Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q3 2023 Earnings Presentation
38 slides from Gcm Grosvenor's earnings presentation, Nov 8, 2023
Slide 1: 2023 Third Quarter Results Earnings Presentation
2023 Third Quarter Results Earnings Presentation
Slide 2: GCM Grosvenor Reports Third Quarter 2023 Results
GCM Grosvenor Reports Third Quarter 2023 Results CHICAGO, November 8, 2023 – GCM Grosvenor (Nasdaq: GCMG), a leading global alternative asset management solutions provider, today reported results for the third quarter ended September 30, 2023. “The breadth and Dividend GCM Grosvenor's Board of Direc
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: Third Quarter 2023 Results
Third Quarter 2023 Results Third Quarter 2023 Results • Third quarter GAAP Net Income attributable to GCM Grosvenor Inc. increased 90% and 22% over prior year and prior quarter, respectively • Third quarter Fee-Related Earnings increased 16% and 11% over prior year and prior quarter, respectively •
Slide 5: 52 Years of Alternative Asset Management Investing
52 Years of Alternative Asset Management Investing 1971 73% 538 179 First year in business of AUM in customized Employees3 Investment professionals separate accounts Real Estate Absolute Return $5.8bn $22.4bn DIRECT SEEDING/ PRIMARY STAKES Alternative Credit $76bn Private Equity $12.5bn AUM4 $29.4bn
Slide 6: Growth in Key Business Drivers Since Going Public
Growth in Key Business Drivers Since Going Public December 31, 2020 September 30, 2023 Growing Earnings Power $62bn $76bn AUM Private Markets Growing as a Percentage 54% 65% Private Markets % of FPAUM Shifting Towards Direct- Oriented Strategies 39% 49% Direct-Oriented Strategies % of Private Market
Slide 7: Investors Continue to Grow Their Alternative Allocations
Investors Continue to Grow Their Alternative Allocations The Majority of Investors Plan to Maintain or Increase Target Alternative Investments AUM ($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
Slide 8: Growing and Diversifying AUM and Earnings Power
Growing and Diversifying AUM and Earnings Power AUM by Strategy (bn) 8% CAGR $76.0 $72.1 $73.7 10% $61.9 Private Equity $29.4 CAGR $26.2 $29.1 $22.8 33% 15% Private Markets $9.1 $13.3 Infrastructure CAGR $11.1 $6.0 CAGR $4.0 $3.2 $5.5 $5.8 24% Real Estate $26.6 CAGR $25.2 $22.9 $22.4 (4)% $4.7 $6.2
Slide 9: Diversified Fundraising Drives Stability & Growth
Diversified Fundraising Drives Stability & Growth Diversified by Channel Diversified by Geography 54% Pensions 18% Corporation 10% Government/Sovereign Entity 49% Americas LTM LTM 6% Retail / Non-Institutional 30% EMEA Fundraising Fundraising 7% Financial Institutions 21% APAC 4% Insurance 1% Other
Slide 10: Client Growth and Mix-Shift Driving Fundraising
Client Growth and Mix-Shift Driving Fundraising Last three years of fundraising 23% 1. Expanding Our Existing Existing 80% Investor Client Relationships Fundraising6 Provides Fundraising 77% Stability 20% Cross Sell Re-up Existing Investor New Investor 2. Double-Mix Shift Private 41% Towards Private
Slide 11: Consistently Growing Private Markets Business
Consistently Growing Private Markets Business 55% to 65% Q3 2021 Private Markets Q3 2023 Private Markets % of Total FPAUM % of Total FPAUM Private Markets Management Fees7 (mm) 13% CAGR $52.8 $53.4 $51.8 $48.8 $49.1 $48.1 $45.8 $44.7 $41.9 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Year-o
