Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — SPAC Merger (August 2020)
45 slides from Gcm Grosvenor's SPAC merger presentation, Aug 3, 2020
Slide 1: CF Finance Acquisition Corporation Investor Presentation
August 3, 2020 CF Finance Acquisition Corporation Investor Presentation
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements This communication contains certain forward - looking statements within the meaning of the federal securities laws with respect to the proposed transaction between Grosvenor Capital Management Holdings, LLLP (“GCM Grosvenor”) and CF Acquisition Corp. (“CFA C” ), includ
Slide 3: Presenters
3 Michael Sacks Chairman and CEO GCM Grosvenor Kevin Buchheit Executive Director GCM Grosvenor Howard Lutnick Chairman and CEO Cantor Fitzgerald Jonathan Levin President GCM Grosvenor Presenters Michael Klein Founder and CEO M . Klein & Company ▪ Mr . Sacks joined GCM Grosvenor in 1990 and became CE
Slide 4: Cantor and M. Klein & Company sponsor overview
4 Cantor is the largest broker - dealer private partnership on Wall Street with over $300 trillion of financial transactions annually covering more than 5,000 fixed income and equities clients; Cantor is 1 of 24 Primary Dealers of U.S. Treasuries Cantor’s Financial and Real Estate Services businesse
Slide 5: Transaction overview
5 ▪ CF Finance Acquisition Corp. ("CFAC") is purchasing interests of GCM Grosvenor at a pre - money valuation of $1,500 million 1 ▪ GCM Grosvenor stockholders will retain $1,381 million in equity, resulting in pro forma economic ownership of 71.4% ▪ $150 million associated with selling shareholders,
Slide 6: Transaction Rationale
6 External partner since 1998 Transition external partner Maintain management ownership at historic levels Improve stability and increase opportunity Embedded growth supports business combination Transaction Rationale Strengthen balance sheet
Slide 7: Largest Independent Open Architecture Alternative Asset Platform
7 ¹ AUM as of March 31 , 2020 for private markets strategies and as of June 30 , 2020 for absolute return strategies . 2 As of June 30 , 2020 . ▪ Throughout our 50 year history, GCM Grosvenor has been a leading alternative investments solutions provider ▪ Invests capital through customized separate
Slide 8: Culture is a Defensible Asset
8 Culture is a Defensible Asset GCM Grosvenor’s culture is reflected in the stability of our internal team and external relationships Culture of compliance – tone at the top Culture of service – we succeed when our clients succeed Culture of excellence – people and performance Culture of diversity ,
Slide 9: Key Investment Highlights
Key Investment Highlights Attractive public company investment opportunity Stable and growing relationships with diversified and long tenured client base Deep bench of talent and strong corporate culture Identified opportunities for further incremental growth Embedded growth in revenue and profitabi
Slide 10: Consistent and Stable Business with Strong Embedded Growth
22.7 24.0 23.6 22.4 24.7 27.0 21.4 24.9 26.5 28.7 34.2 38.0 $50.1 $53.8 $57.7 $58.8 $66.6 $72.7 2017 2018 2019 2020E 2021E 2022E 10 Absolute return strategies FPAUM¹ Private markets FPAUM¹ Contracted but not yet fee - paying and other² AUM growth AUM ($bn ) ¹ Fee - paying assets under management . ²
Slide 11: Stable Absolute Return Strategies Positioned for Growth
Stable Absolute Return Strategies Positioned for Growth Average fee rate (actual/projected) 0.86% 0.78% 0.74% 0.65% 0.74% 0.75% Run rate fee rate at 8 % gross returns 0.88% 0.85% 0.79% 0.76% 0.77% 0.78% Customized separate accounts FPAUM Specialized funds FPAUM Funds raised but not yet fee - paying
Slide 12: Private Markets Activities Growing Strongly
17.1 19.1 20.3 21.7 24.1 26.8 4.3 5.8 6.2 7.0 10.1 11.2 $21.4 $24.9 $26.5 $28.7 $34.2 $38.1 127 132 151 155 195 215 5 2 8 1 4 5 132 133 159 156 199 220 2017 2018 2019 2020E 2021E 2022E 12 Customized separate accounts FPAUM Specialized funds FPAUM Management fees 1 Blended mgmt. fee rate 0.61% 0.57%
Slide 13: Growth of Specialized Funds
$4.3 $5.8 $6.2 $7.0 $10.1 $11.2 $32 $37 $51 $52 $82 $95 2017 2018 2019 2020E 2021E 2022E 13 Growth of Specialized Funds Focused on Private Market Investment Activities ▪ Opportunity to access alternative asset classes in a strategy - specific or broadly diversified way ▪ Multi - year investment peri
Slide 14: Run-rate revenue of 2020+ funds and fund launches
14 Note : Year shown reflects the year of initial fund launch ; Except for the GCF and CIS fund series and the SPAC Sponsorship, all other funds pay catch - up fees going back to the date of launch . 1 SPAC sponsorship activities listed as value of founder shares rather than revenue potential . 2 LI
Slide 15: ESG and responsible business practices
