Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q1 2022 Earnings Presentation
34 slides from Gcm Grosvenor's earnings presentation, May 10, 2022
Slide 1: 2022 First Quarter Results Earnings Presentation
2022 First 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: First Quarter 2022 Results
3 First Quarter 2022 Results $ million March 31, 2021 March 31, 2022 % Change vs 1Q 21 AUM $ 64,862 $ 71,338 10 % FPAUM 53,362 57,859 8 % CNYFPAUM 7,454 6,545 (12) % $ million Three Months Ended March 31, 2021 Three Months Ended March 31, 2022 % Change vs 1Q 21 GAAP Revenue $ 103.2 $ 105.1 2 % GAAP
Slide 4: Fundraising: Last Twelve Months Through Q1 2022
$2.0 $2.9 $0.7 $1.6 $1.0 1.7 2.2 0.6 1.4 1.0 0.3 0.7 0.1 0.2 — Q2-Q4 2021 Q1 2022 Private Equity Infrastructure Real Estate Absolute Return Strategies Opportunistic 4 Fund Strategy Closed in 1Q 22 ($mm) Closed through 1Q 22 ($mm) Forecasted Next / First Closing Final Close GSF III PE Secondaries $11
Slide 5: First Quarter 2022 Fundraising
$ billion 5 First Quarter 2022 Fundraising Private Markets $1.3 0.2 1.1 Q1 2022 Absolute Return Strategies Absolute Return Strategies, 19% Opportunistic, 1% Private Equity, 19%Infrastructure, 55% Real Estate, 6% Specialized Funds, 21% Customized Separate Accounts, 79% Americas, 38% EMEA, 7% APAC, 55
Slide 6: ESG and Impact Remains a Core Driver of Growth
$13.3 $17.9 Q1 2021 Q1 2022 ESG and Impact Investments AUM ($bn) 3-4. See Notes towards the end of the document. 35% Diverse Managers Regionally Targeted Clean Energy Labor Impact Other ESG and Impact $11.8 billion $2.3 billion $1.8 billion $0.9 billion $3.8 billion ESG and Impact Remains a Core Dri
Slide 7: Q1 2022 Revenue & Earnings
$18.9 $23.8 18.9 23.8 Q1 21 Q1 22 $100.9 $102.6 100.9 102.6 Q1 21 Q1 22 Adjusted Revenue5 7 5. Excludes fund reimbursement revenue of $2.4 million and $2.6 million for the three months ended March 31, 2021 and March 31, 2022, respectively. 2% $ million Q1 2022 Revenue & Earnings $82.6 $90.6 40.4 46.
Slide 8: Assets Under Management
$64.9 $71.3 53.3 57.9 7.5 6.5 4.1 6.9 Q1 2021 Q1 2022 $39.3 $46.3 28.9 33.8 7.4 6.53.0 6.0 Q1 2021 Q1 2022 CNYFPAUM Fees Charged on Scheduled Ramp-in $1.6 0.6 0.8 0.2 Remainder of 2022 2023 2024+ $25.6 $25.0 24.4 24.0 0.1 0.1 1.1 0.9 Q1 2021 Q1 2022 FPAUM Contracted not yet FPAUM ("CNYFPAUM") Other6
Slide 9: Q1 2022 Incentive Fees and Unrealized Carried Interest
$491 $939 181 415 309 524 37% 44% Unrealized Carried Interest - Firm Share Unrealized Carried Interest - Non-Firm Share Average Percent of Firm Share Q1 2021 Q1 2022 $1 $12 $12 1 1 3 4 8 8 Annual Performance Fees Carried Interest Total Highly Diversified Incentive Fee Opportunity $ million $39 Q1 20
Slide 10: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers 10 • Robust pipeline of existing and new clients • Continued high re-up rates from Private Markets clients, both Customized Separate Accounts and Specialized Funds • Incremental capital from expanding client relationships into new strategies • Compounding capita
Slide 11: Key Cash, Investment and Debt Metrics
11. Reflects GAAP cash including $12 million of cash held at consolidated carry plan entities. 12. Represents firm share of Net Asset Value as of March 31, 2022. 13. Debt principal at pricing of L+250bps as of March 31, 2022, subject to a LIBOR floor of 50bps. 14. Excludes all outstanding letters of
Slide 12: Condensed Consolidated Statement of Operations
12 Three Months Ended $000, except per share amounts and where otherwise noted Mar 31, 2021 Mar 31, 2022 Revenues Management fees $ 82,625 $ 92,110 Incentive fees 18,214 11,992 Other operating income 2,380 1,026 Total operating revenues 103,219 105,128 Expenses Employee compensation and benefits 83,
Slide 13: Adjusted EBITDA and Fee-Related Earnings
13 16, 18-22. See Notes towards the end of the document. 17. Excludes fund reimbursement revenue of $2.4 million and $2.6 million for the three months ended March 31, 2021 and March 31, 2022, respectively. Three Months Ended $000, except per share amounts and where otherwise noted Mar 31, 2021 Mar 3
Slide 14: Appendix
Appendix
Slide 15: Client Value Proposition and Strong Business Momentum
Unparalleled flexibility ◦ Customized solutions and specialized funds ◦ Primary, secondary, co-invest, and direct ◦ 45%+ of top 50 clients by AUM in multiple investment strategies23 Deeply embedded with our clients ◦ 74% of AUM in customized programs ◦ Cornerstone of clients’ alternative programs ◦
Slide 16: Diversified, Long-Tenured Client Base
16 Note: AUM as of March 31, 2022. Management fees for the twelve months ended March 31, 2022. 27. Institutional clients as of December 31, 2021. Strong Value Proposition Drives Diversified, Long-Tenured Client Base 42% 14% 8% 16% 6% 7% 6% 1% Our client base is institutional and stable % of AUM Our
Slide 17: Illustrative Client Economic Value Proposition: Absolute Return Strategies
