GCM Grosvenor Inc.

Good day and welcome to the GCM Grosvenor third quarter 2024 results webcast. Later we will conduct a question and answer session and 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 and then the key zero 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 third 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. This includes 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. A 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. And good morning, everyone. We are pleased to report another strong quarter on our way to a strong full year of growth in 2024. On a year-to-date basis, our fee-related earnings increased 18% and adjusted net income increased 24% over the same period in 2023. Our fee-related earnings margin was 41% for the quarter compared to 31% at the end of 2020, and we continue to believe that we have margin expansion opportunity. We believe that we succeed when our clients succeed, and this quarter we again delivered value to our clients. Performance across our business was solid in all investment verticals. Absolute return strategies performance has been particularly strong with our multi-strategy composite generating its 12.5% gross rate of return over the last 12 months. We similarly enjoyed portfolio appreciation year over year across private equity and infrastructure strategies. Real estate valuations have largely stabilized, and the environment there is good with regard to investment opportunities. Capital formation activity continues to improve across the business, and we are seeing signs of improvement in realization activity. We raised $1.4 billion of new capital in the quarter, bringing our year-to-date fundraising total to $4.8 billion, a 34% increase year over year. We've seen tremendous growth in late stage pipeline opportunities, which are up over 70% today from a year ago with every investment strategy showing real pipeline growth. We continue to expect fundraising in the second half of the year to exceed the $3.4 billion we raised in the first half of the year. And we see strong fundraising momentum heading into 2025. The composition of our recent fundraising highlights the key business drivers that we've discussed on recent calls. The shift to private markets, the shift to direct oriented investment strategies, the power of our separate account model, and the particularly strong tailwinds behind infrastructure and private credit. Over the last three years, 89% of the $20 billion of capital we have raised was for private market strategies. and near 50% was for direct oriented strategies. Today, 71% of our AUM is in private market strategies and 40% in direct oriented strategies. Both of those numbers will continue to increase based on recent fundraising trend lines. Notably, the financial performance of our absolute return strategies has stabilized as expected. Earlier this year, John discussed the stability and growth embedded in our separate account business. The re-up cycle of separate accounts is a powerful foundation of our growth. 42% of our year-to-date fundraising has been in private equity, largely driven by separate account re-ups. Our separate accounts are programmatic in nature and are core exposures inside of our clients' portfolios. We have a considerable re-up pipeline looking out over the next year. Investors continue to increase allocations to infrastructure and private credit and we are well positioned to be part of the solution for them. You may have seen analyst reports about a sell-side event we hosted last quarter spotlighting the competitive advantages of our infrastructure platform. We are experienced, we are global, our track record is good, we can implement all different types of investments, and our sourcing engine is powerful. These differentiators have led to success with our infrastructure AUM doubling over the last four years. We see further growth in the future. In the case of private credit, we are positioned to provide holistic solutions for client portfolios. That includes serving as a single point of entry for the entirety of a client's private credit allocation and providing complementary credit co-investment and secondaries exposures. Investors continue to grow and evolve their private credit allocations, so the growth potential to scale with them is significant. Credit was our fastest-growing vertical by AUM over the last year, and we expect continued momentum there. We remain confident in our five-year growth target of doubling 2023 fee-related earnings by 2028. And this year's anticipated growth puts us on pace to achieve that goal. At the same time, we see significant latent earnings power in our incentive fee opportunity, which will benefit growth and adjusted EBITDA and adjusted net income to an even greater degree. And with that, I'll turn it over to John.