Fee-Related Earnings
16 4, 20, 22-25. See Notes towards the end of the document. 21. Excludes fund reimbursement revenue of $3.2 million and $2.9 million for the three months ended December 31, 2021 and December 31, 2022, respectively, and $10.4 million and $10.8 million for the years ended December 31, 2021 and Decembe
Slide 17: Appendix
Appendix
Slide 18: 50+ Years of Alternative Asset Management
50+ Years of Alternative Asset Management Investing 18 Primary Direct Secondary Co- Invest Real Estate $5.5bn Absolute Return $23.0bn Private Equity $29.1bn ESG / Impact $21.1bn Alternative Credit $11.9bn Infrastructure $11.1bn 26-27. See Notes towards the end of the document. $74bn 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 December 31, 2022. Management fees for the twelve months ended December 31, 2022. 28. Institutional clients as of September 30, 2022. Strong Value Proposition Attracts Tenured and Diversified Clients Our client base is institutional and stable % of AUM Our client base is global %
Slide 22: ESG and Impact Remains a Core Driver of AUM Growth
$17.4 $21.1 2021 2022 ESG and Impact Investments AUM ($bn) Note: ESG and Impact Investments AUM as of December 31, 2021 and December 31, 2022. ESG and Impact AUM by Strategy as of December 31, 2022. 10, 29. See Notes towards the end of the document. 21% Diverse Managers Regionally Targeted / Inclusi
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. 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 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: Condensed Consolidated Balance Sheet
26 $000 Dec 31, 2021 Dec 31, 2022 Assets Cash and cash equivalents $ 96,185 $ 85,163 Management fees receivable 21,693 18,720 Incentive fees receivable 91,601 16,478 Due from related parties 11,777 13,119 Investments 226,345 223,970 Premises and equipment, net 5,411 4,620 Lease right-of-use assets —
Slide 27: Components of GAAP Expenses
27 Three Months Ended Year Ended $000 Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net33 $ 39,144 $ 39,412 $ 38,080 $ 159,791 $ 158,875 Cash-based incentive fee related compensati
Slide 28: Net Incentive Fees Attributable to GCM Grosvenor
28 Three Months Ended Year Ended $000 Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 42,627 $ 1,006 $ 299 $ 51,947 $ 2,623 Carried interest 51,607 44,461 6,904 121,906 72,544 Total Incentive Fees $
Slide 29: Adjusted Pre-Tax Income and Adjusted Net Income
29 Three Months Ended Year Ended $000 Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ 14,223 $ 3,099 $ 4,390 $ 21,482 $ 19,820 Plus: Net income attributable to noncontrolling interests in G
Slide 30: Adjusted EBITDA and Fee-Related Earnings Reconciliation
30 Three Months Ended Year Ended $000 Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Adjusted EBITDA Adjusted Net Income $ 56,758 $ 26,567 $ 21,946 $ 118,806 $ 94,366 Plus: Adjusted income taxes4 17,871 8,621 6,626 38,553 30,127 Depreciation expense 400 382 364 1,688 1,540 Interest
Slide 31: Adjusted Net Income Per Share
31 Three Months Ended Year Ended $000, except per share amounts and where otherwise noted Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Adjusted Net Income Per Share Adjusted Net Income $ 56,758 $ 26,567 $ 21,946 $ 118,806 $ 94,366 Weighted-average shares of Class A common stock o
Slide 32: 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 (October 1, 2022) $ 35,488 $ 22,563 $ 58,051 $ 8,042 $ 72,602 Contributions from CNYFPAUM 1,125 7 1,132 Contributions from New Capital Raised 892 30 922 With
Slide 33: Management Fees and Average Fee Rates
33 Three Months Ended Year Ended $000 Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Dec 31, 2021 Dec 31, 2022 Management Fees Private Markets Specialized Funds $ 20,015 $ 17,670 $ 19,616 $ 62,677 $ 73,656 Average Fee Rate37 0.78 % 0.78 % 0.78 % 0.80 % 0.79 % Customized Separate Accounts 29,056 31,677 31,06
Slide 34: Investment Performance by Strategy (Dedicated Team Inception)
34 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments39 $ 12,632 $ 13,786 $ 22,943 $ 2,625 1.85 14.0 % 10.6 % S&P 500 Secondaries Investments40 526 454 547 220 1.69 20.5 % 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 Investments39 $ 23,294 $ 21,525 $ 26,331 $ 9,279 1.65 12.9 % 10.4 % S&P 500 Secondary Investments40 1,628 1,448 795 1,315 1.46 18.4 % 7.7 % S&P 500 C
Slide 36: Absolute Return Strategies Performance
36 Annualized Returns Periods Ended Dec 31, 2022 Assets Under Management as of Dec 31, 2022 (Bn) Three Months Ended Dec 31, 2022 One Year Three Year Five Year Since Inception Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $ 23.0 1.6 % 1.5 % (5.8) % (6.4) % 4.7
Slide 37: Notes
1. Excludes fund reimbursement revenue of $2.9 million and $10.8 million for the three months and year ended December 31, 2022, respectively. 2. Excludes fund reimbursement revenue for private markets of $1.1 million and $3.8 million for the three months and year ended December 31, 2022, respectivel
Slide 38: Notes (continued)
38 Notes (continued) 24. Excludes immaterial impacts of non-cash carried interest expense for the three months ended December 31, 2021 and December 31, 2022, respectively, and of $1.3 million and $(0.1) million for the years ended December 31, 2021 and December 31, 2022, respectively. 25. Investment
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