Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q4 2023 Earnings Presentation
36 slides from Gcm Grosvenor's earnings presentation, Feb 13, 2024
Slide 1: 2023 Fourth Quarter and Full Year Results Earnings Presentation
2023 Fourth Quarter and Full Year Results Earnings Presentation
Slide 2: GCM Grosvenor Reports Q4 and Full Year 2023 Results
GCM Grosvenor Reports Q4 and Full Year 2023 Results CHICAGO, February 13, 2024 – GCM Grosvenor (Nasdaq: GCMG), a leading global alternative asset management solutions provider, today reported results for the fourth quarter and full year ended December 31, 2023. “2023 was a strong Dividend GCM Grosve
Slide 3: Forward Looking Statements
Forward Looking Statements THIS PRESENTATION CONTAINS CERTAIN FORWARD- Form 10-K filed by GCM Grosvenor Inc. on February 23, 2023 LOOKING STATEMENTS within the meaning of the Private and its other filings with the U.S. Securities and Exchange Securities Litigation Reform Act of 1995, including state
Slide 4: Fourth Quarter and Full Year 2023 Results
Third Quarter 2023 Results Fourth Quarter and Full Year 2023 Results • Private Markets was a key growth driver, with FPAUM increasing 9% over prior year and management fees increasing 9% over both prior year QTD and YTD • Solid results for the quarter and year ◦ Fourth quarter and full year 2023 GAA
Slide 5: 52 Years of Alternative Asset Management Investing
52 Years of Alternative Asset Management Investing 1971 73% 538 177 First year in business of AUM in customized Employees3 Investment professionals separate accounts Real Estate Absolute Return $6.1bn $22.4bn DIRECT SEEDING/ PRIMARY STAKES Alternative Credit $77bn Private Equity $13.2bn AUM4 $29.4bn
Slide 6: Growth in Key Business Drivers
Growth in Key Business Drivers December 31, 2020 December 31, 2023 Growing Earnings Power $62bn $77bn AUM Private Markets Growing as a Percentage 54% 65% Private Markets % of FPAUM Shifting Towards Direct- Oriented Strategies 39% 52% Direct-Oriented Strategies % of Private Markets AUM Operating Leve
Slide 7: Long Term Tailwinds for Alternatives Persist
Long Term Tailwinds for Alternatives Persist The Majority of Investors Plan to Maintain or Increase Target Alternative Investments AUM ($T) Allocation to Alternative Investments Over the Longer Term 93% 93% 94% +10% 84% $24.5 CAGR 76% $16.3 $10.1 Private Equity Hedge Funds Infrastructure Real Privat
Slide 8: Growing and Diversifying AUM and Earnings Power
Growing and Diversifying AUM and Earnings Power AUM by Strategy (bn) 8% CAGR $76.9 $73.7 $72.1 $61.9 9% $29.4 Private Equity $26.2 $29.1 CAGR 14% $22.8 Private5 Markets CAGR $13.1 $20.0 30% $16.6 $9.2 Real Assets CAGR $25.2 $26.6 $23.0 $22.4 (4)% Absolute Return Strategies CAGR $4.7 $6.2 $5.0 $5.1 Q
Slide 9: Diversified Fundraising Drives Stability & Growth
Diversified Fundraising Drives Stability & Growth Diversified by Channel Diversified by Geography 48% Pensions 19% Corporation 10% Government/Sovereign Entity 49% Americas 2023 2023 6% Individual Investor 33% EMEA Fundraising Fundraising 6% Financial Institutions 18% APAC 5% Insurance 6% Other Diver
Slide 10: Growing Private Markets Business
Growing Private Markets Business $54bn Private Markets Management Fees7 (mm) Private Markets Total AUM $213.7 13% CAGR $193.6 65% $169.4 Private Markets $149.3 % of Total FPAUM $19bn Private Markets Fundraising in Last 2020 2021 2022 2023 Three Years 7. Excludes catch up management fees and fund rei
Slide 11: Growing Carried Interest Earnings Power
Growing Carried Interest Earnings Power $ million Total carried interest continues to experience strong growth, and the firm is keeping a larger share of that carry 137 programs with unrealized carried interest (mm) Unrealized Carried Interest by Vintage Year (mm)8 $479 $776 210 56% Firm 403 Share $
