GCM Grosvenor Inc.

Good day and welcome to the GCM Grosvenor second quarter 2024 results webcast. 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 1 on your keypad to join the queue. If anyone should require operator assistance, please press star then 0 on your telephone. 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 second quarter 2024 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. These include statements regarding our current expectations for the 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 factors 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. Reconciliation of non-GAAP metrics to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on 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.

Thanks, Stacey. We had a strong second quarter building on our recent momentum. During the quarter, fee-related earnings increased 20% and adjusted net income increased 29% over the prior year. Our private market strategies continue to grow with second quarter management fees growing 11% year over year. Private markets now comprises 71% of our total assets under management. Our fee-related earnings margin was 40% for the quarter compared to 31% at the end of 2020. We continue to believe that we have opportunity for further FRE margin expansion in the future. The fundraising environment continued to improve in the second quarter. We raised $1.8 billion, a 26% year-over-year increase, and that brought first-half new capital raised to $3.4 billion, a 45% increase from the first half of 2023. Our pipeline has grown nicely throughout the year, and we expect fundraising in the second half of the year to exceed that of the first half. We've spoken often about the strength of our diversified platform and recently about our confidence in demand for infrastructure and credit strategies. Infrastructure was again the greatest contributor to our quarterly fundraising, with over $600 million raised for this strategy in the quarter, followed by private equity and private credit. Year to date, we've raised $750 million for dedicated credit programs, and we expect our credit platform to see significant growth going forward. Our private markets specialized fundraising of a billion dollars so far this year is a great start, and we are well on pace to see materially higher fundraising levels there than we saw in both 2022 and 2023. All of our private market strategies deliver competitive performance and we believe clients remain appreciative of our value add. Absolute Return Strategies investment performance was again strong, building on the very solid first quarter. Our multi-strategy composite generated a 2.4% gross return in the second quarter, outperforming indices and peers. Gross returns for our composite are 7.4% year-to-date and 12.3% over the last 12 months, and we realized $10 million in performance fees so far this year. As a result of the good performance, our ARS pipeline has expanded meaningfully over the past year, during which we raised a billion dollars for the strategy. We did have net ARS outflows during the quarter, which resulted from the partial restructuring of one client portfolio. The outflows were at a lower than average management fee, leading to an uptick in our average ARS management fee rate. We expect total ARS management fees for Q3 will be roughly flat compared to the third quarter of last year. The recent volatile markets are the type where absolute return strategies typically show well. Having been through a number of market cycles over the past 35 years, I have great confidence in our ability to add value in difficult market environments. Over the past three years, we've raised $1.8 billion from the individual investor channel. Earlier this year, I told you that expanding our products and distribution in that channel was a strategic priority. We made good progress in that regard this quarter. First, we're excited to share that we will serve as a core independent manager for a private equity interval fund focused on private equity co-investments and secondaries. In addition, we secured a $300 million anchor commitment that we expect will seed an infrastructure product targeting the individual investor channel. We look forward to telling you more about these efforts in the future. Whether the strong long-term demand outlook, our history of high re-up rates, our expanded pipeline, or our operating leverage, there are a number of factors that lead to our confidence regarding the back half of this year and our longer-term goals, which John will address now. We have a lot of ways to win, and are confident in our value proposition for clients, shareholders, and team members. And with that, John, take it over.