Slide 12: 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 136 programs with unrealized carried interest (mm) Unrealized Carried Interest by Vintage Year (mm)8 44% $458 CAGR in Firm Share of Car
Slide 13: Significant Value From Absolute Return Strategies
Significant Value From Absolute Return Strategies Significant $148mm $24mm Revenue LTM Absolute Return Run-Rate Annual Generation Strategies Management Fees Performance Fees9 Broad Strategic Benefits Sourcing and Data Engine Loyal Client Base With Private Markets Cross Sell Opportunities 1750+ 140+
Slide 14: ESG and Impact Are a Core Driver of AUM Growth
ESG and Impact Are a Core Driver of AUM Growth13 ESG and Impact AUM by Strategy14 Diverse Managers $15.4 billion Essential Social Services $5.8 billion $25bn Clean Energy $4.8 billion ESG and Impact Investments AUM Workforce Standards / Labor Impact $2.1 billion Regionally Targetted / Inclusive Fina
Slide 15: Fee-Related Revenue
Fee-Related Revenue Private Markets Absolute Return Strategies Fee Related Revenue (mm)1 Management Fees (mm)1 Management Fees (mm)1 4% $88.6 $92.0 10% $54.5 (5)% $49.3 $38.3 $36.4 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Longer-Term Trends 18% $92.0 $77.8 41% (3)% $54.5 $38.6 $37.5 $36.4 Q3 20 Q3 23 Q3
Slide 16: Adjusted Earnings
Adjusted Earnings Fee-Related Earnings (mm) Adjusted EBITDA (mm) Adjusted Net Income (mm) 5% 16% 7% $43.6 $36.4 $41.4 $28.4 $26.6 $31.4 28.4 26.6 Q3 22 Q3 23 Q3 22 Q3 23 Q3 22 Q3 23 Longer-Term Trends 30% 42% $43.6 $36.4 39% $33.6 $25.6 $28.4 $20.5 28.4 20.5 Q3 20 Q3 23 Q3 20 Q3 23 Q3 20 Q3 23 GCM G
Slide 17: Key 2023 and Long-Term Growth Drivers
Key 2023 and Long-Term Growth Drivers Key 2023 and Long-Term Growth Drivers 1. 2. 3. 16 Scale Core Capabilities New Channel Expansion High Growth Strategies Grow with Existing Clients Non-institutional / Retail Private Markets Secondaries/ Co-Invest/Direct 50%+ % of YTD Flows AUM $26bn +12% Of top c
Slide 18: Supplemental Information
Supplemental Information GCM GROSVENOR | 18
Slide 19: Selected Private Markets Specialized Funds
Selected Private Markets Specialized Funds RECENTLY CLOSED FUNDS VINTAGE FUND NAME ASSET CLASS DESCRIPTION YEAR17 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 20: Other Key Items
Other Key Items • In accordance with the firm's $115 million stock repurchase authorization, GCM Grosvenor repurchased $6.4 million of Class A common stock during the quarter ◦ $40.2 million remained in the approved share and warrant repurchase program as of September 30, 2023 KEY CASH, INVESTMENT A
Slide 21: GAAP Statements of Income
GAAP Statements of Income $000, EXCEPT PER SHARE AMOUNTS AND WHERE OTHERWISE NOTED THREE MONTHS ENDED NINE MONTHS ENDED SEP 30, 2022 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Revenues Management fees $ 90,715 $ 94,573 $ 275,655 $ 280,382 Incentive fees 45,467 26,073 67,964 44,884 Other operating income
Slide 22: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures23 $000, except per share amounts and where otherwise noted THREE MONTHS ENDED NINE MONTHS ENDED ADJUSTED EBITDA SEP 30, 2022 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Revenues Private markets strategies1 $ 49,347 $ 54,497 $ 146,582 $ 159,277 Absolute return strate
Slide 23: GAAP Balance Sheets
GAAP Balance Sheets $000, except per share amounts and where otherwise noted DEC 31, 2022 SEP 30, 2023 Assets Cash and cash equivalents $ 85,163 $ 55,354 Management fees receivable 18,720 22,267 Incentive fees receivable 16,478 20,837 Due from related parties 13,119 12,536 Investments 223,970 239,88
