GCM Grosvenor(GCMG) - 2025 Q2 - Quarterly Results

GCM Grosvenor 2025 Second Quarter Results GCM Grosvenor reported strong Q2 2025 financial performance, marked by significant growth in AUM, FPAUM, and net income, alongside record fundraising and a declared dividend Q2 2025 Financial Highlights GCM Grosvenor reported strong Q2 2025 results, with AUM and FPAUM up 9% to $85.9 billion and $69.1 billion respectively, GAAP Net Income surging 222%, and record fundraising of $8.9 billion LTM Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | June 30, 2025 | % Change vs Q2 2024 | | :--- | :--- | :--- | | AUM | $85.9 billion | 9% | | FPAUM | $69.1 billion | 9% | | GAAP Revenue (Q2) | $119.7 million | 2% | | GAAP Net Income (Q2) | $15.4 million | 222% | | Diluted EPS (Q2) | $0.05 | 25% | | Fee-Related Earnings (Q2) | $41.6 million | 6% | | Adjusted EBITDA (Q2) | $49.5 million | 9% | | Adjusted Net Income (Q2) | $32.1 million | 9% | - The company achieved record fundraising, raising $8.9 billion over the last twelve months, a 46% increase year-over-year. Year-to-date fundraising reached $5.3 billion, up 52% compared to the first half of 2024[8][15] - The firm's share of unrealized carried interest increased by $36 million from the first quarter of 2025 to $451 million[15] - The Board of Directors approved a quarterly dividend of $0.11 per share[4] Business Overview and Growth Drivers This section details GCM Grosvenor's robust adjusted earnings growth, key business drivers, strategic focus on private markets, diversified fundraising, and expanding carried interest potential Adjusted Earnings Trends GCM Grosvenor demonstrated strong year-to-date growth in adjusted earnings metrics, with Fee-Related Earnings up 14%, Adjusted EBITDA up 17%, and Adjusted Net Income up 19%, reflecting significant longer-term expansion since 2020 Year-to-Date Adjusted Earnings Growth (vs. YTD 2024) | Metric | YTD 2024 | YTD 2025 | % Growth | | :--- | :--- | :--- | :--- | | Fee-Related Earnings | $77.4M | $88.3M | 14% | | Adjusted EBITDA | $87.8M | $102.9M | 17% | | Adjusted Net Income | $56.6M | $67.4M | 19% | Longer-Term Adjusted Earnings Growth (LTM) | Metric | 2020 LTM | Q2 2025 LTM | % Growth | | :--- | :--- | :--- | :--- | | Fee-Related Earnings | $95.1M | $177.3M | 86% | | Adjusted EBITDA | $147.0M | $228.9M | 56% | | Adjusted Net Income | $91.0M | $151.5M | 67% | Key Business and Growth Drivers Since December 2020, GCM Grosvenor has achieved substantial growth in AUM to $86 billion, driven by a strategic shift to direct-oriented strategies and improved LTM FRE Margin, supported by high client retention and channel expansion Growth of Key Metrics (Dec 2020 vs. June 2025) | Metric | Dec 31, 2020 | June 30, 2025 | | :--- | :--- | :--- | | AUM | $62bn | $86bn | | Private Markets % of AUM | 59% | 71% | | Direct-Oriented Strategies % of Private Markets AUM | 39% | 53% | | LTM FRE Margin | 31% | 44% | | Firm Share of Unrealized Carried Interest | $133mm | $451mm | - Key long-term growth drivers include[23] - Client Retention: Approximately 90% private markets re-up rate - Individual Investor Channel: Raised $3.6 billion since 2020 - Real Assets: Raised $17 billion for real assets since 2020 - Margin Expansion: LTM FRE margin has expanded by approximately 1,300 basis points since Q4 2020 Company Profile and Strategy GCM Grosvenor, a global alternative asset manager with $86 billion in AUM, leverages its open architecture across diverse strategies, achieving an 8% CAGR in AUM since Q4 2020, primarily from Private Markets and Real Assets growth - The firm has $86 billion in AUM, with 71% in customized separate accounts, and operates across five main alternative strategies[26][29] AUM by Strategy (June 30, 2025) | Strategy | AUM (bn) | | :--- | :--- | | Private Equity | $31.7 | | Absolute Return | $25.0 | | Infrastructure | $16.9 | | Alternative Credit | $16.1 | | Real Estate | $6.6 | AUM Growth (CAGR since Q4 2020) | Strategy | CAGR | | :--- | :--- | | Total AUM | 8% | | Private Markets | 12% | | Real Assets | 23% | | Absolute Return Strategies | 0% | Fundraising Analysis GCM Grosvenor's diversified fundraising, totaling $8.9 billion LTM and $2.4 billion in Q2 2025, is primarily driven by Americas and Pension channels, ensuring stability and growth - Total fundraising for Q2 2025 was $2.4 billion, and LTM fundraising was $8.9 billion[37][38] LTM Fundraising Diversification | Category | Breakdown | | :--- | :--- | | By Geography | Americas: 62%, EMEA: 20%, APAC: 18% | | By Channel | Pensions: 60%, Government/Sovereign: 11%, Individual Investor: 7%, Financial Institutions: 7%, Insurance: 6% | Private Markets Focus Private Markets AUM grew to $61.0 billion (12% CAGR since Q4 2020), driven by $12.3 billion in specialized fund closings and a strategic shift to direct-oriented strategies, enhancing the firm's earnings power - Cumulative closings for selected private market specialized funds reached $12.3 billion through Q2 2025[42] - Private Markets AUM has grown from $36.8 billion in Q4 2020 to $61.0 billion in Q2 2025, a 12% CAGR[46] - There has been a significant shift to direct-oriented strategies, which now constitute 53% of Private Markets AUM, up from 39% at the end of 2020[21][46][48] Funds Currently in Market | Name | Asset Class | Investment Implementation | | :--- | :--- | :--- | | Private Credit funds | Private credit | Co-investments, Secondaries, Primaries | | Advance Fund II (Advance II) | Private equity | Co-investments, Secondaries, Primaries | | Secondary Opportunities Fund IV (GSF IV) | Private equity | Secondaries | Carried Interest and Incentive Fees GCM Grosvenor's incentive-based earnings potential expanded significantly, with total unrealized carried interest reaching $909 million and the firm's share growing to $451 million, supported by a 10% CAGR in incentive-fee AUM Growth in Firm Share of Unrealized Carried Interest | Date | Total Unrealized Carry | Firm Share | Firm % of Total | | :--- | :--- | :--- | :--- | | Q4 2020 | $395M | $133M | 34% | | Q2 2025 | $909M | $451M | 50% | - The growth in unrealized carry is supported by an increase in AUM subject to incentive fees, which has grown at a 10% CAGR since 2020 to $61.7 billion[57] - Despite the growth in unrealized carry, realized gross incentive fees have been relatively muted, indicating significant embedded value[53][54] Other Key Items & Financial Position This section outlines GCM Grosvenor's strong capital position, including cash, investments, and unrealized carried interest, alongside its share repurchase program and management ownership Capital Management and Ownership As of June 30, 2025, GCM Grosvenor held $355 million in cash and investments, with total potential value of $806 million, supported by an increased share repurchase authorization and 73% management ownership Key Financial Metrics as of June 30, 2025 ($mm) | Metric | Amount | | :--- | :--- | | Cash and Cash Equivalents | $136 | | Investments | $219 | | Cash and Investments | $355 | | Unrealized Carried Interest (Firm Share) | $451 | | Total Cash, Investments & Unrealized Carry | $806 | - The Board increased the share repurchase authorization by $30 million to $220 million in August 2025. As of June 30, 2025, $57 million remained available under the prior authorization[60][62] - Management holds 73% of total shares outstanding, indicating strong insider alignment[61] Supplemental Information This section provides detailed GAAP financial statements, non-GAAP reconciliations, AUM and fee specifics, investment performance metrics, and comprehensive definitions for key financial terms GAAP Financial Statements GAAP Statements of