Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q2 2022 Earnings Presentation
40 slides from Gcm Grosvenor's earnings presentation, Aug 9, 2022
Slide 1: 2022 Second Quarter Results Earnings Presentation
2022 Second 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: Second Quarter 2022 Results
3 Second Quarter 2022 Results $ billion June 30, 2021 June 30, 2022 % Change vs Q2 21 AUM $ 66.9 $ 71.2 6 % FPAUM 55.0 57.5 4 % Private Markets FPAUM 30.1 34.8 16 % Absolute Return Strategies FPAUM 24.9 22.7 (9) % CNYFPAUM 7.0 6.7 (5) % $ million Three Months Ended June 30, 2022 % Change vs Q2 21 Si
Slide 4: Fundraising: Year-to-Date Through Q2 2022
0.3 0.7 0.2 0.6 1.1 0.1 0.3 Q1 2022 Q2 2022 Private Equity Infrastructure Real Estate Absolute Return Strategies Opportunistic 4 Fund Strategy Closed in Q2 22 ($mm) Closed through Q2 22 ($mm) Forecasted Next / First Closing Final Close GSF III PE Secondaries $190 $866 4Q 2022 Late 2022 CIS III Diver
Slide 5: Second Quarter 2022 Fundraising
$ billion 5 Second Quarter 2022 Fundraising Private Markets $2.1 0.1 2.0 Q2 2022 Absolute Return Strategies Absolute Return Strategies, 4% Opportunistic, 17% Private Equity, 29% Infrastructure, 50% Specialized Funds, 21% Customized Separate Accounts, 79% Americas, 61% EMEA, 6% APAC, 33% Pension, 39%
Slide 6: Year-to-Date 2022 Fundraising
$ billion 6 Year-to-Date 2022 Fundraising Private Markets $3.4 0.3 3.1 Q2 YTD 2022 Absolute Return Strategies Absolute Return Strategies, 10% Opportunistic, 11% Private Equity, 25% Infrastructure, 52% Real Estate, 2% Specialized Funds, 22% Customized Separate Accounts, 78% Americas, 52% EMEA, 7% APA
Slide 7: ESG and Impact Remains a Core Driver of AUM Growth
$14.4 $19.5 Q2 2021 Q2 2022 ESG and Impact Investments AUM ($bn) 5-6. See Notes towards the end of the document. 35% Diverse Managers Regionally Targeted Clean Energy Labor Impact Other ESG and Impact $12.3 billion $2.2 billion $1.6 billion $1.1 billion $5.6 billion ESG and Impact Remains a Core Dri
Slide 8: Strong Q2 2022 Growth
$30.7 $35.2 Q2 21 Q2 22 $84.9 $91.5 42.3 50.4 40.7 40.1 1.9 1.0 Private Markets Absolute Return Strategies Administrative fees and other operating income Q2 21 Q2 22 $19.3 $22.1 19.3 22.1 Q2 21 Q2 22 8 15% $27.5 $32.6 27.5 32.6 Q2 21 Q2 22 19% 14% Q2 2022 over Q2 2021, $ million Strong Q2 2022 Growt
Slide 9: Strong YTD 2022 Growth
$52.6 $64.3 52.6 64.3 Q2 YTD 21 Q2 YTD 22 $60.9 $72.4 60.9 72.4 Q2 YTD 21 Q2 YTD 22 9 19% 20% $38.2 $45.9 38.2 45.9 Q2 YTD 21 Q2 YTD 22 22% YTD 2022 over YTD 2021, $ million Strong YTD 2022 Growth 9% $167.6 $182.1 82.7 97.2 80.6 82.8 4.3 2.1 Private Markets Absolute Return Strategies Administrative
Slide 10: Assets Under Management
$66.9 $71.2 55.0 57.5 7.0 6.7 4.9 7.0 Q2 2021 Q2 2022 $40.9 $47.6 30.1 34.8 6.9 6.63.9 6.2 Q2 2021 Q2 2022 CNYFPAUM Fees Charged on Scheduled Ramp-in $1.6 0.6 0.8 0.2 Remainder of 2022 2023 2024+ $26.0 $23.6 24.9 22.7 0.1 0.1 1.0 0.8 Q2 2021 Q2 2022 FPAUM Contracted not yet FPAUM ("CNYFPAUM") Other9
Slide 11: Private Markets Experiencing Strong Growth and Mix Shift
Q2 2020 39% Private Markets Experiencing Strong Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... 11 $27.1 $30.1 $34.8 Q2 2020 Q2 2021 Q2 2022 $36.5 $42.4 $50.4 Q2 2020 Q2 2021 Q2 2022 Private Markets Management Fees (mm) ...And Private Markets Management Fee Earnings Power Has Grown
Slide 12: Highly Diversified Incentive Fee Opportunity
247 383 378 457 Unrealized Carried Interest - Firm Share Unrealized Carried Interest - Non-Firm Share Q2 21 Q2 22 52 101 230 155 122 180 Firm Share of Carried Interest by Vintage Year 2013 or Earlier 2014-2016 2017+ Highly Diversified Incentive Fee Opportunity Unrealized Carried Interest by Vintage
Slide 13: Key 2022 and Long-Term Growth Drivers
Key 2022 and Long-Term Growth Drivers 5, 14-17. See Notes towards the end of the document. International Geographies Insurance Solutions Non-institutional / Retail ESG / Impact5 Private Markets Secondaries / Co-Investments / Direct Infrastructure & Real Estate Scale Specialized Funds Grow with Exist
Slide 14: Key Cash, Investment and Debt Metrics
18. Reflects GAAP cash including $12 million of cash held at consolidated carry plan entities. 19. Represents firm share of Net Asset Value as of June 30, 2022. 20. Debt principal at pricing of L+250bps as of June 30, 2022, subject to a LIBOR floor of 50bps. 21. Excludes all outstanding letters of c
Slide 15: Condensed Consolidated Statements of Operations
15 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 1,882 1,025 4,262 2,051
Slide 16: Adjusted EBITDA and Fee-Related Earnings Reconciliation
