Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q3 2021 Earnings Presentation
39 slides from Gcm Grosvenor's earnings presentation, Nov 10, 2021
Slide 1: 2021 Third Quarter Results Earnings Presentation
November 10, 2021 2021 Third 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: Business Update
Business Update
Slide 4: Third Quarter 2021 Results
4 Third Quarter 2021 Results $ million September 30, 2020 June 30, 2021 September 30, 2021 % Change vs 2Q 21 % Change vs 3Q 20 AUM $ 58,551 $ 66,900 $ 70,485 5 % 20 % FPAUM 49,890 55,000 56,618 3 % 13 % CNYFPAUM 6,639 7,027 7,921 13 % 19 % $ million Three Months Ended September 30, 2021 % Change vs
Slide 5: Continued Growth in Revenue, Earnings and Earnings Power
Continued Growth in Revenue, Earnings and Earnings Power • Total AUM growth of 20% over 3Q 2020 • Fee-Paying AUM growth of 13% over 3Q 2020 • Contracted Not Yet Fee-Paying AUM growth of 19% over 3Q 2020 • Fee-Related Revenue growth of 11% over 3Q 2020 and 10% over YTD 3Q 2020 • Fee-Related Earnings
Slide 6: Increased Earnings Power From Growing AUM
CNYFPAUM Fees Charged on Scheduled Ramp-in $2.6 0.3 1.5 0.8 Remainder of 2021 2022 2023+ $24.7 $24.4 $25.2 $25.6 $26.0 $26.6 24.0 23.6 24.1 24.4 24.9 25.5 0.1 0.2 0.2 0.1 0.1 0.10.6 0.6 0.9 1.1 1.0 1.0 2018 2019 2020 Q1 2021 Q2 2021 Q3 2021 FPAUM Contracted not yet FPAUM ("CNYFPAUM") Other1 1. Inclu
Slide 7: Growing Value of Incentive Fees and Investments
$182 $349 $410 $107 $247 $297$75 $102 $113 Firm Share of Unrealized Carried Interest Firm Share of Investments Q3 2020 Q2 2021 Q3 2021 Growing Value of Incentive Fees and Investments $ million $37 $42 $43 Q3 2020 Q2 2021 Q3 2021 16% Unrealized Carried Interest by Vintage Year3 $265 $183 $283 $66 $84
Slide 8: Absolute Return Strategies Has Stable Year over Year Results
Absolute Return Strategies Has Stable Year over Year Results $37 $43 Q3 2020 Q3 2021 16% Run-Rate Annual Performance Fees (mm)1 Growth in Earnings Power From Management Fees 8 Strong Performance + Incentive Fee Earnings Power 6.7% 15.2% 7.5% 7.1% YTD Ending 9/30/21 LTM Ending 9/30/21 3Yrs Ending 9/3
Slide 9: Financial Results
Financial Results
Slide 10: Strong Growth in Revenue
Adjusted Revenue1 101. Excludes fund reimbursement revenue of $2.2 million and $2.3 million for the three months ended September 30, 2020 and September 30, 2021, respectively, and $6.0 million and $7.2 million for the nine months ended September 30, 2020 and September 30, 2021, respectively. 16% $26
Slide 11: Strong Growth in Earnings
11 12%$33.6 $37.6 Q3 20 Q3 21 $25.6 $31.0 25.6 31.0 Q3 20 Q3 21 21% $20.5 $23.8 20.5 23.8 Q3 20 Q3 21 24% 38% $68.3 $83.6 68.3 83.6 Q3 YTD 20 Q3 YTD 21 $79.2 $98.5 79.2 98.5 Q3 YTD 20 Q3 YTD 21 $44.9 $62.0 44.9 62.0 Q3 YTD 20 Q3 YTD 21 22% 16% $ million Strong Growth in Earnings Adjusted Net Income
Slide 12: Year to Date 2021 and 2020 Fundraising
$ billion 12 $1.7 $1.8 $1.4 $2.1 $2.5 $1.5 $3.0 0.7 0.3 0.1 0.4 0.6 0.5 0.4 1.0 1.5 1.3 1.7 1.9 1.0 2.6 Private Markets Absolute Return Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 $7B of new capital raised in 2021 Year to Date 2021 and 2020 Fundraising Robust fundraising pipeline support
Slide 13: Key Cash, Investment and Debt Metrics; Summary of Ownership
13 • In accordance with the firm's $25 million stock repurchase authorization, GCM Grosvenor repurchased $6.9 million of Class A common stock and $0.4 million of warrants during the quarter Key Cash, Investment and Debt Metrics as of 9/30/2021 ($mm) Cash and Cash Equivalents1 $ 120 Investments2 113
