GCM Grosvenor(GCMG) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Assets under management (AUM) grew 7% year-over-year, driven by a 12% year-over-year growth in Private Markets AUM [9] - Fee-Related Earnings achieved guidance, with adjusted EBITDA and adjusted net income increasing year-over-year due to a modest increase in carried interest [9][10] - The company expects mid-teens year-over-year Fee-Related Earnings growth in Q3 2023, with strong growth anticipated in 2024 [10][30] Business Line Data and Key Metrics Changes - The Absolute Return Strategies vertical showed signs of stabilization, while private market verticals continued solid growth [9] - Real estate AUM reached $5.5 billion, a 60% increase from two years ago, with $3.8 billion already invested [15] - Private markets now represent 70% of total AUM and 64% of fee-paying AUM [28] Market Data and Key Metrics Changes - Fundraising in Q2 2023 was $1.5 billion, up about 50% from Q1, with 73% of capital raised coming from outside the U.S. [21] - The company is seeing strong demand for its products globally, particularly in infrastructure and private markets [21][64] Company Strategy and Development Direction - The company emphasizes a client-first philosophy and a collaborative culture, which has led to a stable firm structure [22] - The focus on separately managed accounts has resulted in high client longevity and re-up rates of 90% [23] - The company is optimistic about the growth trajectory in real estate and expects it to be a meaningful contributor to fundraising in the coming quarters [33] Management's Comments on Operating Environment and Future Outlook - Management noted that the fundraising environment is beginning to loosen, with positive signs for the second half of the year [21][64] - Despite challenges in the Absolute Return business, management believes it is stabilizing and expects growth next year [55][60] - The company is optimistic about the demand for alternative investments and sees green shoots in fundraising and realizations [64] Other Important Information - The company has $782 million in gross unrealized carry across 135 programs, with significant growth potential from newer funds [36] - The quarterly dividend is maintained at $0.11 per share, with room for future growth [43] - The board approved an increase in share buyback authorization by $25 million [44] Q&A Session Summary Question: Are you seeing industry challenges in fundraising leading to more pressure on fees? - Management stated that fees have remained stable and have not seen pressure from clients regarding fees [48][51] Question: How is the Absolute Return business performing? - Management acknowledged that while the Absolute Return business has stabilized, they are focused on driving inflows and have seen a positive pipeline recently [55][60] Question: What is the outlook for the Secondaries market? - Management expressed optimism about the Secondaries market, noting that it is expected to grow, although discounts are currently wider [67][70]