Income for Q2 2025 show $119.7 million in revenues and $15.4 million net income, with the balance sheet reporting $636.9 million in total assets and $657.5 million in liabilities GAAP Statement of Income Highlights (Three Months Ended June 30) | ($000) | 2024 | 2025 | | :--- | :--- | :--- | | Total operating revenues | $116,954 | $119,657 | | Operating income | $20,835 | $19,245 | | Net income attributable to GCM Grosvenor Inc. | $4,800 | $15,437 | GAAP Balance Sheet Highlights | ($000) | Dec 31, 2024 | Jun 30, 2025 | | :--- | :--- | :--- | | Total assets | $612,731 | $636,859 | | Total liabilities | $703,070 | $657,498 | | Total deficit | ($90,339) | ($20,639) | Non-GAAP Financial Measures & Reconciliations This section details GCM Grosvenor's non-GAAP financial performance, with YTD 2025 Fee-Related Earnings at $88.3 million, Adjusted EBITDA at $102.9 million, and Adjusted Net Income at $67.4 million, along with reconciliations to GAAP figures Non-GAAP Performance (Six Months Ended June 30) | ($000) | 2024 | 2025 | % Change | | :--- | :--- | :--- | :--- | | Fee-Related Revenue | $192,386 | $206,120 | 7% | | Fee-Related Earnings | $77,373 | $88,274 | 14% | | Adjusted EBITDA | $87,840 | $102,892 | 17% | | Adjusted Net Income | $56,598 | $67,364 | 19% | | Adjusted Net Income per Share | $0.30 | $0.34 | 13% | - The reconciliation tables show adjustments for items such as non-cash compensation, amortization, transaction expenses, and changes in the fair value of warrant liabilities to bridge from GAAP Net Income to Adjusted Net Income and Adjusted EBITDA[78][81] AUM and Fee Details In Q2 2025, AUM increased 5% to $85.9 billion and FPAUM grew 4% to $69.1 billion, driven by new capital and market value changes, with consistent average management fee rates across strategies FPAUM Rollforward - Q2 2025 ($mm) | Description | Amount | | :--- | :--- | | Beginning Balance (April 1, 2025) | $66,399 | | Contributions (New Capital & CNYFPAUM) | $1,992 | | Withdrawals & Distributions | ($792) | | Change in Market Value & FX | $1,474 | | End of Period Balance (June 30, 2025) | $69,073 | Average Management Fee Rates (Q2 2025) | Strategy | Average Fee Rate | | :--- | :--- | | Private Markets | 0.54% | | Absolute Return Strategies (Mgmt Fee Only) | 0.67% | Investment Performance Metrics This section presents investment performance metrics, highlighting Private Equity Co-Investments/Direct Investments with a net TVPI of 1.76x and net IRR of 17.0%, and Absolute Return Strategies achieving a 7.3% five-year annualized net return Performance of All Private Equity Investments (as of 3/31/25) | Strategy | Investment Net TVPI | Investment Net IRR | | :--- | :--- | :--- | | Primary Fund Investments | 1.63x | 12.5% | | Secondary Investments | 1.42x | 13.4% | | Co-Investments/Direct Investments | 1.76x | 17.0% | Annualized Net Returns of Absolute Return Strategies (as of 6/30/25) | Period | Overall Net Return | | :--- | :--- | | One Year | 10.8% | | Three Year | 8.9% | | Five Year | 7.3% | | Since Inception (1996) | 6.0% | Notes and Definitions This section provides detailed notes and definitions for financial metrics, including non-GAAP measures like Adjusted EBITDA and operational KPIs such as AUM and FPAUM, along with context for performance data and the share repurchase plan - Defines key non-GAAP measures used for evaluating profitability, including Adjusted Net Income, Adjusted EBITDA, and Fee-Related Earnings (FRE)[114][116][119] - Defines key performance indicators used to measure assets, including Fee-Paying AUM (FPAUM), Contracted, Not Yet Fee-Paying AUM (CNYFPAUM), and Assets Under Management (AUM)[122][124] - Details the share repurchase plan, which was increased by $30.0 million in August 2025 to a total authorization of $220.0 million for repurchasing Class A common stock and warrants[129]