15 ¹ We received an A+ rating from PRI for our approach to strategy and governance, and an A+ rating for ESG integration in private equity manager selection, approval, and monitoring . For the full GCM Grosvenor PRI Transparency Report and assessment methodology, visit the Principles for Responsible
Slide 16: ESG and Impact Investments Drive AUM Growth
16 $8.5 $9.0 $11.1 2017 2018 2019 ESG and Impact Investments AUM ($bn) Clean Energy Invested / Committed: $2.3bn Labor Impact Invested / Committed: $0.8bn Regionally Targeted Invested / Committed: $3.4bn 14% CAGR $15bn committed or invested in ESG - related themes since 2002; ~$4bn has been realized
Slide 17: Business Highlights
Business Highlights
Slide 18: Deep Bench of Talent, Strong Corporate Culture
18 Note : Data as of June 30 , 2020 ; Individuals with dual responsibilities are counted only once . ¹ Includes research and portfolio management, operational due diligence, risk management, and labor and government strategy . GCM Grosvenor is dedicated to the broader community and fostering a diver
Slide 19: Deep, Tenured and Diversified Client Relationships
19 Note : AUM as of March 31 , 2020 for private markets strategies and as of June 30 , 2020 for absolute return strategies . Deep, Tenured and Diversified Client Relationships Public Pensions Sovereign Entities Union Pensions Corporate Pensions Financial Institutions Other Institutional High Net Wor
Slide 20: Customized Separate Accounts vs Specialized Funds
Advantages to GCM Grosvenor $ 13bn ( 23% of total) $ 44bn ( 77% of total) AUM¹ 20 Customized Separate Accounts Specialized Funds Contract ▪ Contract terms vary, including finite life and evergreen programs ▪ Finite life with 8 – 15 year terms or evergreen Characteristics ▪ Typically utilized by larg
Slide 21: Well Positioned to Serve and Grow Global Client Base
21 Long term fund relationship with embedded growth Long - term client relationships Expanding client relationships New client relationships Growing private markets allocations ▪ 65%+ of private markets AUM has a remaining tenor of 7+ years ▪ Significant embedded growth opportunity from raising the
Slide 22: Secular Tailwinds Driving Industry Growth
$3 $5 $6 $10 $14 $21 2004 2007 2012 2016 2020E 2025E 22 % Total alternative AUM share of global AUM Source : PricewaterhouseCoopers, Asset & Wealth Management Revolution : Embracing Exponential Change, 2017 . 9% % CAGR Continued growth in global institutional wealth 12 % 4% 29% Projected growth in g
Slide 23: Embedded growth and revenue sustainability
High management fee centricity ▪ Management fees constitute ~90% of total fees attributable to GCM Grosvenor from 2017 – 2022E Revenue sustainability ▪ 65%+ of private markets AUM has a remaining tenor of 7+ years ▪ Re - up capital was more than 50% of total customized accounts capital raised over t
Slide 24: Management fee growth tailwinds
▪ Management fee growth tailwinds from upcoming specialized fund fundraises and all time high contractual AUM that has not yet beg un paying its management fees ▪ Private markets specialized fund growth will be driven by the natural progression of successor funds for our established spec ial ized fu
Slide 25: Maturing and Growing Carried Interest
< 5 years 19% 5 – 8 years 33% 8 – 12 years 29% > 12 years 19% Unrealized carry by age² 25 Note: A material portion of this carried interest is subject to non - controlling interest or has been awarded as compensation. ¹ Represents consolidated view, excluding all NCI and compensation related awards
Slide 26: Realization of carried interest
26 ¹ "Carry dollars at work " defined as aggregate commitments to the relevant GCM Grosvenor Fund multiplied by the percentage of carried interest provided for in the governing documents of the relevant GCM Grosvenor Fund . Realization of current net accrued carried interest Current net accrued carr
Slide 27: Run Rate Annual Performance Fees
$21.1 $29.1 2017 Run rate¹ 27 ▪ The amount of firm AUM eligible for an annual performance fee has increased 26% since 2017 ▪ As a result , for an equivalent level of performance, annual performance fees would be materially higher today compared to historical results ▪ Annual performance fees at an 8
Slide 28: Summary of Embedded Growth
Summary of Embedded Growth From Current Funds and Business Momentum ~$95mm i n management fee growth $58mm ¹ + i n incentive fees growth $153mm ¹ + i n total fee growth From current contracted funds ~$27mm ~$5.4bn of contracted but not yet Fee Paying AUM (see p.24) ~$50mm Incremental r un rate carry
Slide 29: Multiple Avenues of Upside Not Included in the Projections