Slide 14: Consolidated Results of Operations
14 Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2020 Sep 30, 2021 % Change Sep 30, 2020 Sep 30, 2021 % Change Revenues Management fees $ 78,269 $ 87,796 12 % $ 231,106 $ 256,015 11 % Incentive fees 21,774 29,178 34 % 38,048 79,619 109 % Other
Slide 15: Adjusted EBITDA and Fee-Related Revenue Reconciliation
151, 3-8. See Notes towards the end of the document. 2. Excludes fund reimbursement revenue of $2.2 million and $2.3 million for the three months ended September 30, 2020 and September 30, 2021, respectively, and $6.0 million and $7.2 million for the nine months ended September 30, 2020 and Septembe
Slide 16: About GCM Grosvenor
About GCM Grosvenor
Slide 17: Client Value Proposition and Business Momentum
Strong economic value proposition ◦ Fee savings and preferential terms ◦ Access to hard to access managers ◦ Proprietary deal flow Deeply embedded with our clients ◦ 75% of AUM in customized programs ◦ Cornerstone of clients’ alternative programs ◦ Clients leverage our full investment and operationa
Slide 18: Diversified, Long-Tenured Client Base
18Note: AUM as of September 30, 2021. Management fees for the twelve months ended September 30, 2021. Strong Value Proposition Drives Diversified, Long-Tenured Client Base 42% 14% 8% 16% 6% 7% 6% 1% Our client base is institutional and stable % of AUM Our client base is global % of AUM Our client ba
Slide 19: ESG and Impact Investing are Core Values
ESG and Impact Investments AUM ($bn) Note: Total invested/committed and category breakdown includes Absolute Return Strategies data as of September 30, 2021, and Private Markets data as of June 30, 2021; Some investments are counted in more than one ESG category. 1-2. See Notes towards the end of th
Slide 20: Illustrative Client Economic Value Proposition: Absolute Return Strategies
20 Illustrative Client Economic Value Proposition: Absolute Return Strategies Example: $300M Fee Paying; $300M Non-Fee Paying. Assuming 0% gross return. 1 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%. 2 Fee savin
Slide 21: Illustrative Client Economic Value Proposition: Private Markets
21 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 22: Appendix
Appendix
Slide 23: Condensed Consolidated Balance Sheet
23 $000 Dec 31, 2020 Sep 30, 2021 Assets Cash and cash equivalents $ 198,146 $ 119,981 Management fees receivable 14,524 16,979 Incentive fees receivable 69,424 28,274 Due from related parties 11,326 9,435 Investments 166,273 203,993 Premises and equipment, net 7,870 5,629 Intangible assets, net 8,5
Slide 24: Components of GAAP Employee Compensation and Expenses
24 Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net1 $ 39,373 $ 40,255 $ 39,200 $ 119,727 $ 120,647 Cash-based incentive fee related comp
Slide 25: Net Incentive Fees Attributable to GCM Grosvenor
25 Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 884 $ 2,891 $ 316 $ 1,621 $ 9,320 Carried interest 20,890 29,336 28,862 36,427 70,299 Less incentive fees
Slide 26: Adjusted Pre-Tax Income and Adjusted Net Income
26 Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ — $ 656 $ 4,056 $ — $ 7,259 Plus: Net income (loss) attributable to noncontrolling interests in
Slide 27: Adjusted EBITDA and Fee-Related Earnings Reconciliation
