GCM Grosvenor(US:GCMG)2025-05-07 12:02markdown [First Quarter 2025 Performance Highlights](index=7&type=section&id=First%20Quarter%202025%20Results) [Financial and Operational Summary](index=7&type=section&id=First%20Quarter%202025%20Results) GCM Grosvenor achieved strong Q1 2025 financial growth, including a 12% rise in Fee-Related Revenue and 26% in Adjusted EBITDA Q1 2025 Key Financial and AUM Metrics (vs. Q1 2024) | Metric | Q1 2025 | % Change vs Q1 2024 | | :--- | :--- | :--- | | **AUM** | | | | Total AUM | $82.0 billion | 4% | | Fee-Paying AUM (FPAUM) | $66.4 billion | 5% | | Private Markets FPAUM | $44.4 billion | 9% | | **Financials (Three Months Ended)** | | | | GAAP Revenue | $125.8 million | 16% | | Fee-Related Revenue | $106.2 million | 12% | | Fee-Related Earnings | $46.7 million | 22% | | Adjusted EBITDA | $53.4 million | 26% | | Adjusted Net Income | $35.3 million | 30% | | Adjusted Net Income Per Share - Diluted | $0.18 | 29% | - Capital raising was exceptionally strong, with **$2.9 billion** raised in Q1 2025 (**+77% YoY**) and **$8.4 billion** over the last twelve months (**+46% YoY**)[15](index=15&type=chunk) - Strategic initiatives announced include a partnership in Japan targeting **$1.5 billion** of incremental capital by 2030 and the launch of Grove Lane Partners, a joint venture, for individual investor distribution[15](index=15&type=chunk) [Adjusted Earnings Trends](index=9&type=section&id=Adjusted%20Earnings) The company demonstrated robust growth in adjusted earnings for Q1 2025, with Fee-Related Earnings up 22% and Adjusted Net Income up 30% Q1 Adjusted Earnings Growth (YoY) | Metric | Q1 2024 ($ million) | Q1 2025 ($ million) | % Growth | | :--- | :--- | :--- | :--- | | Fee-Related Earnings | $38.1 million | $46.7 million | 22% | | Adjusted EBITDA | $42.4 million | $53.4 million | 26% | | Adjusted Net Income | $27.2 million | $35.3 million | 30% | Longer-Term Adjusted Earnings Growth (2020 LTM vs. Q1 2025 LTM) | Metric | 2020 LTM ($ million) | Q1 2025 LTM ($ million) | % Growth | | :--- | :--- | :--- | :--- | | Fee-Related Earnings | $91.0 million | $148.8 million | 64% | | Adjusted EBITDA | $95.1 million | $174.9 million | 84% | | Adjusted Net Income | $147.0 million | $224.9 million | 53% | [Business Growth and Strategy](index=11&type=section&id=Business%20Growth%20and%20Strategy) [Key Business Drivers Evolution](index=11&type=section&id=Growth%20in%20Key%20Business%20Drivers) GCM Grosvenor significantly expanded AUM to $82 billion and shifted towards private markets, increasing unrealized carried interest to $415 million Comparison of Key Business Drivers (Dec 2020 vs. Mar 2025) | Driver | Metric | Dec 31, 2020 (Amount) | Mar 31, 2025 (Amount) | | :--- | :--- | :--- | :--- | | Earnings Power | AUM | $62 billion | $82 billion | | Business Mix | Private Markets % of FPAUM | 54% | 67% | | Strategy Shift | Direct-Oriented Strategies % of Private Markets AUM | 39% | 53% | | Operating Leverage | LTM FRE Margin | 31% | 43% | | Incentive Potential | Firm Share of Unrealized Carried Interest | $133 million | $415 million | [Long-Term Growth Initiatives](index=13&type=section&id=Key%20Long-Term%20Growth%20Drivers) The company's long-term strategy focuses on scaling core capabilities, targeting individual investors and real assets, and enhancing earnings quality - **Scaling Core Capabilities:** Achieved through high client retention (**approx. 90% private markets re-up rate**) and expanding relationships, with **over 50%** of top clients invested in more than one vertical[24](index=24&type=chunk) - **Planting Seeds for Future Growth:** Targeting the individual investor channel (raised **$3.5 billion** since 2020) and expanding in real assets (raised **$16 billion** since 2020)[24](index=24&type=chunk) - **Growing Earnings Quality and Power:** Driven by a business shift to private markets (**67% of FPAUM**), margin expansion (**~1,200 bps** since Q4 2020), and growth in unrealized carried interest[24](index=24&type=chunk) [AUM Growth and Diversification](index=15&type=section&id=Growing%20and%20Diversifying%20AUM%20and%20Earnings%20Power) GCM Grosvenor's AUM grew at a 7% CAGR to $82.0 billion, driven by strong expansion in diversified Private Markets strategies