16 23, 25-29. See Notes towards the end of the document. 24. Excludes fund reimbursement revenue of $2.6 million and $2.3 million for the three months ended June 30, 2021 and June 30, 2022, respectively, and $4.9 million for each of the six months ended June 30, 2021 and June 30, 2022. Three Months
Slide 17: Appendix
Appendix
Slide 18: 50+ Years of Alternative Asset Management Investing
50+ Years of Alternative Asset Management Investing 18 Primary Direct Secondary Co- Invest Real Estate $4.2bn Absolute Return $23.6bn Private Equity $27.9bn ESG / Impact $19.5bn Alternative Credit $13.4bn Infrastructure $10.5bn 30-31. See Notes towards the end of the document. 71.2bn Assets under Ma
Slide 19: One Platform That Spans the Alternatives Investing Universe
One Platform That Spans the Alternatives Investing Universe Multiple Implementation Options Co-Investments Custom StructuresDirect InvestmentsPrimary Investments Secondaries Seeding Real Estate Absolute Return StrategiesPrivate Equity Infrastructure Credit ESG and Impact Our Strategic Advantage is O
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
21 Note: AUM as of June 30, 2022. Management fees for the twelve months ended June 30, 2022. 32. Institutional clients as of March 31, 2022. Strong Value Proposition Attracts Tenured and Diversified Clients 42% 14% 8% 16% 6% 7% 6% Our client base is institutional and stable % of AUM Our client base
Slide 22: Illustrative Client Economic Value Proposition: Absolute Return Strategies
22 Illustrative Client Economic Value Proposition: Absolute Return Strategies Example: $300M Fee Paying; $300M Non-Fee Paying. Assuming 0% gross return. 33. 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%. 34. Fee s
Slide 23: Illustrative Client Economic Value Proposition: Private Markets
23 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 24: Supplemental Information
Supplemental Information
Slide 25: Condensed Consolidated Balance Sheets
25 $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 right-of-use assets —
Slide 26: Components of GAAP Employee Compensation and Expenses
26 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 incentive fee related compen
Slide 27: Net Incentive Fees Attributable to GCM Grosvenor
27 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 41,437 21,179 Total Incentive Fee
Slide 28: Adjusted Pre-Tax Income & Adjusted Net Income
28 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) attributable to noncontrolling inter
Slide 29: Adjusted EBITDA and Fee-Related Earnings
29 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 expense 407 399 395 880 794 Interes
Slide 30: Adjusted Net Income Per Share
30 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 $ 45,853 Weighted-average shares of Class A common
Slide 31: Quarterly Change in FPAUM and AUM
31 $mm Private Markets Strategies Absolute Return Strategies Total FPAUM Contracted Not Yet 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 8 642 Contributions from New Capital Raised 788 75 863 Withdrawal
Slide 32: Management Fees and Average Fee Rates
32 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 Accounts 27,932 29,753
Slide 33: Investment Performance by Strategy
33 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments42 $ 12,271 $ 13,361 $ 22,055 $ 2,972 1.87 14.2 % 9.6 % S&P 500 Secondaries Investments43 409 381 447 154 1.58 18.3 % 12.5 % S&P 500 Co-In
Slide 34: Investment Performance by Strategy (Since Inception)
34 Strategy Commitments Contributions Distributions Current Value Investment Net TVPI Investment Net IRR PME IRR PME Index Private Equity Primary Fund Investments42 $ 22,758 $ 20,648 $ 25,341 $ 9,626 1.69 13.2 % 11.0 % S&P 500 Secondary Investments43 1,279 1,152 641 1,182 1.58 21.1 % 15.0 % S&P 500
Slide 35: Absolute Return Strategies Performance
35 Annualized Returns Periods Ended June 30, 2022 Assets Under Management as of June 30, 2022 (Bn) Three Months Ended June 30, 2022 Year to Date One Year Three Year Five Year Since Inception Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Return Strategies (Overall) $ 23.6 (3.6)
Slide 36: 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 amount
Slide 37: Notes (continued)
37 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, 20
Slide 38: Non-GAAP Measure Definitions
38 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 (loss) attributable to GCMH, excluding (b) provision (benefit) for in
Slide 39: Definitions
39 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 40: Forward-Looking Statements
40 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