27 Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Adjusted EBITDA Adjusted Net Income $ 20,464 $ 19,306 $ 23,836 $ 44,906 $ 62,048 Plus: Adjusted income taxes1 6,822 6,435 7,945 14,970 20,682 Depreciation expense 540 407 408 1,772 1,288 Int
Slide 28: Adjusted Net Income Per Share
28 Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2020 1 Sep 30, 2021 Sep 30, 2020 1 Sep 30, 2021 Adjusted Net Income Per Share Adjusted Net Income $ 20,464 $ 23,836 $ 44,906 $ 62,048 Weighted-average shares of Class A common stock outstanding -
Slide 29: Fee-Paying AUM Rollforward
29 $mm Private Markets Strategies Absolute Return Strategies Total FPAUM Contracted Not Yet FPAUM Total AUM Fee-Paying AUM Beginning of Period (July 1, 2021) $ 30,112 $ 24,888 $ 55,000 $ 7,027 $ 66,900 Contributions from CNYFPAUM 526 16 542 Contributions from New Capital Raised 921 460 1,381 Withdra
Slide 30: Management Fees and Average Fee Rates
30 Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Management Fees Private Markets Specialized Funds $ 11,911 $ 14,428 $ 15,265 $ 34,049 $ 42,662 Average Fee Rate2 0.72 % 0.75 % 0.75 % 0.73 % 0.74 % Customized Separate Accounts 26,677 27,932
Slide 31: Private Markets Strategy Investment Performance
31 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments1 $ 10,946 $ 12,022 $ 19,703 $ 2,467 1.84 14.2 % 9.1 % S&P 500 Secondaries Investments2 339 232 264 70 1.44 16.9 % 10.4 % S&P 500 Co-Inves
Slide 32: Private Markets Strategy Investment Performance, Since Inception
32 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments1 $ 21,483 $ 19,199 $ 23,031 $ 9,154 1.68 13.1 % 11.0 % S&P 500 Secondary Investments2 1,448 963 438 1,002 1.49 20.1 % 16.2 % S&P 500 Co-I
Slide 33: Absolute Return Strategies Performance
33 Annualized Returns Periods Ended Sept 30, 2021 Assets Under Management as of Sept 30, 2021 (Bn) Year to Date through Sept 30, 2021 One Year Three Year Five Year Since Inception Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $ 26.6 6.7 % 6.1 % 15.2 % 14.2 %
Slide 34: Notes on Growing Value of Incentive Fees and Investments
34 Notes on Growing Value of Incentive Fees and Investments (Page 7) 1. Represents firm share of Net Asset Value as of September 30, 2021. For comparison purposes, presented as if the Mosaic repurchase occurred as of the earliest period presented. 2. Illustrative annual earnings power from unrealize
Slide 35: Notes (continued)
35 Notes (continued) Notes on Only Alternative Asset Solutions Provider Covering the Full Range of Strategies (Page 17) 1. See Only Alternative Asset Solutions Provider Covering the Full Range of Strategies slide (Page 17). 2. Represents top 25 clients by AUM. 3. From December 31, 2017 through Septe
Slide 36: Notes on Reconciliation to Non-GAAP Metrics
36 Notes on Reconciliation to Non-GAAP Metrics (Page 27) 1. Represents corporate income taxes at a blended effective tax rate of 21% and an estimated combined state, local and foreign income tax rate net of federal benefits of 4%. As we were not subject to U.S. federal and state income taxes prior t
Slide 37: Non-GAAP Measure Definitions
37 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 attributable to GCMH, excluding (b) provision (benefit) income taxes,
Slide 38: Definitions of AUM Terms
38 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 39: Forward-Looking Statements
39 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