GCM Grosvenor at William Blair Conference: Strategic Growth Insights

On Wednesday, 04 June 2025, GCM Grosvenor (NASDAQ:GCMG) presented at the 45th Annual William Blair Growth Stock Conference. CEO Michael Sacks highlighted the firm’s historical growth, current strengths, and strategic focus on expanding into the individual investor market. While optimistic about future growth, Sacks acknowledged challenges in the current market environment.

Key Takeaways

• GCM Grosvenor aims to double its 2023 fee-related earnings by 2028.
• The firm has grown from $225 million in assets under management (AUM) in 1990 to $82 billion today.
• Specialized funds, comprising 30% of AUM, are expanding rapidly with higher margins.
• A new $300 million fund targets the individual investor market.
• Significant insider ownership aligns management’s interests with shareholders.

Financial Results

The company has demonstrated consistent growth in AUM, a key driver of earnings power. Private markets have expanded at a high rate, and GCM Grosvenor has shifted capital toward direct-oriented strategies, enhancing margins. The carried interest asset, valued at $415 million, represents over $2 per share. Despite a slow start last year, the firm is on track to achieve its goal of doubling fee-related earnings by 2028.

Operational Updates

Specialized funds, accounting for 30% of AUM, are growing quickly with higher fees and margins. GCM Grosvenor employs an open architecture strategy and boasts a high re-up rate with clients. Over half of its clients invest in more than one strategy, and the firm is delivering institutional expertise to individual investors. The launch of a $300 million fund, supported by internal and external teams, underscores its commitment to the individual investor market.

Future Outlook

GCM Grosvenor is focused on expanding its presence in the individual investor market, expecting significant growth in incentive fee revenue and alternative assets. The firm plans to double its 2023 fee-related earnings by 2028 and is optimistic about the growth of private credit and real assets. Despite current challenges, the firm remains confident in its long-term strategy.

Q&A Highlights

During the Q&A session, CEO Michael Sacks emphasized the firm’s ability to adapt to evolving market conditions and the significant opportunity within the individual investor market. He predicted the emergence of larger firms in this space and reiterated the company’s commitment to growth and client satisfaction.

For a detailed understanding of GCM Grosvenor’s strategic initiatives and financial performance, refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Adam Klauber, Analyst, William Blair: Good morning, everyone. Thank you for joining us. We’ve got a really, really, what I call, cool company, Grossner. First, Adam Klauber, obviously with William Blair. Real quick compliance.

Please see our disclosures for any compliance or or that sort of stuff. But Grozner is, you know, clearly an industry leader and, you know, really differentiated model with showing great track record of really nice compounding growth over time. And, you know, we think the future as they really build out the different different segments looks really, really good. We’re pleased to have Michael Sacks, CEO. Michael, if you wanna come up.

Thank you.

Michael Sacks, CEO, GCM Grosvenor: Thank you. Thank you. Thanks to everybody at William Blair for having us out. This is a it’s a great day for us, it’s very close to home. So it’s nice and easy.

I gotta brighten the mood here on a very gloomy morning outside. So we’ll see if we can make it lively.

Unidentified speaker: Let me see if I can figure out how this works.

Unidentified speaker: Tell me what I’m doing here.

Michael Sacks, CEO, GCM Grosvenor: It’s not exactly the way I’m going make it lively. Do we want you want me just to give you a cue to do it? I’m pushing the forward arrow. It’s alright. Okay, there we go.

Alright. So GCM Grosvenor, our ticker is GCMG. We are a fifty four year old firm headquartered here in Chicago. Have offices in New York and London and Hong Kong, Tokyo, Seoul. I think one of the most important aspects of our story, and I think it’s a really relevant aspect.

So we manage $82,000,000,000 across the broad range of alternative investment strategies, largely like overwhelmingly institutional client base. We’ll talk all about how we’re built. But one of the most important points I think I can make and that

Unidentified speaker: I would like for all of

Michael Sacks, CEO, GCM Grosvenor: you to keep in the back of your minds is that the amount of evolution and change that we’ve seen in the alternative investment universe, that business is pretty much incomprehensible, right? So you go back I started in the late 1980s, got to Grosvenor in 1990, we were $225,000,000 We had six people. It was unsettled law whether institutions and foundations and endowments were allowed to invest in distressed bonds, were allowed to invest in hedged strategies where there were short selling. It was like not truly not an industry. It wasn’t a category.

