Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q4 2020 Earnings Presentation
39 slides from Gcm Grosvenor's earnings presentation, Feb 25, 2021
Slide 1: 2020 Fourth Quarter Results Earnings Presentation
2020 Fourth Quarter Results Earnings Presentation February 25, 2021
Slide 2: Presenters
Presenters Michael Sacks Jonathan Levin Pamela Bentley Stacie Selinger Chairman and President Chief Financial Head of Chief Executive Officer Officer Investor Relations 2
Slide 3: Business Update
Business Update
Slide 4: 2020 Results
2020 Results $ million December 31, 2020 % QoQ Change % YoY Change AUM $ 61,943 6% 7% FPAUM 51,969 4% 4% CNYFPAUM 7,057 6% 37 % Quarter Ended Year Ended $ million unless otherwise noted December 31, 2020 % QoQ Change December 31, 2020 % YoY Change GAAP Results GAAP Revenue $ 155.5 53 % $ 430.0 3% GA
Slide 5: Business Highlights
Business Highlights • Strong fourth quarter and 2020 led to significant earnings growth Strong Fundraising ◦ Adjusted FRE of $95.1 million for the year ended December 31, 2020, an increase of 8% year-over-year, and Adjusted Net Income of and Performance $91.0 million for the year ended December 31,
Slide 6: Continued Profitability Growth
Continued Profitability Growth 1 $ million Quarter-over-quarter Year-over-year Adjusted EBITDA 18% 102% Adjusted FRE 8% 5% Adjusted Net Income 26% 125% 6 1. Non-GAAP financial measures; see Appendix for a reconciliation to the most directly comparable GAAP measure.
Slide 7: Adjusted Revenue
Adjusted Revenue $ million Quarter-over-quarter Year-over-year Adjusted Revenue1 3% 54% Incentive Fees 33% 238% Management Fees1 (5)% 1% 1. Excludes fund reimbursement revenue of $2.2 million for the quarter ended September 30, 2020, $2.4 million for the quarter ended December 31, 2020, $6.7 million
Slide 8: Increased Earnings Power From Growing AUM
Increased Earnings Power From Growing AUM FPAUM and CNYFPAUM ($bn) Absolute return strategies FPAUM Private markets FPAUM CNYFPAUM Estimated incremental management fees from 2020 CNYFPAUM: $34 million CNYFPAUM Scheduled Ramp-in $3.1 Invested Capital $4.0 7% ‘18–’20E CAGR Total AUM1 $53.8 $57.7 $61.9
Slide 9: Incentive Fee Earnings Power
Incentive Fee Earnings Power Run rate annual performance fees1 ($mm) Gross Unrealized Carried Interest2 16% 86% > 12 years < 5 years 24% 22% Unrealized carry by age 8-12 years 5-8 years 27% 27% 1. The run rate on annual performance fees reflect a 8% gross return for both multi-strategy and credit st
Slide 10: Significant Embedded Growth and Strong Business Momentum
Significant Embedded Growth and Strong Business Momentum Management fee growth Incentive fee growth Incremental run rate carry earnings from ~$34mm contracted funds and growth in AUM eligible for annual performance fees, $7.1 billion of Contracted but not yet Fee increasing run-rate incentive fee po
Slide 11: Q4 and 2020 Fundraising Summary
Q4 and 2020 Fundraising Summary $ billion $7Bn of new capital raised in 2020 11
Slide 12: Financial Results
Financial Results
Slide 13: GAAP Statements of Income (unaudited)
GAAP Statements of Income (unaudited) Three Months Ended Twelve Months Ended $000, except per share amounts Dec 31, 2019 Sept 30, 2020 Dec 31, 2020 QoQ % Change Dec 31, 2019 Dec 31, 2020 YoY % Change Revenues 324,71 ) Management fees $ 81,008 78,269 $ 79,639 2 %$ $ 310,745 (4 6 % Incentive fees 18,3
Slide 14: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures 1 Three Months Ended Twelve Months Ended $000 Dec 31, 2019 Sept 30, 2020 Dec 31, 2020 QoQ % Change Dec 31, 2019 Dec 31, 2020 YoY % Change Adjusted EBITDA Management fees, net2 $ 77,968 $ 76,105 $ 77,197 1 %$ 318,008 $ 302,339 (5)% Administrative fees and other
