Gcm Grosvenor Inc. · NASDAQ:GCMG
Gcm Grosvenor — Q2 2023 Earnings Presentation
41 slides from Gcm Grosvenor's earnings presentation, Aug 9, 2023
Slide 1: 2023 Second Quarter Results Earnings Presentation
2023 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 2023 Results
Second Quarter 2023 Results • Second quarter 2023 fundraising of $1.5 billion • 2023 Private Markets FPAUM increased 12% and Private Markets YTD management fees increased 8% over prior year • GCM Grosvenor's Board of Directors approved a $0.11 per share dividend payable on September 15, 2023 to shar
Slide 4: Fundraising: Last Twelve Months Through Q2 2023
Fundraising: Last Twelve Months Through Q2 2023 $ billion Closed in Closed Forecasted Next / Fund Strategy Q2 23 through Final Close $2.4 billion $6.8 billion ($mm) Q2 23 ($mm) First Closing YTD 2023 Capital Raised LTM Capital Raised Diversified CIS III $145 $798 3Q 2023 Mid 2023 Infrastructure MAC
Slide 5: Second Quarter 2023 Fundraising Drivers
Second Quarter 2023 Fundraising Drivers $ billion Absolute Return Opportunistic, Strategies, 3% Specialized 4% $1.5 Funds, 17% Private By Equity, 29% By Infrastructure, Strategy Structure 64% Customized Separate Accounts, 83% 1.4 Pension, 14% Americas, 27% APAC, 37% Financial Institutions, 21% Gover
Slide 6: Year-to-Date 2023 Fundraising Drivers
Year-to-Date 2023 Fundraising Drivers $ billion Absolute Return $2.4 Strategies, 8% Specialized Opportunistic, Funds, 18% 4% Private By Equity, 18% By Strategy Structure Infrastructure, 70% Customized Separate 2.2 Accounts, 82% Financial Institutions, 13% Other, 2% Insurance, 1% Americas, 26% Retail
Slide 7: Q2 2023 Summary
Q2 2023 Summary $ million Private Markets Absolute Return Strategies Fee-Related Revenue1 Management Fees2 Management Fees3 (1)% $91.5 $90.8 5% $53.0 (8)% $50.4 $40.1 $36.8 Q2 22 Q2 23 Q2 22 Q2 23 Q2 22 Q2 23 Fee-Related Earnings Adjusted EBITDA Adjusted Net Income 2% 1% $35.2 $36.0 36.0 3% $32.6 $3
Slide 8: Private Markets Experiencing Growth and Mix Shift
Private Markets Experiencing Growth and Mix Shift FPAUM Has Shifted Towards Private Markets... ...And Private Markets Management Fees Have Grown Private Markets FPAUM (bn) Private Markets Management Fees5 (mm) 15% 14% CAGR CAGR $52.8 $48.1 $39.1 $34.8 $40.1 $30.1 Q2 21 Q2 22 Q2 23 Q2 21 Q2 22 Q2 23
Slide 9: Consistent Private Markets Growth
Consistent Private Markets Growth Private Markets Management Fees5 ($ in millions) 15% CAGR $52.8 $51.8 Increasing Private $49.1 $48.8 Markets Management $48.1 Fees5 $45.8 $44.7 $41.9 $40.1 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Year-over-year Private Markets Management 11% 12% 18% 18
Slide 10: Assets Under Management
Assets Under Management $ billion CNYFPAUM Fees Charged on Scheduled Ramp-in 1.2 $2.3 0.5 0.6 Total AUM Fees Charged on Invested Capital Remainder 2024 2025+ $4.4 of 2023 7% $76.0 $71.2 8.7 Private Markets AUM Absolute Return Strategies AUM 7.0 $53.5 12% 6.7 $47.6 7.8 6.7 6.2 6.6 (5)% 6.6 $23.6 0.8
Slide 11: Highly Diversified Incentive Fee Opportunity
Highly Diversified Incentive Fee Opportunity $ million • Annual Performance Fees: $28 million annual run-rate performance fee opportunity9, from 55 programs ◦ $13 million performance fee potential in 20239 • Carried Interest: 135 programs with unrealized carried interest Firm Share of Carried Intere
Slide 12: Key 2023 and Long-Term Growth Drivers
Key 2023 and Long-Term Growth Drivers Scale Core Capabilities New Channel Expansion13 High-Growth Strategies Grow with Existing Clients Non-institutional / Retail Private Markets Secondaries/Co-Invest/Direct 50%+ 2 Year Flows 9% > AUM $26b 18% Of top clients are 5% AUM YoY Increase invested in
Slide 13: Other Key Items