17 Illustrative Client Economic Value Proposition: Absolute Return Strategies Example: $300M Fee Paying; $300M Non-Fee Paying. Assuming 0% gross return. 28. 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%. 29. Fee s
Slide 18: Illustrative Client Economic Value Proposition: Private Markets
18 Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. Direct Primary + GCM Grosvenor-Managed Co-Investment Program Direct Primary Only Program $1.0 billion Management fee at the underlying fund level 200 bps Management fee at the GCM
Slide 19: Condensed Consolidated Balance Sheet
19 $000 Dec 31, 2021 Mar 31, 2022 Assets Cash and cash equivalents $ 96,185 $ 76,510 Management fees receivable 21,693 18,195 Incentive fees receivable 91,601 15,602 Due from related parties 11,777 10,647 Investments 226,345 232,668 Premises and equipment, net 5,411 5,283 Lease right-of-use assets —
Slide 20: Components of GAAP Expenses
20 Three Months Ended $000 Mar 31, 2021 Mar 31, 2022 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net31 $ 41,192 $ 40,863 Cash-based incentive fee related compensation 1,833 1,594 Carried interest compensation, net32 7,503 6,191 Partnership int
Slide 21: Net Incentive Fees Attributable to GCM Grosvenor
21 Three Months Ended $000 Mar 31, 2021 Mar 31, 2022 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 6,113 $ 1,001 Carried interest 12,101 10,991 Total Incentive Fees $ 18,214 $ 11,992 Less incentive fees contractually owed to others: Cash carried interest compens
Slide 22: Adjusted Pre-Tax Income & Adjusted Net Income
22 Three Months Ended $000 Mar 31, 2021 Mar 31, 2022 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ 2,547 $ 4,726 Plus: Net income attributable to noncontrolling interests in GCMH 703 13,669 Provision (benefit) for income taxes (663) 2,333 Change in fai
Slide 23: Adjusted EBITDA and Fee-Related Earnings Reconciliation
23 Three Months Ended $000 Mar 31, 2021 Mar 31, 2022 Adjusted EBITDA Adjusted Net Income $ 18,906 $ 23,770 Plus: Adjusted income taxes22 6,302 7,714 Depreciation expense 473 399 Interest expense 4,491 5,284 Adjusted EBITDA $ 30,172 $ 37,167 Fee-Related Earnings Adjusted EBITDA 30,172 37,167 Less: In
Slide 24: Adjusted Net Income Per Share
24 Three Months Ended $000, except per share amounts and where otherwise noted Mar 31, 2021 Mar 31, 2022 Adjusted Net Income Per Share Adjusted Net Income $ 18,906 $ 23,770 Weighted-average shares of Class A common stock outstanding - basic (in millions) 42.1 44.6 Exercise of private warrants - incr
Slide 25: Quarterly Change in FPAUM and AUM
25 $mm Private Markets Strategies Absolute Return Strategies Total FPAUM Contracted Not Yet FPAUM Total AUM Fee-Paying AUM Beginning of Period (January 1, 2022) $ 33,080 $ 25,575 $ 58,655 $ 7,683 $ 72,130 Contributions from CNYFPAUM 1,072 16 1,088 Contributions from New Capital Raised 374 245 619 Wi
Slide 26: Management Fees and Average Fee Rates
26 Three Months Ended $000 Mar 31, 2021 Mar 31, 2022 Management Fees Private Markets Specialized Funds $ 12,970 $ 17,088 Average Fee Rate35 0.74 % 0.76 % Customized Separate Accounts 27,403 29,753 Average Fee Rate 0.49 % 0.48 % Private Markets Management Fees 40,373 46,841 Average Fee Rate - Private
Slide 27: Private Markets Investment Performance by Strategy
27 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments37 $ 11,965 $ 13,100 $ 21,510 $ 2,928 1.87 14.1 % 9.2 % S&P 500 Secondaries Investments38 311 281 361 78 1.56 19.7 % 11.5 % S&P 500 Co-Inv
Slide 28: Private Markets Investment Performance by Strategy (continued)
28 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments37 $ 22,497 $ 20,242 $ 24,872 $ 9,474 1.70 13.3 % 11.2 % S&P 500 Secondary Investments38 1,242 1,062 574 1,114 1.59 21.3 % 17.1 % S&P 500
Slide 29: Absolute Return Strategies Performance
29 Annualized Returns Periods Ended Mar 31, 2022 Assets Under Management as of Mar 31, 2022 (Bn) Year to Date One Year Three Year Five Year Since Inception Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $ 25.0 (5.2) % (5.3) % 1.1 % 0.5 % 6.4 % 5.6 % 5.2 % 4.5
Slide 30: Notes
3. The data regarding ESG themes presented above and otherwise contained herein is based on the amount committed to and invested in investments by GCM Grosvenor-managed portfolios as of the date above, based on the assessment of each such investment by GCM Grosvenor investment team members. The rele
Slide 31: Notes (continued)
31 Notes (continued) 24. Represents top 25 clients by AUM. 25. Defined by improved fee structures and capacity constrained funds. 26. For Private Markets customized separate accounts from January 1, 2017 through March 31, 2022. 31. Excludes severance expenses of $0.6 million and $0.5 million for the
Slide 32: Non-GAAP Measure Definitions
32 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 33: Definitions of AUM Terms
33 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 based on invested capital (capital committed to underlying investments) or on a scheduled ramp-
Slide 34: Forward-Looking Statements
34 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