Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q2 2022 Earnings Presentation
40 slides from Gcm Grosvenor's earnings presentation, 2022
Slide 1: 2022 Second Quarter Results Earnings Presentation
2022 Second Quarter 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: Second Quarter 2022 Results
Second Quarter 2022 Results • Second quarter 2022 fundraising of $2.1 billion • Fee-Related Revenue growth driven by Private Markets management fee growth of 19% over Q2 20211 • GCM Grosvenor's Board of Directors approved a $0.10 per share dividend payable on September 15, 2022 to shareholders on re
Slide 4: Fundraising: Year-to-Date Through Q2 2022
Fundraising: Year-to-Date Through Q2 2022 $ billion Closed in Q2 22 Closed through Forecasted Next / First Fund Strategy Final Close ($mm) Q2 22 ($mm) Closing $2.1 billion $3.4 billion GSF III PE Secondaries $190 $866 4Q 2022 Late 2022 Q2 2022 Capital Raised YTD Capital Raised CIS III Diversified In
Slide 5: Second Quarter 2022 Fundraising
Second Quarter 2022 Fundraising $ billion $2.1 Absolute Return Strategies, 4% Specialized Opportunistic, Funds, 21% 17% Infrastructure, By By 50% Strategy Structure Customized Private Equity, Separate 29% Accounts, 79% 2.0 Other, 1% Insurance, 20% APAC, 33% Retail/Non- Institutional, 5% By By Pensio
Slide 6: Year-to-Date 2022 Fundraising
Year-to-Date 2022 Fundraising $ billion Absolute Return Real Estate, 2% Strategies, 10% Specialized $3.4 Opportunistic, Funds, 22% 11% By By Strategy Structure Infrastructure, 52% Customized Private Equity, Separate 25% Accounts, 78% 3.1 Other, 1% Financial Insurance, 13% Institutions, 3% APAC, 41%
Slide 7: ESG and Impact Remains a Core Driver of AUM Growth
5 ESG and Impact Remains a Core Driver of AUM Growth ESG and Impact Investments AUM ($bn) ESG and Impact AUM by Strategy6 Diverse Managers $19.5 $12.3 billion 35% Regionally Targeted $2.2 billion $14.4 Clean Energy $1.6 billion Labor Impact $1.1 billion Other ESG and Impact $5.6 billion Q2 2021 Q2 2
Slide 8: Strong Q2 2022 Growth
Strong Q2 2022 Growth Q2 2022 over Q2 2021, $ million Fee-Related Revenue7 Fee-Related Earnings 8% $91.5 $84.9 1.0 1.9 (1)% 40.1 40.7 19% $32.6 32.6 $27.5 27.5 19% 50.4 42.3 Q2 21 Q2 22 Q2 21 Q2 22 Private Markets Absolute Return Strategies Administrative fees and other operating income Adjusted EBI
Slide 9: Strong YTD 2022 Growth
Strong YTD 2022 Growth YTD 2022 over YTD 2021, $ million Fee-Related Revenue8 Fee-Related Earnings 9% $182.1 $167.6 2.1 4.3 22% $64.3 3% 82.8 64.3 80.6 $52.6 52.6 82.7 18% 97.2 Q2 YTD 21 Q2 YTD 22 Q2 YTD 21 Q2 YTD 22 Private Markets Absolute Return Strategies Administrative fees and other operating
Slide 10: Assets Under Management
Assets Under Management $ billion CNYFPAUM Fees Total AUM Charged on Scheduled Ramp-in 0.8 Fees Charged 0.6 $1.6 on Invested 0.2 6% Capital $5.1 $71.2 Remainder 2023 2024+ of 2022 $66.9 7.0 4.9 Private Markets AUM Absolute Return Strategies AUM 6.7 7.0 16% $47.6 6.2 (9)% $40.9 $26.0 1.0 3.9 6.6 0.1
Slide 11: Private Markets Experiencing Strong Growth and Mix Shift
Private Markets Experiencing Strong Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... ...And Private Markets Management Fee Earnings Power Has Grown Private Markets FPAUM (bn) Private Markets Management Fees (mm) 13% 18% CAGR CAGR $50.4 $34.8 $42.4 $30.1 $27.1 $36.5 Q2 2020 Q2 2021 Q
Slide 12: Highly Diversified Incentive Fee Opportunity
Highly Diversified Incentive Fee Opportunity $ million • Annual Performance Fees: $31 million annual run-rate performance fee opportunity13, from 52 programs • Carried Interest: 137 programs in unrealized carried interest Firm Share of Carried Interest10,12 Unrealized Carried Interest by Vintage Yea
Slide 13: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers Scale Core Capabilities New Channel Expansion17 High-Growth Strategies Grow with Existing Clients Non-institutional / Retail Private Markets Secondaries / Co-Investments / Direct 31% LTM Flows 84%+ 50%+ AUM 10% > 4% $22b Of clients have added Of top client
Slide 14: Other Key Items
Other Key Items • In accordance with the firm's $65 million stock repurchase authorization, GCM Grosvenor repurchased $10.0 million of Class A common stock and $1.9 million of warrants during the quarter ◦ $40.3 million remained in the approved share and warrant repurchase program as of June 30, 202
Slide 15: GAAP Statements of Income
GAAP Statements of Income Three Months Ended Six Months Ended $000, except per share amounts and where otherwise noted Jun 30, 2021 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Revenues Management fees $ 85,594 $ 92,830 $ 168,219 $ 184,940 Incentive fees 32,227 10,505 50,441 22,497 Other operating income
Slide 16: Summary of Non-GAAP Financial Measures
23 Summary of Non-GAAP Financial Measures Three Months Ended Six Months Ended $000, except per share amounts and where otherwise noted Jun 30, 2021 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Adjusted EBITDA Revenues Private markets strategies $ 42,360 $ 50,394 $ 82,733 $ 97,235 Absolute return strategie
Slide 17: Appendix
Appendix
Slide 18: 50+ Years of Alternative Asset Management Investing