29 New specialized funds (Equity Opportunities Fund, Real Estate, Credit, ESG) Expanded distribution in certain markets New distribution channels Strategic, accretive and synergistic investment opportunities Monetization of data and analytics capabilities Multiple Avenues of Upside Not Included in t
Slide 30: Valuation versus peers
30 Source : FactSet, research reports, company filings . Note : Market data as of July 31 , 2020 ; Please refer to "Use of Non - GAAP Financial Measures" for additional information regarding the non - GAAP measures included in this presentation . ¹ Reflects adjusted pre - tax income for GCM Grosveno
Slide 31: In Summary: Key Investment Highlights
In Summary: Key Investment Highlights Attractive public company investment opportunity 31 We are well positioned to continue to benefit from the secular trends underpinning the alternative asset management industry Stable and growing relationships with diversified and long tenured client base Deep b
Slide 32: Financial Highlights
Financial Highlights
Slide 33: Projection assumptions
▪ Private markets strategies: › Specialized funds fundraising based on identified product pipeline › Customized separate accounts revenue growth driven by contracted capital turning to fee - paying AUM and fundraising in line with historical levels ▪ Absolute return strategies: › Fundraising in 2020
Slide 34: Summary Non-GAAP Key Metrics
34 $mm, unless otherwise mentioned Summary Non - GAAP Key Metrics Note : Please refer to "Use of Non - GAAP Financial Measures" for additional information regarding the non - GAAP measures included in this presentation . 1 Excludes fund expense reimbursement revenue . 2 The total fees attributable t
Slide 35: Appendix I
Appendix I
Slide 36: Pro Forma Transaction Capitalization
36 $mm, unless otherwise mentioned Pro Forma Transaction Capitalization ¹ Comprised of $ 43 mm of net debt plus $ 177 mm net call price for Mosaic option . ² Enterprise value calculated as pro f orma m arket c apitalization plus $ 43 mm of net d ebt plus $ 177 mm of Mosaic call price . 3 Includes $
Slide 37: Comparison of GCM Grosvenor to Publicly Traded Peers
37 Source : Company filings . ¹ Reflects net revenue, calculated as the sum of management fee - related revenue (including admin fees) and net incentive fees . ² For Blackstone, Apollo, and Carlyle, financial information is as of June 30 , 2020 . 92% 94% 79% 83% 87% 86% 74% 89% 8% 6% 21% 17% 13% 14%
Slide 38: Publicly Traded Comparable Companies
13.9x 27.1x 22.3x 16.0x 15.6x 15.0x 14.7x 11.2x 24.7x 38 2021 P/E 2022 P/E 5.5x 16.8x 11.9x 11.0x 10.9x 10.4x 6.3x 5.2x 13.9x 25.1x 23.7x 15.9x 15.3x 13.6x 13.0x 2021E EV / EBITDA 17.7x 32.0x 26.4x 18.4x 17.9x 17.9x 17.6x 13.8x 9.2x 11.0x 11.8x 12.5x 13.1x 20.3x 11.1x 2021E EV / revenue¹ 2022E reven
Slide 39: Publicly Traded Comparable Companies (Cont'd)
39 Public trading comparables Publicly Traded Comparable Companies (Cont’d) Source : FactSet, company filings, research reports . Note : Market data as of July 31 , 2020 ; Partners Group market data converted into USD as of market date and financial data as of filing date . ¹ Enterprise value includ
Slide 40: Mosaic option payments and fund investments
1 Based on cash flow up to the relevant date, GCM Grosvenor may be required to make payments up to a maximum amount of $ 4 . 9 mm at 12 / 31 / 20 , $ 7 . 5 mm at 12 / 31 / 21 , and $ 7 . 5 mm at 12 / 31 / 22 ; all such payments reduce the option price dollar for dollar . GCM Grosvenor may also be re
Slide 41: Mosaic Unwind Impact
41 $mm, unless otherwise noted Mosaic Unwind Impact Note : Please refer to "Use of Non - GAAP Financial Measures" for additional information regarding the non - GAAP measures included in this presentation . 1 Mosaic option is exercisable by GCM Grosvenor at any time . Such call price is calculated a
Slide 42: Pro Forma Structure
42 Pro Forma Structure ¹ Residual interest is entitled to distributions when third party investor’s preferred return hurdle is reached . Grosvenor Capital Management Holdings, LLLP Mosaic Acquisitions 2020, L.P. Common Units and Warrants G P PubCo HoldCo Public Stockholders Sponsor PIPE Investors Cl
Slide 43: Appendix II
Appendix II
Slide 44: Reconciliation to Non-GAAP Metrics
44 Reconciliation to Non - GAAP Metrics Actuals Projections 2017 2018 2019 2020 E 2021E 2022E Adjusted pre - tax income and adjusted net income Net income attributable to GCM Grosvenor $53.0 $39.2 $46.8 Plus: Income taxes 1.3 1.4 2.3 Change in fair value of derivatives 1.3 1.3 5.4 Amortization of in
Slide 45: Reconciliation to Non-GAAP Metrics (cont'd)
45 Reconciliation to Non - GAAP Metrics (cont’d) Actuals Projections 2017 2018 2019 2020E 2021E 2022E Net incentive fees attributable to GCM Grosvenor Incentive fees $59.6 $57.1 $84.2 Less: carried interest expense attributable to employees and former employees (24.7) (27.9) (39.6) Less: carried int