Slide 12: Significant Embedded Value From Incentive Fees
Significant Embedded Value From Incentive Fees Incentive Fee Revenue has Been ...and Incentive Fee Earnings Power is Muted Despite Growth in Unrealized Growing with Shift Towards Direct- Carry... Oriented Strategies Unrealized Carried Interest vs Gross Incentive Fees (mm) AUM Subject to Incentive Fe
Slide 13: Growth in Sustainable and Impact Investments
Growth in Sustainable and Impact Investments10 $26bn Sustainable Investing AUM11 Energy Workforce Regionally Other Diverse Essential Social Transition / Standards / Targeted / Sustainable Managers Services Climate Labor Impact Inclusive Finance Investments $15.7 bn $6.4 bn $6.0 bn $2.3 bn $1.6 bn $0
Slide 14: Adjusted Earnings
Adjusted Earnings Fee-Related Earnings (mm) Adjusted EBITDA (mm) Adjusted Net Income (mm) 9% 9% 9% $103.2 $139.9 $162.2 $94.4 $128.5 $149.3 103.2 94.4 2022 2023 2022 2023 2022 2023 Longer-Term Trends 10% $162.2 47% $147.0 13% $139.9 $103.2 $91.0 $95.1 103.2 91.0 2020 2023 2020 2023 2020 2023 GCM GRO
Slide 15: Key 2023 and Long-Term Growth Drivers
Key 2023 and Long-Term Growth Drivers Key Long-Term Growth Drivers 1. 2. 3. 14 Scaling Core Capabilities Planting Seeds for Future Growth Improving Earnings Quality and Power Client Retention & Compound Capital Individual Investor & Insurance Business Shifting Towards Private Markets Approximately O
Slide 16: Supplemental Information
Supplemental Information GCM GROSVENOR | 16
Slide 17: Selected Private Markets Specialized Funds
Selected Private Markets Specialized Funds RECENTLY CLOSED FUNDS VINTAGE FUND NAME ASSET CLASS DESCRIPTION YEAR15 CLOSED SIZE (mm) Co-Investment Opportunities II Single point of entry to a diversified portfolio of middle Private Equity 2018 $539 (GCF II) market private equity co-investments Advance
Slide 18: Other Key Items
Other Key Items • In accordance with the firm's $115 million stock repurchase authorization, GCM Grosvenor repurchased $30 million of Class A common stock during the year ended December 31, 2023 ◦ $40 million remained in the approved share and warrant repurchase program as of December 31, 2023 ◦ The
Slide 19: GAAP Statements of Income
GAAP Statements of Income $000, EXCEPT PER SHARE AMOUNTS AND WHERE OTHERWISE NOTED THREE MONTHS ENDED TWELVE MONTHS ENDED DEC 31, 2022 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Revenues Management fees $ 91,587 $ 95,062 $ 367,242 $ 375,444 Incentive fees 7,203 20,019 75,167 64,903 Other operating incom
Slide 20: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures21 $000, except per share amounts and where otherwise noted THREE MONTHS ENDED TWELVE MONTHS ENDED ADJUSTED EBITDA DEC 31, 2022 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Revenues Private markets strategies1 $ 50,685 $ 55,061 $ 197,267 $ 214,338 Absolute return stra
Slide 21: GAAP Balance Sheets
GAAP Balance Sheets $000, except per share amounts and where otherwise noted DEC 31, 2022 DEC 31, 2023 Assets Cash and cash equivalents $ 85,163 $ 44,354 Management fees receivable 18,720 24,996 Incentive fees receivable 16,478 27,371 Due from related parties 13,119 13,581 Investments 223,970 240,20
Slide 22: Components of GAAP Expenses
Components of GAAP Expenses $000 THREE MONTHS ENDED TWELVE MONTHS ENDED DEC 31, 2022 SEP 30, 2023 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net22 $ 38,080 $ 38,027 $ 32,918 $ 158,875 $ 149,327 Cash-base
Slide 23: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics $000 THREE MONTHS ENDED TWELVE MONTHS ENDED NET INCENTIVE FEES ATTRIBUTED TO GCM GROSVENOR DEC 31, 2022 SEP 30, 2023 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Incentive fees: Performance fees $ 299 $ 661 $ 14,139 $ 2,623 $ 15,313 Carried interest 6,904 25,412 5,880 72
