GCM Grosvenor Inc. Q3 FY2024 earnings call

• GCM Grosvenor reported strong Q3 results with fee-related earnings up 18% and adjusted net income up 24% year-to-date. - Raised $1.4 billion of new capital in Q3, with year-to-date fundraising at $4.8 billion, a 34% increase YOY. - Private markets continue to be a key driver, with private market fee-paying AUM growing 7% YOY. - Focus on individual investor channel, having raised over $3 billion from individual investors since 2020, and announcing new partnerships for interval fund private market products. - Absolute return strategies performance has been strong, with the multi-strategy composite generating a 12.5% gross rate of return over the last 12 months.

Private markets were a key driver in the quarter, with private market fee-paying AUM growing 7% year-over-year. Private markets now represent 71% of total AUM and 66% of fee-paying AUM. Private markets management fees grew 6% for the quarter and 8% year-to-date. Absolute return strategies management fees stabilized; Q3 ARS management fees increased 2% year-over-year, and full-year 2024 ARS management fees are expected to be stable relative to last year. Private markets management fee growth for full-year 2024 is expected to be 9% to 11% over the prior year, depending on fourth-quarter specialized fund closings.

• Expect fundraising in the second half of 2024 to exceed the $3.4 billion raised in the first half. - Confident in doubling 2023 fee-related earnings by 2028, with this year's growth on pace to achieve that goal. - Private markets management fee growth for full-year 2024 is expected to be 9% to 11% over the prior year. - Absolute return strategies management fees are expected to be stable in 2024 relative to last year.

Q: Crispin Love asked about confidence in fundraising in the second half and specific drivers.

A: Michael Sacks stated confidence due to a strong near-term pipeline across all strategies, with fundraising expected to be a solid quarter and the pipeline significantly larger than a year ago.

Q: Bill Katz inquired about revenue growth for FRE and margin expansion.

A: Michael Sacks mentioned confidence in driving private market management fee growth 10% or better, with incentive fees having significant upside from existing assets and capital raised.

Q: Ken Worthington asked about wealth management partnerships and private credit outlook.

A: Jonathan Levin discussed partnerships as not mutually exclusive with internal distribution, and Michael Sacks and Jonathan Levin commented on private credit being a growing space with secular trends continuing regardless of short-term cyclical factors.

Q: Stephanie Ma asked about private credit industry outlook post-election.

A: Michael Sacks and Jonathan Levin noted private credit is a growing space with secular trends driven by capital demand, and transaction activity picking up post-election could benefit private credit.

Q: Bill Katz asked about realizations and payout ratio for carried interest.

A: Michael Sacks stated payout ratio depends on revenue growth, with historic ratios comfortable for planning and modeling, and margin opportunity expected as revenues grow.