GCM Grosvenor Inc. · NASDAQ:GCMG
GCM Grosvenor — Q3 2021 Earnings Presentation
39 slides from GCM Grosvenor's earnings presentation, Nov 10, 2021
Slide 1: 2021 Third Quarter Results Earnings Presentation
2021 Third Quarter Results Earnings Presentation November 10, 2021
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: Business Update
Business Update
Slide 4: Third Quarter 2021 Results
Third Quarter 2021 Results $ million September 30, 2020 June 30, 2021 September 30, 2021 % Change vs 2Q 21 % Change vs 3Q 20 AUM $ 58,551 $ 66,900 $ 70,485 5% 20 % FPAUM 49,890 55,000 56,618 3% 13 % CNYFPAUM 6,639 7,027 7,921 13 % 19 % Three Months Ended Nine Months Ended $ million September 30, 202
Slide 5: Business Highlights
Business Highlights • Total AUM growth of 20% over 3Q 2020 • Fee-Paying AUM growth of 13% over 3Q 2020 • Contracted Not Yet Fee-Paying AUM growth of 19% over 3Q 2020 Continued Growth • Fee-Related Revenue growth of 11% over 3Q 2020 and 10% over YTD 3Q 2020 in Revenue, • Fee-Related Earnings growth o
Slide 6: Increased Earnings Power From Growing AUM
Increased Earnings Power From Growing AUM $ billion Total AUM CNYFPAUM Fees Charged on 10% ‘18–’Q3 21 CAGR Scheduled $70.5 Ramp-in 1.5 Fees Charged $2.6 0.8 $66.9 5.9 on Invested 0.3 $64.9 Capital 4.9 Remainder 2022 2023+ $61.9 4.1 $5.3 of 2021 2.9 7.9 $57.7 7.0 2.4 7.5 $53.8 7.1 Private Markets AUM
Slide 7: Growing Value of Incentive Fees and Investments
Growing Value of Incentive Fees and Investments $ million Growing Firm Share of Carried Interest and Investments1 Growing Carried Interest Annual Earnings Power2 Firm Share of Unrealized Carried Interest Firm Share of Investments 188% $46 125% $410 $38 $349 $113 $102 $182 $16 $75 $297 $247 $107 Q3 2
Slide 8: Absolute Return Strategies Has Stable Year over Year Results
Absolute Return Strategies Has Stable Year over Year Results Growth in Earnings Power From Management Fees Stable to Expanding Fee Rates Strong Performance + Incentive Fee Earnings Power Absolute Return Strategies Fee-Paying Assets Absolute Return Strategies Average Fee Rate1 Absolute Return Strateg
Slide 9: Financial Results
Financial Results
Slide 10: Strong Growth in Revenue
Strong Growth in Revenue $ million Q3 21-over-Q3 20 YTD 21-over-YTD 20 Fee-Related Revenue1 10% 11% $86.6 $254.2 $77.8 $230.5 5.4 1.1 5.3 1.7 41.9 122.5 37.5 113.5 38.6 43.6 111.6 126.4 Q3 20 Q3 21 Q3 YTD 20 Q3 YTD 21 Private Markets Absolute Return Strategies Administrative fees and other operating
Slide 11: Strong Growth in Earnings
Strong Growth in Earnings $ million Q3 21-over-Q3 20 YTD 21-over-YTD 20 Adjusted EBITDA 12% $37.6 24% $33.6 $98.5 $79.2 98.5 79.2 Q3 20 Q3 21 Q3 YTD 20 Q3 YTD 21 Fee-Related Earnings 22% 21% $83.6 $68.3 83.6 $31.0 $25.6 31.0 68.3 25.6 Q3 20 Q3 21 Q3 YTD 20 Q3 YTD 21 Adjusted Net Income 16% 38% $23.8
Slide 12: Year to Date 2021 and 2020 Fundraising
Year to Date 2021 and 2020 Fundraising $ billion Private Markets Absolute Return $3.0 $2.5 $7B of new capital $2.1 raised in 2021 $1.8 $1.7 2.6 1.9 $1.5 $1.4 Robust fundraising 1.0 1.7 pipeline supports 1.5 1.0 future growth 1.3 0.7 0.6 0.5 0.4 0.4 0.3 0.1 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2
Slide 13: Other Key Items
Other Key Items • In accordance with the firm's $25 million stock repurchase authorization, GCM Grosvenor repurchased $6.9 million of Class A common stock and $0.4 million of warrants during the quarter Key Cash, Investment and Debt Metrics as of 9/30/2021 ($mm) Summary of Ownership as of 9/30/2021
Slide 14: GAAP Statements of Income (unaudited)
GAAP Statements of Income (unaudited) Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2020 Sep 30, 2021 % Change Sep 30, 2020 Sep 30, 2021 % Change Revenues Management fees $ 78,269 $ 87,796 12 % $ 231,106 $ 256,015 11 % Incentive fees 21,774 29,
Slide 15: Summary of Non-GAAP Financial Measures
1 Summary of Non-GAAP Financial Measures Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2020 Sep 30, 2021 % Change Sep 30, 2020 Sep 30, 2021 % Change Adjusted EBITDA Revenues Private markets strategies $ 38,588 $ 43,643 13 % $ 111,600 $ 126,376
Slide 16: About GCM Grosvenor
About GCM Grosvenor
Slide 17: Only Alternative Asset Solutions Provider Covering the Full Range of Strategies
Only Alternative Asset Solutions Provider Covering the Full Range of Strategies Client Value Proposition Strong Business Momentum Strong economic value proposition Stable and diversified revenue base Absolute ◦ Fee savings and preferential terms Real Estate ◦ Management and administrative fees are ~
Slide 18: Strong Value Proposition Drives Diversified, Long-Tenured Client Base
Strong Value Proposition Drives Diversified, Long-Tenured Client Base 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 High Net Worth/ Endowments 5% of our management fee
Slide 19: ESG and Impact Investing are Core Values
1 ESG and Impact Investing are Core Values A+ rating $20.3B $16.2B Diverse Managers from UN Principles of Committed and invested in of ESG and Impact AUM Responsible Investing (PRI)2 ESG and Impact $9.9B Invested / Committed Regionally Targeted ESG and Impact Investments AUM ($bn) $4.3B Invested / C