Other Key Items • In accordance with the firm's $90 million stock repurchase authorization, GCM Grosvenor repurchased $1.1 million of Class A common stock during the quarter ◦ $21.6 million remained in the approved share and warrant repurchase program as of June 30, 2023 ◦ The Board of Directors app
Slide 14: 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, 2022 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Revenues Management fees $ 92,830 $ 93,564 $ 184,940 $ 185,809 Incentive fees 10,505 12,996 22,497 18,811 Other operating income
Slide 15: Summary of Non-GAAP Financial Measures
Summary of Non-GAAP Financial Measures19 Three Months Ended Six Months Ended $000, except per share amounts and where otherwise noted Jun 30, 2022 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Adjusted EBITDA Revenues Private markets strategies $ 50,394 $ 52,978 $ 97,235 $ 104,780 Absolute return strategie
Slide 16: Appendix
Appendix
Slide 17: 52 Years of Alternative Asset Management Investing
52 Years of Alternative Asset Management Investing 1971 74% 533 173 25 First year of investing of AUM in customized separate accounts Employees Investment professionals Real Estate Absolute $5.5bn Return $22.5bn Direct Primary Alternative Private Credit $76bn Equity $12.5bn Seeding Assets under Co-
Slide 18: Our Strengths Fuel Our Future Growth
Our Strengths Fuel Our Future Growth $76bn Assets under Management26 26. See Notes towards the end of the document. 18
Slide 19: With Alternatives, We Operate as a Solutions Provider
With Alternatives, We Operate as a Solutions Provider FRAGMENTED DEAL AND MANAGER UNIVERSE Track 6,500+ managers across our platform27 Over 500 institutional clients27 Over 150 clients with customized portfolios27 27. As of December 31, 2022. 19
Slide 20: Flexible Delivery Formats Fuel Client Extension Opportunities
Flexible Delivery Formats Fuel Client Extension Opportunities • 74% of AUM • Specifically tailored program to client objectives and constraints • Extension of staff • Provide value-add ancillary services, including administering capital, on behalf of certain of our clients • Evergreen and closed-end
Slide 21: Strong Value Proposition Attracts Tenured and Diversified Clients
Strong Value Proposition Attracts Tenured and Diversified Clients Our client base is Our client base is Our client base is institutional and stable global diversified % of AUM % of AUM % of management fees No single client contributes more than 5% of our management fees Financial Institutions Rest o
Slide 22: ESG and Impact Remains a Core Driver of AUM Growth
ESG and Impact Remains a Core Driver of AUM Growth10 ESG and Impact Investments AUM ($bn) ESG and Impact AUM by Strategy29 Diverse Managers $24.1 $15.1 billion 24% Regionally Targeted / Inclusive Finance $19.5 $1.6 billion Clean Energy $4.2 billion Workforce Standards / Labor Impact $1.7 billion Ess
Slide 23: 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 Fee Paying30 Non-Fee Paying large Absolute Return $300 million $300 million Strategies clients a ‘hybrid model’ through which t
Slide 24: Illustrative Client Economic Value Proposition: Private Markets
Illustrative Client Economic Value Proposition: Private Markets Example: $1.0Bn Program – Direct Primary Program vs. GCM Grosvenor Primary + Co-Investment Program GCM Grosvenor GCM Grosvenor Direct Primary Only Managed Primaries Managed Co- Program vs. Program Investment Program $1.0 billion $650 mi
Slide 25: Supplemental Information
Supplemental Information
Slide 26: GAAP Balance Sheets
GAAP Balance Sheets $000 Dec 31, 2022 Jun 30, 2023 Assets Cash and cash equivalents $ 85,163 $ 50,756 Management fees receivable 18,720 19,184 Incentive fees receivable 16,478 7,230 Due from related parties 13,119 12,266 Investments 223,970 236,014 Premises and equipment, net 4,620 4,404 Lease right
