Summary of GCM Grosvenor Conference Call Company Overview - **Company**: GCM Grosvenor (NasdaqGM:GCMG) - **Industry**: Alternative Asset Management - **AUM**: $87 billion - **Client Approach**: 70% of AUM in customized separate accounts [1][3] Key Financial Highlights - **Record Fundraising**: $10.5 billion for the year, with $3.5 billion in Q4 [5][10] - **Performance Fees**: Strong performance fees from the ARS business, although realized carry revenue was lighter than expected [6][10] - **Operating Leverage**: Fee-related earnings margin increased by a couple of hundred basis points, with expectations for continued operating leverage [7][10] - **Pipeline Growth**: Current fundraising pipeline is larger than a year ago, indicating strong demand for alternative investments [10][15] Strategic Focus Areas - **Wealth Channel**: Identified as a critical area for long-term growth, with high re-up rates (90%) from clients and significant opportunities for cross-selling [18][21] - **Infrastructure Investments**: Targeting infrastructure assets due to fundamental demand, particularly in power generation and data centers [36][38] - **Credit Business**: Expanded to $17 billion AUM, with interest in credit secondaries and asset-backed credit [30][31] Market Dynamics - **Interest Rates and Demand**: Despite rising interest rates, demand for alternative investments remains strong, with no significant capital withdrawal from institutional clients [15][16] - **SaaS Exposure**: Low exposure (4% of AUM) to SaaS, with a belief that AI presents a significant opportunity for growth [12][13][14] Growth Initiatives - **Grove Lane Partners**: Joint venture aimed at enhancing the wealth platform through a dedicated distribution team [50][52] - **Private Label Products**: Development of customized products for RIA firms, with 11 relationships established in the last two years [56][58] Challenges and Opportunities - **Credit Quality Concerns**: Negative press around private credit has not significantly impacted fundraising, indicating resilience in client relationships [32][33] - **Infrastructure Growth**: Anticipated increase in target allocations for infrastructure investments as demand continues to rise [27][36] Future Outlook - **Long-term Goals**: Aiming to double fee-related earnings (FRE) from 2023 to 2028, with a target of $1.20 adjusted net income per share by 2028 [23][25] - **Market Positioning**: GCM Grosvenor is well-positioned to capitalize on growth opportunities in the wealth channel and infrastructure sectors, with a focus on maintaining strong client relationships and performance [21][22][36]

Financial Data and Key Metrics Changes - In 2025, GCM Grosvenor achieved a record fundraising year, raising $10.7 billion, with $3.5 billion raised in Q4 alone, marking significant growth compared to previous years [4][5] - Fee-Related Earnings, Adjusted EBITDA, and Adjusted Net Income increased by 11%, 15%, and 18% respectively compared to 2024 [5][24] - The company ended 2025 with $91 billion in assets under management (AUM), a 14% increase from the end of 2024 [7] - Fee-Paying AUM grew 12% year-over-year to $72 billion, while Contracted Not Yet Fee-Paying AUM increased by 27% to $10 billion [8] Business Line Data and Key Metrics Changes - Absolute Return Strategies (ARS) performance was strong, with a Multi-Strategy Composite generating a 15% gross rate of return in 2025 [4] - Infrastructure, the fastest-growing strategy, returned approximately 11% for the year [4] - ARS fee-paying AUM and management fees grew 15% and 5% year-over-year respectively [22] Market Data and Key Metrics Changes - The individual investor channel saw AUM increase by 18% year-over-year, indicating strong demand for customized solutions [8] - The company has less exposure to SaaS businesses, with only 4% of total AUM and less than 6% of credit AUM attributed to this sector [10] Company Strategy and Development Direction - GCM Grosvenor is focused on diversifying its investment strategies and enhancing its wealth management distribution through initiatives like Grove Lane Partners [8] - The company aims to double its Fee-Related Earnings to over $280 million by 2028 and grow adjusted net income per share to more than $1.20 [12] - The firm is committed to maintaining a capital-light business model while increasing shareholder returns through share buybacks and debt repayment [27][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the investment opportunity set and the strength of their fundraising pipeline entering 2026 [5][9] - The recent market volatility is viewed as an opportunity, with management emphasizing the importance of diversification in their investment strategy [9][10] - The company anticipates continued operating leverage and margin expansion through 2028 [30] Other Important Information - The gross unrealized carried interest balance reached an all-time high of $949 million, up 14% from the end of 2024 [7] - The company repurchased 2.8 million shares in Q4 at an average price of $11.11 per share, totaling $31 million [24] Q&A Session Summary Question: Capital allocation plans post-warrant exercise - Management indicated a focus on maintaining a capital-light business model, with plans for share buybacks and debt repayment [27] Question: Operating leverage and margin expansion - Management believes they can continue to drive margin expansion through 2028 [30] Question: Future of the absolute return business - Management remains cautious about budgeting for organic growth in the absolute return business but acknowledges recent successes [34] Question: Fundraising outlook for 2026 - Management has a strong pipeline and expects fundraising in 2026 to potentially exceed 2025, but they are not officially budgeting for that yet [58] Question: Performance fees and carried interest - Management noted that carried interest realizations were lower than expected but expressed confidence in future increases [60]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported fee-related earnings, adjusted EBITDA, and adjusted net income increased by 18%, 16%, and 18% respectively compared to Q3 2024 [4] - The fee-related earnings margin for the quarter was 45%, approximately 350 basis points higher than Q3 2024 [4] - The company ended the quarter with a record $87 billion in assets under management, a 9% increase from Q3 2024 [4][18] Business Line Data and Key Metrics Changes - Absolute Return Strategies (ARS) generated a gross rate of return of 14.2% over the last 12 months, with ARS management fees growing 6% year-over-year [5][18] - Private markets management fees increased by 10% year-to-date and 7% year-over-year, driven by solid fundraising and conversion of contracted AUM [18] - The gross unrealized carried interest balance reached an all-time high of $941 million, up 4% from Q2 2025 [6][20] Market Data and Key Metrics Changes - Year-to-date fundraising reached $7.2 billion, surpassing the total for the full year of 2024, with infrastructure and credit leading the growth [5][12] - Insurance clients accounted for approximately 14% of capital raised over the last 12 months and 40% of Q3 capital raised [13] Company Strategy and Development Direction - The company aims to double its 2023 fee-related earnings to over $280 million by 2028 and increase adjusted net income per share to over $1.20 by 2028 [10][22] - The company is focused on expanding its investment strategies across private equity, infrastructure, credit, real estate, and absolute return, with a scalable investment platform [9][10] - The company is actively managing its share buyback program, with $86 million remaining in authorization [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to compound value for shareholders over the long term, citing strong fundraising momentum and investment performance [11][22] - The outlook for ARS is increasingly encouraging, with a strong pipeline and improved investor interest [13][31] Other Important Information - The company announced an increase in its quarterly dividend to $0.12 per share, reflecting confidence in its growth trajectory [10][21] - The company hosted its 2025 Investor Day, highlighting its central role in the alternatives ecosystem and its client-first culture [8][10] Q&A Session Summary Question: Are there ongoing fees for the CFO product? - The CFO is a regular recurring management fee with some carry building over time, and the company will start to enjoy management fees from that pool of capital next quarter [24][26] Question: Why isn't the improvement in ARS reflected in net flows? - Management noted that while interest levels are higher, they are maintaining their flat net flows budgeting assumption for Q4, which is typically a seasonally weaker quarter [27][31] Question: What drives the strong realization outlook in Q3? - The seasonality of Q3 is related to when tax carry is paid in the industry, and the company has a diversified carry across many lines, making it difficult to predict timing [34][37] Question: How is the company managing stock-based compensation and share count? - The company expects stock-based compensation to remain stable, with less than 3% dilution over the last five years, actively managing dilution through buybacks [39][41] Question: What is the current status of the retail business and AUM? - The individual investor channel currently has about $4 billion in AUM, with significant growth in partnerships and separately managed accounts [44][46] Question: Are there concerns in the private credit landscape? - Management indicated that they are not seeing a slowdown in private credit and believe the asset class will continue to grow despite some high-profile credit issues [52][56]

Financial Data and Key Metrics Changes - For the second quarter of 2025, the company reported a 6% increase in fee-related earnings, a 99% increase in adjusted EBITDA, and a 19% increase in adjusted net income compared to 2024 [6][7] - Year-to-date fee-related earnings, adjusted EBITDA, and adjusted net income were up 14%, 17%, and 19% respectively compared to 2024 [6] - The fee-related earnings margin for the quarter was 42%, which is 200 basis points higher than the second quarter of last year [6] Business Line Data and Key Metrics Changes - The infrastructure segment accounted for $1,900,000,000 of fundraising in the first half of the year, contributing significantly to growth [8] - Private credit was the highest contributor to fundraising for the quarter, with expectations of increased diversification in private credit allocations [9] - Absolute return strategies (ARS) had a strong quarter with a multi-strategy composite returning approximately 6% on a gross basis, leading to a 7% increase in fee-paying AUM year-to-date [10][11] Market Data and Key Metrics Changes - Total assets under management (AUM) reached $86,000,000,000, a 5% increase compared to the end of 2024 [7] - Fundraising for the first half of the year totaled $5,300,000,000, a 52% increase from 2024, marking the highest first half fundraising total on record [7] Company Strategy and Development Direction - The company is focused on building out its individual investor channel and has made progress with its distribution joint venture, Grove Lane [11] - The company is also in the market with a structured alternative investment solution, indicating a strategic move towards innovative investment products [12] - AI is a key strategic focus, with increasing adoption expected to enhance efficiency and profitability [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the macro environment, noting strong demand for alternative investments and improved clarity around tax policy [13] - The company remains cautious due to ongoing volatility around interest rates and tariffs, but is well-positioned with $12,000,000,000 of dry powder for investment opportunities [14] - The firm aims to double its fee-related earnings by 2028, reflecting confidence in long-term growth prospects [30] Other Important Information - The company announced plans for its first Investor Day on October 15 in New York, aiming to showcase its growth profile and value proposition [15] - The firm has a strong financial position with robust cash generation and growing unrealized carried interest, which surpassed $900,000,000 this quarter [14][30] Q&A Session Summary Question: Retail uptake on the Evergreen retail vehicle and status on the private equity vehicle - Management indicated that the infrastructure interval fund is generating modest sales and is optimistic about the future of this channel, emphasizing a multiyear build [33][34] - Regarding private equity, management aims to develop their own product similar to infrastructure, with ongoing efforts to communicate progress [37] Question: Performance of absolute return business and fee rate influences - Management noted that while internal forecasts remain unchanged, improved performance has positively impacted the pipeline for ARS [42] - The fee rate has seen slight fluctuations due to idiosyncratic factors, but overall demand remains stable [44][46] Question: Re-ups in a volatile environment - Management reported strong re-ups and client tenure, with expectations for improved fundraising in 2025 compared to 2024 [51][54] Question: Fee pressures in private markets - Management stated that fee conversations have been constructive, with no significant pressures observed [56] Question: Differentiated origination capabilities in infrastructure - Management highlighted the flexible investment model that allows for diverse capital deployment, enhancing deal flow and client solutions [62][66] Question: AI opportunities and modeling - Management emphasized the integration of AI across various functions to improve efficiency and decision-making, with ongoing discussions on best practices [72][76]