Slide 15: Other Key Items
Other Key Items • Received $180 million of net proceeds upon closing of transaction on November 17, 2020 • Repaid $42 million of outstanding revolving credit facility in November 2020 • Repaid $50 million of term loan in February 2021, extended remaining $290 million term loan and $50 million revolv
Slide 16: About GCM Grosvenor
About GCM Grosvenor
Slide 17: Leading Open Architecture Alternative Asset Solutions Provider
Leading Open Architecture Alternative Asset Solutions Provider Business highlights Broad and deep investment capabilities Tailored client solutions % of AUM 50-year history Specialized funds Capabilities Across all Alternatives 23% Leader in Customization AUM: Flexibility of Investment $62B¹ Impleme
Slide 18: High Degree of Flexibility Drives Client Value Proposition
High Degree of Flexibility Drives Client Value Proposition Absolute Return Strategies Private Equity Real Estate Infrastructure $25.2B $22.8B $3.2B $6.0B ESG Alternative Credit $12.8B Investment $11.4B Strategies One Firm One Culture Primary Customized Separate Accounts $48B Delivery Implementation
Slide 19: Strong Value Proposition Drives Diversified, Long Tenured Client Base
Strong Value Proposition Drives Diversified, Long Tenured Client Base Our client base is institutional and stable Our client base is global Our client base is diversified % of AUM % AUM % of management fees High Net Worth/ Endowments No single client contributes more than Family Office & Foundations
Slide 20: 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. ◦ GCM Grosvenor offers large Absolute Return Fee Paying1 Non-Fee Paying Strategies clients a ‘hybrid $300 million $300 million model’ through which th
Slide 21: 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 Direct Primary Only Direct Primaries Program GCM Grosvenor Managed Program $650 million Co-Investment Program $1.0 billion
Slide 22: ESG and Investing with an Impact are Core Values
ESG and Investing with an Impact are Core Values ESG and Impact Investments AUM ($bn) A+ rating From UN Principles of Responsible Investing (PRI)¹ 13% CAGR Approx. $17 billion Committed and invested in ESG and Impact Approx. $13 billion Of ESG and Impact AUM Diverse Managers Regionally Targeted Clea
Slide 23: Strong Investment Performance Driven by Proven Investment Process
Strong Investment Performance Driven by Proven Investment Process Private Equity Absolute Return Strategies $22.8bn Infrastructure Real Estate $25.2bn $6.0bn $3.2bn Primaries Secondaries Co-Invest/Directs Diverse Managers 2020 Performance1 Inception to Date Performance (Realized and Partially Realiz
Slide 24: Deep Bench of Talent, Strong Corporate Culture
Deep Bench of Talent, Strong Corporate Culture Investment team Client Group Executive management Support and operational team Michael Sacks Paul Meister Jonathan Levin Pamela Bentley Sandra Hurse Francis Idehen Eric Levin Burke Montgomery Frederick Pollock Stacie Selinger Chairman and Chief Vice Pre
Slide 25: Appendix
Appendix
Slide 26: GAAP Balance Sheets (unaudited)
GAAP Balance Sheets (unaudited) $000 Dec 31, 2019 Dec 31, 2020 Assets Cash and cash equivalents $ 79,866 $ 198,146 Management fees receivable 13,896 14,524 Incentive fees receivable 20,771 69,424 Due from related parties 10,226 11,326 Investments 159,358 166,273 Premises and equipment, net 8,871 7,8
Slide 27: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Twelve Months Ended $000 Dec 31, 2019 Sept 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 Net incentive fees attributable to GCM Grosvenor Incentive fees $ 18,346 $ 21,774 $ 73,602 $ 84,165 $ 111,650 Less: Incentive fee related compensation (6,3