Slide 24: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics $000 THREE MONTHS ENDED TWELVE MONTHS ENDED ADJUSTED PRE-TAX INCOME & ADJUSTED NET INCOME DEC 31, 2022 SEP 30, 2023 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Net income attributable to GCM Grosvenor Inc. $ 4,390 $ 5,898 $ 3,258 $ 19,820 $ 12,774 Plus: Net income (loss
Slide 25: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics $000 THREE MONTHS ENDED TWELVE MONTHS ENDED ADJUSTED EBITDA DEC 31, 2022 SEP 30, 2023 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Adjusted Net Income $ 21,946 $ 28,427 $ 32,435 $ 94,366 $ 103,204 Plus: Adjusted income taxes2 6,626 9,075 11,260 30,127 33,853 Depreciation
Slide 26: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share $000, except per share amounts and where otherwise noted THREE MONTHS ENDED TWELVE MONTHS ENDED ADJUSTED NET INCOME PER SHARE DEC 31, 2022 SEP 30, 2023 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Adjusted Net Income $ 21,946 $ 28,427 $ 32,435 $ 94,366 $ 103
Slide 27: Change in FPAUM and AUM
Change in FPAUM and AUM Three Months Ended December 31, 2023 PRIVATE MARKET ABSOLUTE RETURN CONTRACTED $mm STRATEGIES STRATEGIES TOTAL FPAUM NOT YET FPAUM TOTAL AUM Fee-Paying AUM Beginning of Period (October 1, 2023) $ 39,554 $ 21,414 $ 60,968 $ 7,056 $ 75,974 Contributions from CNYFPAUM 617 20 637
Slide 28: Management Fee Detail
Management Fee Detail1 $000 THREE MONTHS ENDED TWELVE MONTHS ENDED MANAGEMENT FEES DEC 31, 2022 SEP 30, 2023 DEC 31, 2023 DEC 31, 2022 DEC 31, 2023 Private Markets Specialized Funds $ 19,616 $ 21,117 $ 20,971 $ 73,656 $ 81,460 Average Fee Rate28 0.78 % 0.79 % 0.77 % 0.79 % 0.80 % Customized Separate
Slide 29: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics Realized and Partially Realized Investments ($mm) CURRENT INVESTMENT INVESTEMNT STRATEGY COMMITMENTS CONTRIBUTIONS DISTRIBUTION PME IRR PME INDEX VALUE NET TVPI NET IRR Private Equity Primary Fund Investments30 $ 13,396 $ 14,652 $ 24,167 $ 2,742 1.84 13
Slide 30: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics All Investments All Investments ($($mm) million) CURRENT INVESTMENT INVESTEMNT STRATEGY COMMITMENTS CONTRIBUTIONS DISTRIBUTION PME IRR PME INDEX VALUE NET TVPI NET IRR Private Equity Primary Fund Investments30 $ 24,392 $ 22,956 $ 27,370 $ 10,253 1.64 12
Slide 31: Absolute Return Strategies Performance
Absolute Return Strategies Performance AS OF THREE MONTHS ANNUALIZED RETURNS PERIODS ENDED DEC 31, 2023 DEC 31, 2023 ENDED SINCE DEC 31, 2023 ONE YEAR THREE YEAR FIVE YEAR INCEPTION Assets Under Management (bn) Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $
Slide 32: Notes
Notes Data in the presentation is as of December 31, 2023 unless otherwise noted. 1. Excludes fund reimbursement revenue. 2. Reflects a corporate and blended statutory tax rate of 24.7% and 24.2% applied to Adjusted Pre-Tax Income for the years ended December 31, 2023 and 2022, respectively. The rat
Slide 33: Notes (Continued)
Notes (Continued) 24. Excludes immaterial impacts of non-cash carried interest compensation. s immaterial. 25. Investment income or loss is generally realized when the Company redeems all or a portion of its investment or when the Company receives or is due cash, such as a from dividends or distribu
Slide 34: 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 35: 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 36: Disclosures
Disclosures Non-GAAP Financial Measures The non-GAAP financial measures contained in this presentation are not GAAP measures of GCM Grosvenor’s financial performance or liquidity and should not be considered as alternatives to net income (loss) as a measure of financial performance or cash flows fro