GCM Grosvenor Inc.

Good day and welcome to the GCM Grosvenor fourth quarter and full year 2022 results call. Later, we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press star one on your keypad to join the queue. If anyone should require operator assistance, please press star then zero on your telephones. As a reminder, this call will be recorded. I would now like to hand the call over to Stacey Selinger, Head of Investor Relations. You may begin.

Thank you. Good morning and welcome to GCM Grosvenor's fourth quarter and full year 2022 earnings call. Today I am joined by GCM Grosvenor's Chairman and Chief Executive Officer Michael Sachs, President John Levin, and Chief Financial Officer Pam Bentley. Before we discuss this quarter's results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for our business, our financial performance and projections. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call. Please refer to the factors in the risk factor section of our 10-K, our other filings with the Securities and Exchange Commission, and our earnings release, all of which are available on the public shareholder section of our website. We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of non-GAAP metrics to the nearest gap metric can be found in our earnings presentation and earnings supplement, both of which are available on the public shareholders section of our website. Our goal is to continually improve how we communicate with and engage with our shareholders. And in that spirit, we look forward to your feedback. Thank you again for joining us. And with that, I'll turn the call over to Michael.

Thank you, Stacey. During the fourth quarter of 2022, our financial results were in line with or moderately exceeded the expectations that we communicated on our last earnings call. Despite a challenging backdrop, we performed well for clients while raising $1.5 billion of capital to achieve total funds raised of $7.8 billion for the year. Our private markets verticals continued to grow with Q4 private markets management fees, excluding catch-up fees, rising by 10% over the fourth quarter of 2021 and 14% for the full year 2022. Fee-related earnings for the full year increased by 7%, while FRE margin improved by 100 basis points. As was the case for the entire category, adjusted EBITDA and net income were lower than the prior year due to the capital markets environment. On a bright note during the quarter, we were pleased to launch a new and important specialized fund, Elevate, with a $500 million anchor investment. As with our investment in Grosvenor Insurance Solutions, we believe that the Elevate strategy, part of a broader sponsor solutions category, provides the firm with a lot of promise And John will take you through that in his remarks. Looking ahead, the continued growth of our private markets management fees combined with our strong fundraising pipeline, including our five private markets specialized funds in market, leave us confident that we can compound fee-related earnings in 2023 and beyond at mid-teens rates. While forecasting incentive fees is always a challenge, The earnings power represented by our absolute strategies performance fees combined with our significant carry asset give us confidence that we have similar strong rates of growth in adjusted EBITDA and adjusted net income over time. For 2023, we can achieve these objectives with lower levels of total fundraising than we saw in 2022. That said, Like last year, we believe total fundraising in 23 will be weighted towards the back of the year and will exceed or equal 2022 levels. Overall, we expect full year 2023 growth in private markets management fees in the mid to high teens over 2022. For Q1 23, we expect continued strong private markets management fee growth, excluding catch-up fees of 11% to 13%, over Q1 of 22, with overall private markets management fee growth a couple of points below that due to minimal expected fund closings in the quarter. Due to the back-end weighting of our fundraising, the limited Q1 catch-up fees, the full effect of the 22 absolute return strategies results, and the timing of certain compensation-related expenses, we expect Q1 fee-related revenue and fee-related earnings that are both slightly lower than Q4 of 22. This month marks the two-year anniversary of our first earnings call as a public company, and it is worth reflecting on our performance over that period of time. Since coming public, we've raised $17 billion of new capital, of which $9 billion was in fee-accretive strategies such as co-investments, secondaries, and direct investments. With more than $10 billion of dry powder across strategies as of year end, our fundraising success leaves us enthusiastic about our ability to capture investment opportunities and generate alpha for clients. During the last two years, we have grown both private markets fee paying AUM and management fees by 32%, with private market strategies now comprising 63% of our fee paying AUM. up from 54% just two years ago. We believe that this double mix shift, the movement towards more private markets AUM and more fee accretive strategies will continue to be a driving force of value creation going forward. In addition to the growth we have achieved, we have made strategic investments in our business to capture white space and lay the groundwork for continued growth in the coming years. Our offices in Toronto and Frankfurt, our new efforts in insurance solutions where we've already seen results, and our new sponsors' solution efforts all provide significant opportunity. Our fee-related earnings margin increased from 31% two years ago to 36% at year end as we realized the scalability and operating leverage embedded in our business. We believe we have continued room to expand in that regard. Our existing clients are re-upping at higher rates and in greater amounts, and we are growing our specialized fund franchises with successor funds achieving larger size and scale than their predecessors, all while bringing new funds to market. Finally, we have made good on our commitment to return significant excess cash to our shareholders. Since going public just two years ago, we have paid 74 cents in cumulative dividends per share and increasing our quarterly dividend four times from 6 cents to 11 cents per share. As of Friday, our annualized quarterly dividend was 4.7%. In addition, we've returned 44 million of capital through share and warrant repurchases. We have managed our share count, and as Pam will describe, we intend to significantly mitigate any dilution associated with our LTIP and stock-based compensation going forward. In closing, despite last year's tough environment, We are proud of our results both last year and over our first two years as a public company. We delivered value for our clients despite a powerful paradigm shift, significant market losses, and record-setting volatility. The value proposition for clients and the strength of our business model have shown well, while the opportunities for clients and shareholders in 23 and beyond are as compelling as they have ever been. Importantly, investor demand for alternatives remains strong. We continue to believe that our stock represents good value, and we look forward to delivering for all of our stakeholders going forward. And with that, I will turn it over to John.