Slide 27: Components of GAAP Expenses
Components of GAAP Expenses Three Months Ended Six Months Ended $000 Jun 30, 2022 Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net33 $ 40,520 $ 39,890 $ 38,492 $ 81,383 $ 78,382 Cash-based inc
Slide 28: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Six Months Ended $000 Jun 30, 2022 Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 317 $ 244 $ 269 $ 1,318 $ 513 Carried interest 10,188 5,571 12,727 21,179 1
Slide 29: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Six Months Ended $000 Jun 30, 2022 Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Adjusted Pre-Tax Income & Adjusted Net Income Net income (loss) attributable to GCM Grosvenor Inc. $ 7,605 $ (1,230) $ 4,848 $ 12,331 $ 3,618 Plus: Net income
Slide 30: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Six Months Ended $000 Jun 30, 2022 Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Adjusted EBITDA Adjusted Net Income $ 22,083 $ 19,623 $ 22,719 $ 45,853 $ 42,342 Plus: Adjusted income taxes4 7,166 6,266 7,252 14,880 13,518 Depreciation expe
Slide 31: 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, 2022 Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Adjusted Net Income Per Share Adjusted Net Income $ 22,083 $ 19,623 $ 22,719 $ 45,853 $ 42,342
Slide 32: Change in FPAUM and AUM
Change in FPAUM and AUM Three Months Ended June 30, 2023 Private Markets Absolute Return Contracted Not $mm Strategies Strategies Total FPAUM Yet FPAUM Total AUM Fee-Paying AUM Beginning of Period (April 1, 2023) $ 38,030 $ 21,785 $ 59,815 $ 6,436 $ 75,252 Contributions from CNYFPAUM 499 — 499 Contr
Slide 33: Management Fee Detail
Management Fee Detail36 Three Months Ended Six Months Ended $000 Jun 30, 2022 Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Management Fees Private Markets Specialized Funds $ 19,282 $ 19,450 $ 19,922 $ 36,371 $ 39,372 Average Fee Rate37 0.79 % 0.79 % 0.79 % 0.77 % 0.80 % Customized Separate A
Slide 34: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics Realized and Partially Realized Investments ($ million) Current Investment Investment Strategy Commitments Contributions Distributions PME IRR PME Index Value Net TVPI Net IRR Private Equity Primary Fund Investments39 $ 13,214 $ 14,386 $ 23,691 $ 2,973
Slide 35: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics All Investments ($ million) Current Investment Investment Strategy Commitments Contributions Distributions PME IRR PME Index Value Net TVPI Net IRR Private Equity Primary Fund Investments39 $ 24,064 $ 22,272 $ 26,851 $ 9,991 1.65 12.9 % 10.6 % S&P 500 S
Slide 36: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended June 30, 2023 Three Months Ended June Year to Date One Year Three Year Five Year Since Inception Assets Under 30, 2023 Management as of June 30, 2023 (Bn) Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net Absolute Retu
Slide 37: Notes
Notes 1. Excludes fund reimbursement revenue of $3.8 million and $7.1 million for the three and six months ended June 30, 2023, respectively. 2. Excludes fund reimbursement revenue for private markets of $1.4 million and $3.0 million for the three and six months ended June 30, 2023, respectively. 3.
Slide 38: Notes (continued)
Notes (continued) 23. Excludes immaterial impacts of non-cash carried interest expense of $0.1 million and $(0.1) million for the three months ended June 30, 2022 and 2023, respectively, and $0.4 million and $(0.4) million for the six months ended June 30, 2022 and 2023, respectively. 24. Investment
Slide 39: 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 40: 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 41: 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