GCM Grosvenor(US:GCMG)2023-11-10 14:12Financial Data and Key Metrics Changes - Fee-related earnings increased by 16% year-over-year, with private markets management fees growing by 10% year-over-year, marking the tenth consecutive quarter of double-digit growth excluding catch-up fees [13][28] - Assets under management (AUM) reached $76 billion, a 5% increase from the previous year, with total fee-paying AUM also increasing by 5% year-over-year [53] - Adjusted EBITDA and adjusted net income grew by 5% and 7% respectively [28] Business Line Data and Key Metrics Changes - The infrastructure vertical raised approximately $580 million, more than doubling its AUM from $6 billion at the end of 2020 to over $13 billion by the end of Q3 2023 [9] - Private markets now represent 65% of fee-paying AUM, up from 54% at the end of 2020, with private markets management fees growing at a 13% compound annual growth rate over the last three years [23][44] - Absolute return strategies management fees remained stable in Q3 compared to the previous quarter, with expectations for stability in Q4 [24] Market Data and Key Metrics Changes - The company noted a moderate uptick in activity levels in the market, although investors are still not moving as quickly as they did two years ago [15] - The pipeline for fundraising has more than doubled over the past year, indicating strong future capital formation potential [10] Company Strategy and Development Direction - The company is focusing on customized impact solutions, leveraging its open architecture sourcing platform to broaden its funnel of impact investments [20][50] - There is a strong emphasis on maintaining a disciplined cost structure to grow margins, with a fee-related earnings margin of 37% [16] - The company aims to expand its individual investor efforts and bring more products to the individual investor channel [73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued double-digit growth in private markets management fees and stabilization of absolute return strategies management fees [29] - The company anticipates significant growth potential in incentive fee revenues as M&A activity returns [56] - Management highlighted the importance of performance in driving inflows, particularly in the absolute return business [70] Other Important Information - The company has maintained a healthy quarterly dividend of $0.11 per share, with potential for further growth [28] - Non-GAAP general and administrative expenses declined to $17.5 million due to reduced costs [27] Q&A Session Summary Question: Did all expected funds have closes this quarter? - Management confirmed that some capital expected to close in Q3 was pushed to Q4, but they remain confident that second half fundraising will exceed the first half [62][63] Question: What is the outlook for the secondary market? - Management noted that while discounts remain wide, there is pent-up demand for transaction activity, which is expected to pick up next year [71] Question: How is the company addressing the retail fund vehicle? - Management acknowledged the growth in individual investor fundraising and expressed intentions to focus more on this channel in the future [73]