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. Fee Paying1 Non-Fee Paying ◦ GCM Grosvenor offers large $300 million $300 million Absolute Return Strategies clients a ‘hybrid model’ Management fee a
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 GCM Grosvenor Direct Primary Only Direct Primaries Managed Co-Investment Program Program Program $1.0 billion $650 million
Slide 22: Appendix
Appendix
Slide 23: GAAP Balance Sheets (unaudited)
GAAP Balance Sheets (unaudited) $000 Dec 31, 2020 Sep 30, 2021 Assets Cash and cash equivalents $ 198,146 $ 119,981 Management fees receivable 14,524 16,979 Incentive fees receivable 69,424 28,274 Due from related parties 11,326 9,435 Investments 166,273 203,993 Premises and equipment, net 7,870 5,6
Slide 24: Components of GAAP Expenses
Components of GAAP Expenses Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Components of GAAP Employee Compensation and Benefits Cash-based employee compensation and benefits, net1 $ 39,373 $ 40,255 $ 39,200 $ 119,727 $ 120,647 Cash-based i
Slide 25: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Net Incentive Fees Attributable to GCM Grosvenor Incentive fees: Performance fees $ 884 $ 2,891 $ 316 $ 1,621 $ 9,320 Carried interest 20,890 29,336 28,862 36
Slide 26: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Adjusted Pre-Tax Income & Adjusted Net Income Net income attributable to GCM Grosvenor Inc. $ — $ 656 $ 4,056 $ — $ 7,259 Plus: Net income (loss) attributable
Slide 27: Reconciliation to Non-GAAP Metrics
Reconciliation to Non-GAAP Metrics Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Adjusted EBITDA Adjusted Net Income $ 20,464 $ 19,306 $ 23,836 $ 44,906 $ 62,048 Plus: Adjusted income taxes1 6,822 6,435 7,945 14,970 20,682 Depreciation exp
Slide 28: Reconciliation to Adjusted Net Income Per Share
Reconciliation to Adjusted Net Income Per Share Three Months Ended Nine Months Ended $000, except per share amounts and where otherwise noted Sep 30, 2020 1 Sep 30, 2021 Sep 30, 2020 1 Sep 30, 2021 Adjusted Net Income Per Share Adjusted Net Income $ 20,464 $ 23,836 $ 44,906 $ 62,048 Weighted-average
Slide 29: Quarterly Growth in FPAUM and AUM
Quarterly Growth in FPAUM and AUM Three Months Ended September 30, 2021 Private Markets Absolute Return Contracted Not Yet $mm Strategies Strategies Total FPAUM FPAUM Total AUM Fee-Paying AUM Beginning of Period (July 1, 2021) $ 30,112 $ 24,888 $ 55,000 $ 7,027 $ 66,900 Contributions from CNYFPAUM 5
Slide 30: Management Fee Detail
1 Management Fee Detail Three Months Ended Nine Months Ended $000 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Management Fees Private Markets Specialized Funds $ 11,911 $ 14,428 $ 15,265 $ 34,049 $ 42,662 Average Fee Rate2 0.72 % 0.75 % 0.75 % 0.73 % 0.74 % Customized Separate A
Slide 31: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics Realized and Partially Realized Investments Investment Investment Strategy Commitments Contributions Distributions Current Value PME IRR PME Index Net TVPI Net IRR Private Equity Primary Fund Investments1 $ 10,946 $ 12,022 $ 19,703 $ 2,467 1.84 14.2 % 9
Slide 32: Private Markets Strategies Performance Metrics
Private Markets Strategies Performance Metrics All Investments Investment Investment Strategy Commitments Contributions Distributions Current Value PME IRR PME Index Net TVPI Net IRR Private Equity Primary Fund Investments1 $ 21,483 $ 19,199 $ 23,031 $ 9,154 1.68 13.1 % 11.0 % S&P 500 Secondary Inve
Slide 33: Absolute Return Strategies Performance
Absolute Return Strategies Performance Annualized Returns Periods Ended Sept 30, 2021 Year to Date through One Year Three Year Five Year Since Inception Sept 30, 2021 Assets Under Management as of Gross Net Gross Net Gross Net Gross Net Gross Net Sept 30, 2021 (Bn) Absolute Return Strategies (Overal
Slide 34: Notes
Notes Notes on Growing Value of Incentive Fees and Investments (Page 7) 1. Represents firm share of Net Asset Value as of September 30, 2021. For comparison purposes, presented as if the Mosaic repurchase occurred as of the earliest period presented. 2. Illustrative annual earnings power from unreal
Slide 35: Notes (continued)
Notes (continued) Notes on Only Alternative Asset Solutions Provider Covering the Full Range of Strategies (Page 17) 1. See Only Alternative Asset Solutions Provider Covering the Full Range of Strategies slide (Page 17). 2. Represents top 25 clients by AUM. 3. From December 31, 2017 through Septembe
Slide 36: Notes (continued)
Notes (continued) Notes on Reconciliation to Non-GAAP Metrics (Page 27) 1. Represents corporate income taxes at a blended effective tax rate of 21% and an estimated combined state, local and foreign income tax rate net of federal benefits of 4%. As we were not subject to U.S. federal and state incom
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) 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 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, including anticipated incrementa