Wasn’t an asset class. Nothing was on the efficient frontier. And the evolution from that time. I tell the story that my I went to work for an older man who had founded the firm in the 70s. He was a real visionary.

He did have a real vision of the future of alternatives and absolute return strategies, liquid markets alternatives. He was not a real business guy. I described it when I got there. Was a twenty year old startup. We thought we could see these strategies end up on the efficient frontier.

We’re two twenty five million. People would ask in a meeting, how big do you think he can be? His track record was great. How big do you think he’d be? He’d say, oh, I think we can manage 500,000,000 or a billion.

And I would say, Dick, you can’t say that because you literally sound nutty if you say you think we can be that big. And we lose credibility when you say that. Say, don’t know, maybe we can be 50% bigger or something. Just don’t scare people away. I think nobody saw.

Dick had vision. I don’t think anybody saw where the alts would go that we’d be managing 20 plus percent of endowments and every one of the strategies would be on the efficient frontier and multiple implementation methods. So our business has evolved with that and one of the things we’ve been able to do since 1990 is evolve as the strategy set, as the marketplace, as the investor universe has evolved. And I I lead with that. I start with that because ten years from now, the world’s gonna in our in our space is gonna be different than it is today.

We have a proven track record of evolving with that universe. We were one of seven firms back then. There was nobody doing what we were doing. And we have a proven track record of being able to grow with this space, grow with the industry, evolve with the space, evolve with the industry. And we will continue to do that.

And I really think that’s I think that’s important. And I just want to lead with that. We are a solutions provider. That means that for 71 of our AUM, we sit down with clients. We structure portfolio objectives and constraints with clients.

And we enter into a high touch relationship with clients. It’s not like we’re giving them a fun document and receiving a wire transfer, quarterly letter and one annual general meeting. It’s a real relationship. It ends up making for very sticky, very long term client relationships. And I think we talk a little bit later about the average tenure of our top clients and things like that.

But it’s it is an approach we adopted in the 90s. We did it simply because we were trying to build the business and we thought it was in the best interest of clients to do that. We thought that was the best deal for the clients. The best structural relationship was to have the separate account. Let us lead by example on that separate account, let them leverage our resources on their own direct investing activities in the space.

And it turned out that it was you know, we thought well, initially we thought you could get this intermediate or something. Turned out as sort of super sticky, super high value add in terms of the moat and the client relationship and the depth of the client relationship. And so I think that is a distinguishing factor. We have grown our specialized fund business significantly. It’s 30% of AUM today and it’s growing fast.

It’s got a high growth rate. That’s good business. It’s probably higher average fee business and it is probably a bit higher margin business because there’s less sort of support work associated with the specialized funds and it’s growing nicely. And we’ve been fortunate that our successor specialized funds in the different verticals that we have have been bigger than the prior fund and so that’s all growing. We’re getting re ups from the existing investors and we’re adding investors.

On the strategy side, we are open architecture across the entire breadth of the alternative strategies. So it’s real assets, infrastructure, real estate, private equity, private credit, hedge funds. And we we will invest open architecture outsource where we allocate capital externally. We will invest in secondaries. We will invest in we have large co invest business, large and fast growing co invest approaches in all of those strategies, and we have direct investment efforts in all of those strategies.

And our theory again was be in a position to give the clients what they want, to build these portfolios for the clients. It’s a very interesting, think, skill set. It’s a cult it’s a little bit of a cultural thing. It’s not it’s not here’s a fund, invest in the fund. It’s it’s sort of relationship.

And I’m going to touch on the individual investor market and the opportunity there in a bit. And I think that core skill set of ours is going to end up providing real return for our firm in terms of how we work with the wirehouses, how we work with the RIAs and the independent broker dealers and even some of the insurers. And I think that that ability to craft solutions and be a partner is going to end up being a big deal in that individual investor space, just as it’s been a big deal for us in institutional space. This slide is just a little slide to just show how we’ve performed as a public company. We came public in the fourth quarter of twenty twenty.

We did that through a SPAC merger. Don’t throw anything at me. Don’t give me a hard time for that. We are pretty much almost officially not a SPAC anymore. I think we hit the five year mark and that’s behind us.

But there were reasons, if anybody wants to know later, we’re happy to talk about them, that we did that. But that’s when we came public. And we’ve had very nice and very consistent growth since we’ve come public as a firm. We’ve grown AUM, which is ultimately what drives our earnings power. Our private markets have grown at a very high rate.