Slide 24: Components of GAAP Expenses
Components of GAAP Expenses $000 THREE MONTHS ENDED NINE MONTHS ENDED SEP 30, 2022 JUN 30, 2023 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net24 $ 39,412 $ 38,492 $ 38,027 $ 120,795 $ 116,409 Cash-based
Slide 25: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics $000 THREE MONTHS ENDED NINE MONTHS ENDED NET INCENTIVE FEES ATTRIBUTED TO GCM GROSVENOR SEP 30, 2022 JUN 30, 2023 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Incentive fees: Performance fees $ 1,006 $ 269 $ 661 $ 2,324 $ 1,174 Carried interest 44,461 12,727 25,412 65,6
Slide 26: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics $000 THREE MONTHS ENDED NINE MONTHS ENDED ADJUSTED PRE-TAX INCOME & ADJUSTED NET INCOME SEP 30, 2022 JUN 30, 2023 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Net income attributable to GCM Grosvenor Inc. $ 3,099 $ 4,848 $ 5,898 $ 15,430 $ 9,516 Plus: Net income (loss) a
Slide 27: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics $000 THREE MONTHS ENDED NINE MONTHS ENDED ADJUSTED EBITDA SEP 30, 2022 JUN 30, 2023 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Adjusted Net Income $ 26,567 $ 22,719 $ 28,427 $ 72,420 $ 70,769 Plus: Adjusted income taxes2 8,621 7,252 9,075 23,501 22,593 Depreciation exp
Slide 28: 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 NINE MONTHS ENDED ADJUSTED NET INCOME PER SHARE SEP 30, 2022 JUN 30, 2023 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Adjusted Net Income $ 26,567 $ 22,719 $ 28,427 $ 72,420 $ 70,76
Slide 29: Change in FPAUM and AUM
Change in FPAUM and AUM Three Months Ended September 30, 2023 PRIVATE MARKET ABSOLUTE RETURN CONTRACTED $mm STRATEGIES STRATEGIES TOTAL FPAUM NOT YET FPAUM TOTAL AUM Fee-Paying AUM Beginning of Period (July 1, 2023) $ 39,051 $ 21,510 $ 60,561 $ 6,700 $ 75,967 Contributions from CNYFPAUM 414 31 445 C
Slide 30: Management Fee Detail
Management Fee Detail1 $000 THREE MONTHS ENDED NINE MONTHS ENDED MANAGEMENT FEES SEP 30, 2022 JUN 30, 2023 SEP 30, 2023 SEP 30, 2022 SEP 30, 2023 Private Markets Specialized Funds $ 17,670 $ 19,922 $ 21,117 $ 54,040 $ 60,489 Average Fee Rate30 0.78 % 0.79 % 0.79 % 0.78 % 0.79 % Customized Separate A
Slide 31: 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 Investments32 $ 13,182 $ 14,409 $ 23,804 $ 2,842 1.85 13
Slide 32: 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 Investments32 $ 24,205 $ 22,588 $ 27,072 $ 10,201 1.65 12
Slide 33: Absolute Return Strategies Performance
Absolute Return Strategies Performance AS OF THREE MONTHS ANNUALIZED RETURNS PERIODS ENDED SEPT 30, 2023 SEPT 30, 2023 ENDED SINCE SEPT 30, 2023 YEAR TO DATE ONE YEAR THREE YEAR FIVE YEAR INCEPTION Assets Under Management (bn) Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Retu
Slide 34: Notes
Notes 1. Excludes fund reimbursement revenue. 2. Reflects a corporate and blended statutory tax rate of 24.5% for the three and nine months ended September 30, 2022 and of 24.2% for the three and nine months ended September 30, 2023 applied to Adjusted Pre-Tax Income. The 24.5% and 24.2% are based o
Slide 35: Notes (Continued)
Notes (Continued) 26. Excludes immaterial impacts of non-cash carried interest compensation. s immaterial. 27. 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 36: 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 37: 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 38: Disclaimer
Disclaimer 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 from