50+ Years of Alternative Asset Management Investing 1971 74% 517 164 First year of investing of AUM in customized separate accounts Employees30 Investment professionals Real Estate Absolute $4.2bn Return Primary $23.6bn Private Alternative Credit Direct 71.2bn Co- Invest Equity $13.4bn Assets under
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 $71bn ESG and Private Equity Infrastructure Real Estate Absolute Return Credit Assets under Strategies Impact Management31 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 Financial 5% of our management fees Institutions Rest o
Slide 22: 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. Fee Paying33 Non-Fee Paying ◦ GCM Grosvenor offers large $300 million $300 million Absolute Return Strategies clients a ‘hybrid model’ Management fee
Slide 23: Illustrative Client Economic Value Proposition: Private Markets
Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. Direct Primary + GCM Grosvenor-Managed Co-Investment Program GCM Grosvenor Direct Primary Only Direct Primaries Managed Co-Investment Program Program Program $1.0 billion $650 million
Slide 24: Supplemental Information
Supplemental Information
Slide 25: GAAP Balance Sheets
GAAP Balance Sheets $000 Dec 31, 2021 Jun 30, 2022 Assets Cash and cash equivalents $ 96,185 $ 78,483 Management fees receivable 21,693 18,291 Incentive fees receivable 91,601 11,936 Due from related parties 11,777 10,634 Investments 226,345 222,957 Premises and equipment, net 5,411 5,266 Lease righ
Slide 26: Components of GAAP Expenses
Components of GAAP Expenses Three Months Ended Six Months Ended $000 Jun 30, 2021 Mar 31, 2022 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net36 $ 40,255 $ 40,863 $ 40,520 $ 81,447 $ 81,383 Cash-based inc
Slide 27: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Six Months Ended $000 Jun 30, 2021 Mar 31, 2022 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 2,891 $ 1,001 $ 317 $ 9,004 $ 1,318 Carried interest 29,336 10,991 10,188 4
Slide 28: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Six Months Ended $000 Jun 30, 2021 Mar 31, 2022 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ 656 $ 4,726 $ 7,605 $ 3,203 $ 12,331 Plus: Net income (loss) attr
Slide 29: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Six Months Ended $000 Jun 30, 2021 Mar 31, 2022 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Adjusted EBITDA Adjusted Net Income $ 19,306 $ 23,770 $ 22,083 $ 38,212 $ 45,853 Plus: Adjusted income taxes29 6,435 7,714 7,166 12,737 14,880 Depreciation exp
Slide 30: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share Three Months Ended Six Months Ended $000, except per share amounts and where otherwise noted Jun 30, 2021 March 31, 2022 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Adjusted Net Income Per Share Adjusted Net Income $ 19,306 $ 23,770 $ 22,083 $ 38,212 $ 45,8
Slide 31: Quarterly Change in FPAUM and AUM
Quarterly Change in FPAUM and AUM Three Months Ended June 30, 2022 Private Markets Absolute Return Contracted Not Yet $mm Strategies Strategies Total FPAUM FPAUM Total AUM Fee-Paying AUM Beginning of Period (April 1, 2022) $ 33,847 $ 24,012 $ 57,859 $ 6,545 $ 71,338 Contributions from CNYFPAUM 634 8
Slide 32: Management Fee Detail
39 Management Fee Detail Three Months Ended Six Months Ended $000 Jun 30, 2021 Mar 31, 2022 Jun 30, 2022 Jun 30, 2021 Jun 30, 2022 Management Fees Private Markets Specialized Funds $ 14,428 $ 17,088 $ 19,282 $ 27,398 $ 36,371 Average Fee Rate40 0.75 % 0.76 % 0.79 % 0.74 % 0.77 % Customized Separate
Slide 33: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics Realized and Partially Realized Investments ($ billion) Investment Investment Strategy Commitments Contributions Distributions Current Value PME IRR PME Index Net TVPI Net IRR Private Equity Primary Fund Investments42 $ 12,271 $ 13,361 $ 22,055 $ 2,972
Slide 34: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics All Investments ($ billion) Investment Investment Strategy Commitments Contributions Distributions Current Value PME IRR PME Index Net TVPI Net IRR Private Equity Primary Fund Investments42 $ 22,758 $ 20,648 $ 25,341 $ 9,626 1.69 13.2 % 11.0 % S&P 500 S
Slide 35: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended June 30, 2022 Three Months Ended Year to Date One Year Three Year Five Year Since Inception June 30, 2022 Assets Under Management as of Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net June 30, 2022 (Bn) Absolute Retu
Slide 36: Notes
Notes 5. AUM related to certain ESG and Impact investments includes mark-to-market changes for funds that charge management fees based on commitments. Such increases in AUM do not increase FPAUM or revenue. The data regarding ESG themes presented above and otherwise contained herein is based on the
Slide 37: Notes (continued)
Notes (continued) 30. Employee data as of July 1, 2022. Individuals with dual responsibilities are counted only once. 31. AUM as of June 30, 2022 36. Excludes severance expenses of $0.8 million, $0.5 million and $0.3 million for the three months ended June 30, 2021, March 31, 2022 and June 30, 2022,
Slide 38: 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 39: 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) 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 base
Slide 40: 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