AUM by Strategy as of March 31, 2025 | Strategy | AUM ($ billion) | | :--- | :--- | | Private Equity | $30.5 | | Infrastructure | $16.0 | | Real Estate | $6.3 | | Alternative Credit | $14.5 | | Absolute Return | $23.4 | | **Total AUM** | **$82.0** | - Total AUM grew from $61.9 billion in Q4 2020 to **$82.0 billion** in Q1 2025, representing a **7% Compound Annual Growth Rate (CAGR)**[32](index=32&type=chunk) - The growth was primarily led by Private Markets (Private Equity and Real Assets), which saw a combined **12% CAGR**, while Absolute Return Strategies AUM declined slightly with a **(2)% CAGR** over the same period[32](index=32&type=chunk) [Fundraising Performance](index=19&type=section&id=Diversified%20Fundraising%20Drives%20Stability%20%26%20Growth) The firm's fundraising is highly diversified, with $2.9 billion raised in Q1 2025 and $8.4 billion LTM from global client channels - LTM fundraising is diversified by client channel: Pensions (**60%**), Government/Sovereign (**11%**), Individual Investor (**8%**), Insurance (**8%**), and Financial Institutions (**7%**)[35](index=35&type=chunk) - LTM fundraising is also geographically diverse: Americas (**58%**), EMEA (**20%**), and APAC (**22%**)[35](index=35&type=chunk) - Fundraising has been consistent across various strategies, with Private Equity, Infrastructure, and Alternative Credit being significant contributors over the last several years[38](index=38&type=chunk) [Segment and Earnings Power Analysis](index=21&type=section&id=Segment%20and%20Earnings%20Power%20Analysis) [Private Markets Business Growth](index=21&type=section&id=Private%20Markets%20Specialized%20Fund%20Franchises) The Private Markets segment is a key growth engine, with AUM reaching $59 billion and management fees growing at a 13% CAGR since 2020 - Private Markets management fees have grown steadily, from **$150.0 million** in 2020 to **$249.9 million** in the last twelve months (LTM), a **13% CAGR**[48](index=48&type=chunk)[49](index=49&type=chunk) - The firm has raised **$33 billion** for its Private Markets strategies since 2020[51](index=51&type=chunk) - Cumulative closings for selected private market specialized funds have increased from **$2.2 billion** in 2018 to over **$12.2 billion** through Q1 2025[42](index=42&type=chunk) [Carried Interest and Incentive Fees](index=25&type=section&id=Growing%20Carried%20Interest%20Earnings%20Power) The firm's unrealized carried interest reached $865 million, with its share increasing to 48%, supported by growing AUM subject to incentive fees Growth in Unrealized Carried Interest (mm) | Metric | Q4 2020 ($ million) | Q1 2025 ($ million) | | :--- | :--- | :--- | | Total Unrealized Carried Interest | $395 | $865 | | Firm Share of Carried Interest | $133 | $415 | | Firm Share % | **34%** | **48%** | - The unrealized carried interest is spread across 142 programs, with a significant portion from more recent vintages (2017+), where the firm's share is higher (**53%**)[53](index=53&type=chunk) - AUM subject to incentive fees has grown from **$45.9 billion** in 2020 to **$59.8 billion** in Q1 2025, a **10% CAGR**, underpinning future earnings potential[59](index=59&type=chunk) [Financial Position and Shareholder Information](index=29&type=section&id=Other%20Key%20Items) [Key Balance Sheet and Ownership Metrics](index=29&type=section&id=KEY%20CASH,%20INVESTMENT%20AND%20DEBT%20METRICS) The company maintained a solid financial position with $304 million in cash and investments, and management owning 76% of shares Key Financial Metrics as of March 31, 2025 ($mm) | Metric | Amount ($ million) | | :--- | :--- | | Cash and Cash Equivalents | $94 | | Investments | $210 | | **Cash and Investments** | **$304** | | Unrealized Carried Interest (Firm Share) | $415 | | **Cash, Investments and Unrealized Carry** | **$719** | | Debt | $435 | Ownership Summary as of March 31, 2025 | Holder | Shares (mm) | % Ownership | | :--- | :--- | :--- | | Management Owned | 144.2 | 76% | | Publicly Traded | 45.2 | 24% | | **Total Shares** | **189.4** | **100%** | [Shareholder Returns and Strategic Updates](index=29&type=section&id=Shareholder%20Returns%20and%20Strategic%20Updates) GCM Grosvenor returns capital via dividends and repurchases, and