Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q4 2022 Earnings Presentation
41 slides from Gcm Grosvenor's earnings presentation, 2023
Slide 1: 2022 Fourth Quarter and Full Year Results Earnings Presentation
2022 Fourth Quarter and Full Year 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: 2022 Results
2022 Results • Fourth quarter 2022 fundraising of $1.5 billion and full year 2022 fundraising of $7.8 billion ◦ Launched Elevate seeding strategy with $500 million anchor investment • 2022 Private Markets FPAUM increased 11% and Private Markets management fees increased 12% over prior year • GCM Gro
Slide 4: Fourth Quarter and Full Year 2022 Fundraising
Fourth Quarter and Full Year 2022 Fundraising $ billion Closed in Closed Forecasted Next / Fund Strategy Q4 22 through Final Close $1.5 billion $7.8 billion ($mm) Q4 22 ($mm) First Closing Q4 2022 Capital Raised 2022 Capital Raised GSF III PE Secondaries $60 $972 N/A Closed Q4 22 Diversified CIS III
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 There is a clear Targeting small, em
Slide 6: Fourth Quarter 2022 Fundraising Drivers
Fourth Quarter 2022 Fundraising Drivers $ billion Absolute Return $1.5 Strategies, 2% Opportunistic Real Estate, , 8% Specialized 18% Funds, 44% Customized Infrastructure Separate , 7% By Accounts, By Strategy 56% Structure Private Equity, 65% 1.5 Financial Institutions, 4% Retail/Non- Institutional
Slide 7: 2022 Fundraising Drivers
2022 Fundraising Drivers $ billion Absolute Return $7.8 Strategies, 7% Specialized Opportunistic, Real Estate, Funds, 22% 6% 21% By By Strategy Structure Private Infrastructure Equity, 39% , 27% Customized Separate Accounts, 7.3 78% Financial Other, 3% Institutions, 3% Insurance, 6% Retail/Non- APAC
Slide 8: Fiscal Year 2022 Summary
Fiscal Year 2022 Summary $ million Fee-Related Revenue5 Fee-Related Earnings $347.4 4% $360.5 6.5 4.1 7% $128.5 159.1 165.4 (4)% $120.4 128.5 120.4 175.4 12% 197.3 FY 21 FY 22 FY 21 FY 22 Private Markets Absolute Return Strategies Administrative fees and other operating income Adjusted EBITDA Adjust
Slide 9: Strong Growth Over 2 Years as Public Company
Strong Growth Over 2 Years as Public Company Strong, $17b $9b $3b Diversified Fundraising 2021 Fundraising from Fee- Fundraising from Newer Fundraising and 2022 Accretive Strategies Channels (Insurance, (Secondaries, Co-Invest, Retail) Direct Investments) Private Markets 32% 8% 32% 63% Growth Growth
Slide 10: 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) 15% 15% CAGR CAGR $36.9 $33.1 $197.3 $175.4 $27.8 $150.0 2020 2021 2022 FY 2020 FY 2021 FY
Slide 11: Assets Under Management
Assets Under Management $ billion CNYFPAUM Fees Charged on Scheduled Ramp-in $2.9 1.1 1.2 Total AUM Fees Charged on 0.6 Invested Capital $4.7 2023 2024 2025+ 2% $73.7 $72.1 7.2 Private Markets AUM Absolute Return Strategies AUM 5.8 12% $50.7 7.7 7.6 6.3 $45.5 4.8 $26.6 (14)% 7.5 1.0 7.6 0.1 $23.0 0.
Slide 12: Highly Diversified Incentive Fee Opportunity
Highly Diversified Incentive Fee Opportunity $ million • Annual Performance Fees: $30 million annual run-rate performance fee opportunity ($17 million performance fee potential in 2023)9, from 52 programs • Carried Interest: 131 programs with unrealized carried interest Firm Share of Carried Interes
Slide 13: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers Scale Core Capabilities New Channel Expansion14 High-Growth Strategies Grow with Existing Clients Non-institutional / Retail Private Markets Secondaries/Co-Invest/Direct 88%+ 50%+ > $25b 21% 2022 Flows AUM Of clients have added Of top clients are 7% 4% AUM
Slide 14: Other Key Items
Other Key Items • In accordance with the firm's $90 million stock repurchase authorization, GCM Grosvenor repurchased $5.9 million of Class A common stock during the quarter and $32.8 million during the year ◦ $45.5 million remained in the approved share and warrant repurchase program as of December
Slide 15: GAAP Statements of Income
GAAP Statements of Income 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
Slide 16: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures20 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 Adjusted EBITDA Revenues Private markets strategies $ 49,071 $ 50,685 $ 175,447 $ 197,267 Absolute return strategies 42,
Slide 17: Appendix
Appendix
Slide 18: 50+ Years of Alternative Asset Management Investing
50+ Years of Alternative Asset Management Investing 1971 74% 529 170 26 First year of investing of AUM in customized separate accounts Employees Investment professionals Real Estate Absolute $5.5bn Return $23.0bn Primary Alternative Private Credit Direct $74bn Co- Equity $11.9bn 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 $74bn Absolute ESG and Assets under Private Equity Infrastructure Real Estate Return Credit Management27 Strategies Impact Private Across All Markets Strategies Multiple Implementation
Slide 20: Flexible Delivery Formats Fuel Client Extension Opportunities
Flexible Delivery Formats Fuel Client Extension Opportunities • 74% of AUM • Specifically tailored program to client objectives and constraints • Extension of staff • Provide value-add ancillary services, including administering capital, on behalf of certain of our clients • Evergreen and closed-end
Slide 21: Strong Value Proposition Attracts Tenured and Diversified Clients
Strong Value Proposition Attracts Tenured and Diversified Clients Our client base is Our client base is Our client base is institutional and stable global diversified % of AUM % of AUM % of management fees No single client contributes more than 5% of our management fees Financial Institutions Rest o
Slide 22: ESG and Impact Remains a Core Driver of AUM Growth
ESG and Impact Remains a Core Driver of AUM Growth10 ESG and Impact Investments AUM ($bn) ESG and Impact AUM by Strategy29 $21.1 Diverse Managers 21% $13.1 billion Regionally Targeted / Inclusive Finance $17.4 $2.3 billion Clean Energy $2.9 billion Workforce Standards / Labor Impact $1.5 billion Oth
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 Paying30 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 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 righ
Slide 27: Components of GAAP Expenses
Components of GAAP Expenses 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 incenti
Slide 28: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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 6,904 121,90
Slide 29: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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
Slide 30: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics 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
Slide 31: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share 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 Weig
Slide 32: Change in FPAUM and AUM
Change in FPAUM and AUM Three Months Ended December 31, 2022 Private Markets Absolute Return Contracted Not $mm Strategies Strategies Total FPAUM 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
Slide 33: Management Fee Detail
Management Fee Detail36 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 Account
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 Investments39 $ 12,632 $ 13,786 $ 22,943 $ 2,625
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 Investments39 $ 23,294 $ 21,525 $ 26,331 $ 9,279 1.65 12.9 % 10.4 % S&P 500 S
Slide 36: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended Dec 31, 2022 Three Months Ended One Year Three Year Five Year Since Inception Assets Under Dec 31, 2022 Management as of Dec 31, 2022 (Bn) Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $
Slide 37: Notes
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, respe
Slide 38: Notes (continued)
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 in
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