Slide 28: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Twelve Months Ended $000 Dec 31, 2019 Sept 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 Adjusted pre-tax income & Adjusted net income Net income attributable to GCM Grosvenor Inc. $ — $ — $ 7,507 $ — $ 7,507 Plus: Net income (loss) attributabl
Slide 29: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Twelve Months Ended $000 Dec 31, 2019 Sept 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 Adjusted EBITDA Adjusted net income $ 17,445 $ 20,464 $ 46,057 $ 72,448 $ 90,963 Plus: Income taxes 1 5,811 6,822 15,351 24,149 30,321 Depreciation expense
Slide 30: Reconciliation to adjusted net income per share
Reconciliation to adjusted net income per share Three Months Ended Twelve Months Ended $000, except per share amounts Dec 31, 2019 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 Adjusted net income $ 17,445 $ 46,057 $ 72,448 $ 90,963 Weighted-average shares of Class A common stock outstanding - basic (1) 39
Slide 31: Quarterly and Annual Growth in FPAUM and AUM
Quarterly and Annual Growth in FPAUM and AUM Quarter Ended December 31, 2020 Private Markets Absolute Return Contracted Not Yet $mm Strategies Strategies Total FPAUM FPAUM Total AUM Fee-Paying AUM Beginning of Period (October 1, 2020) $ 27,094 $ 22,796 $ 49,890 $ 6,639 $ 58,551 Contributions from CN
Slide 32: Management Fee Detail
Management Fee Detail1 Three Months Ended Twelve Months Ended $000 Dec 31, 2019 Sept 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 Management Fees Private Markets Specialized Funds $ 12,622 $ 11,911 $ 11,678 $ 50,637 $ 45,727 Average Fee Rate3 0.73 % 0.72 % 0.73 % 0.74 % 0.71 % Customized Separate
Slide 33: Private Markets Strategies Performance Metrics – Realized and Partially Realized Investments
Private Markets Strategies Performance Metrics – Realized and Partially Realized Investments Investment Net Strategy Commitments Contributions Distributions Current Value Investment Net IRR PME IRR PME Index TVPI Private Equity 10,60 11,63 18,36 Primary Fund Investments1 $ $ $ $ 2,160 1.76 13.8 % 9.
Slide 34: Private Markets Strategies Performance Metrics – All Investments
Private Markets Strategies Performance Metrics – All Investments Investment Net Strategy Commitments Contributions Distributions Current Value Investment Net IRR PME IRR PME Index TVPI Private Equity 20,40 18,46 21,42 Primary Fund Investments1 $ $ $ $ 7,539 1.57 12.1 % 10.4 % S&P 500 3 6 0 Secondary
Slide 35: Absolute Return Strategies Performance
Absolute Return Strategies Performance Assets Under Year to Date Returns Ending December 31, Annualized Returns Since Inception Management as of 2020 Through December 31, 2020 December 31, 2020 ($Bn) Gross Net Gross Net Absolute Return Strategies (Overall) $ 25.2 13.67 % 12.81 % 7.28 % 6.16 % GCMLP
Slide 36: Mosaic Overview and Update as of December 31, 2020
Mosaic Overview and Update as of December 31, 2020 ▪ In 2020, GCM Grosvenor formed Mosaic Acquisitions 2020, L.P. (“Mosaic”), a Cayman Limited Partnership Option call price is the greater of the following ($mm): ◦ GCM Grosvenor is the general partner of the entity and controls the entity ◦ In exchan
Slide 37: 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 38: 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) Assets Under Management (“AUM”) reflects the sum of (a) FPAUM, (b) CNYFPAUM and (c) other mark-to-market, insider capital and non-fee-paying assets under management. GCM Grosvenor refers to the combined acc
Slide 39: 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. These forward-looking statements