finalized a strategic partnership in Japan with a $50 million equity investment - The Board of Directors approved a quarterly dividend of **$0.11 per share**, payable on June 16, 2025[64](index=64&type=chunk) - The company repurchased **$19.3 million** of Class A common stock in Q1 and April/May 2025. As of May 1, 2025, **$63 million** remained available under the share and warrant repurchase program[64](index=64&type=chunk) - Subsequent to quarter end, a strategic partner in Japan purchased approximately **3.8 million shares** of Class A stock for **$50 million**[64](index=64&type=chunk) [Supplemental Information (Appendix)](index=31&type=section&id=Supplemental%20Information) [GAAP Financial Statements](index=33&type=section&id=GAAP%20Financial%20Statements) The GAAP financial statements detail Q1 2025 performance, showing $125.8 million in revenues and $0.5 million net income attributable to GCM Grosvenor Inc GAAP Statement of Income Highlights (Three Months Ended Mar 31, 2025) | Metric ($000) | Amount ($ thousand) | | :--- | :--- | | Total operating revenues | $125,846 | | Total operating expenses | $110,516 | | Operating income | $15,330 | | Net loss | $(1,090) | | Net income attributable to GCM Grosvenor Inc. | $463 | GAAP Balance Sheet Highlights (As of Mar 31, 2025) | Metric ($000) | Amount ($ thousand) | | :--- | :--- | | Total assets | $579,818 | | Total liabilities | $669,492 | | Total deficit | $(89,674) | GAAP Statements of Income](index=33&type=section&id=GAAP%20Statements%20of%20Income) GAAP Balance Sheets](index=37&type=section&id=GAAP%20Balance%20Sheets) [Non-GAAP Financial Measures and Reconciliations](index=35&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides detailed reconciliations for key non-GAAP measures, with Q1 2025 FRE at $46.7 million and Adjusted EBITDA at $53.4 million Summary of Non-GAAP Measures (Three Months Ended Mar 31, 2025) | Metric ($000) | Amount ($ thousand) | | :--- | :--- | | Fee-Related Revenue | $106,163 | | Fee-Related Earnings | $46,657 | | Fee-Related Earnings Margin | 44% | | Adjusted EBITDA | $53,376 | | Adjusted EBITDA Margin | 44% | | Adjusted Net Income | $35,274 | Summary of Non-GAAP Measures (Adjusted EBITDA & ANI)](index=35&type=section&id=Summary%20of%20Non-GAAP%20Financial%20Measures) Reconciliation to Non-GAAP Metrics](index=41&type=section&id=Reconciliation%20to%20Non-GAAP%20Metrics) [Key Performance Indicators (KPIs)](index=49&type=section&id=Key%20Performance%20Indicators%20(KPIs)) The firm's FPAUM increased by 3% to $66.4 billion, driven by new capital, with stable average management fee rates across strategies FPAUM Rollforward (Three Months Ended Mar 31, 2025) | ($mm) | Beginning Balance ($ million) | End of Period Balance ($ million) | % Change | | :--- | :--- | :--- | :--- | | Private Market Strategies | $42,717 | $44,398 | 4% | | Absolute Return Strategies | $22,048 | $22,001 | 0% | | **Total FPAUM** | **$64,765** | **$66,399** | **3%** | Average Management Fee Rates (Q1 2025) | Strategy | Average Fee Rate | | :--- | :--- | | Private Markets | 0.55% | | Absolute Return Strategies | 0.69% | AUM and FPAUM Rollforward](index=49&type=section&id=Change%20in%20FPAUM%20and%20AUM) Management Fee Detail](index=51&type=section&id=Management%20Fee%20Detail) [Investment Performance Metrics](index=53&type=section&id=Investment%20Performance%20Metrics) The report details strong Private Markets performance, with PE Co-Investments/Direct achieving 2.08x net TVPI and 20.7% net IRR Private Markets Performance Highlights (Realized/Partially Realized) | Strategy | Investment Net TVPI | Investment Net IRR | | :--- | :--- | :--- | | PE Primary Fund Investments | 1.82x | 13.4% | | PE Co-Investments/Direct | **2.08x** | **20.7%** | | Infrastructure Direct-Oriented | 1.78x | 14.5% | Absolute Return Strategies Performance (Annualized Net Returns) | Period Ended Mar 31, 2025 | Net Return | | :--- | :--- | | One Year | **7.2%** | | Three Year | 5.8% | | Five Year | 7.7% | | Since Inception | 5.9% | Private Markets Strategies Performance](index=53&type=section&id=Private%20Markets%20Strategies%20Performance%20Metrics) Absolute Return Strategies Performance](index=57&type=section&id=Absolute%20Return%20Strategies%20Performance)