We’ve shifted our capital towards what we call direct oriented strategies. That’s secondaries, co and direct invest, which are typically which are going to be higher fee and higher margin strategies for us. We’ve been able to grow our margins and we still think that we have operating leverage in those margins. And we’ve significantly grown our carried interest asset and our carried interest earnings power. And this is something that I think is also worth like a specific mention because we’ve been in a period of time where transaction activity has been muted for a few years and you haven’t seen revenue coming off that carry asset to drive adjusted EBITDA and adjusted net income the way that you any of you in the room would ever model it.

We’ve had a 400 some odd, you know, is it $415,000,000 carry asset. That’s the firm’s carry asset. The team comp one of the comp pools for the team is to carry so the team has them. That’s just the firm’s share. That’s a significant chunk of the overall.

It’s right around half, a little under half of the overall carry asset. And that $400,000,000 ish asset, which is right around 2, you know, a little over $2 a share on a $12.50 stock price, that has only yielded about 5% from a revenue perspective over the last few years. Nobody would model an asset like that as a that’s net asset value in the ground at the last mark. So that means liquidation value of all the underlying partnerships, all the underlying positions, dollars $414,000,000 to the firm. Nobody would model that as a 5% yield.

Nobody would model that as a twenty percent twenty year kind of runoff. It’s your typical sort of run off on something like that is much faster. So our our revenue from that line item has been depressed for the last several years as we’ve seen limited transaction activity post the rise in rates. And that will change at some point. It just it just will.

It’s a question of when. And importantly, we’re adding to the value of that asset in terms of what we call dry powder carry or carry at work every year. So there is an amount of carry at work behind that. That’s in the money liquidation value. We have carry that is working for us but not yet in the money because the money was raised in the last few years.

It has maybe half of it’s been deployed and it’s not yet been marked up. There is a huge asset behind that. So I’ll show you a slide in a little bit where you can see like what that asset was $133,000,000 We collected, I don’t know, 85,000,000, 90 million of the $1.33. So as the $1.33 ran down by, call it, $90,000,000, we screw that asset to four fifteen. That same thing, I think, will happen where we’ll collect on the four fifteen, but it’ll still be a bigger asset five years out than it is today.

And there’s a lot of power there that we’re not just we’re waiting for. We don’t control that. Our financial performance has good. We’ve got it here both from on the bottom from when we went public to and on the top just last year, we had a good first quarter of twenty twenty five and we’ve had good solid growth across the board since we’ve come public as a company. I should mention probably that we are significant shareholders in our own stock.

We own 70 plus percent of the economics of the stock. And so we are completely aligned with investors in our stock. This is the Solutions business and these are some of the statistics that I was talking about earlier where our average relationship that you see down in the middle at the bottom, average relationship with our separate account clients is of our top 25 clients is fifteen years. We have clients in that top 25 that we go back to the late 1990s with. We’ve worked for them.

And as I mentioned, it becomes very sticky, a very solid moat. We didn’t necessarily see that in the 1990s when we embraced this approach. We thought we could get disintermediated. Knowledge transfer was part of what people were looking for. It turns out you’re sort of the institutional memory for these giant institutions.

One of the points that I want to make on this solutions page, for some reason people hear solutions and hear separate accounts and I think they think they are smaller clients, maybe clients who don’t have the staffing or the capability to put these programs in place their self. That’s actually not the case at all. Our clients in the solutions space, these are huge clients. These are the state of Texas and CalPERS Texas teachers and CalPERS and the state of New York and in in Pennsylvania and sovereign wealth funds around the world. And they are huge clients who find value in that separate account relationship where they have a stable partner as almost I think like the base of a pyramid for a particular approach within a strategy.

And so I like to point that out because I think sometimes we think people are surprised when they realize these are fancy sophisticated clients that have their own full staff, pursue direct investment activities on their own, have for sure have fund allocation efforts on their own and they see real value in working with a firm like ours. We’re not the only one, Hamilton Lane, Stepstone, but that place have have much better valuation metrics than those other guys. We’re not the only ones. That space is a space that delivers a lot of value in different ways for the clients and they like it and it’s growing. It’s going to still grow in the institutional world.

Important to the lower on the right, over half of our clients are invested with us in more than one strategy. So I mentioned earlier all the different strategies we have and all the different methods of implementation that we have. Over 50% of our clients are working with us in more than one strategy. That means we still have 50% to go where we can grow in a different strategy. That number has grown a tremendous amount over the last decade.

And I think it will continue to grow. I don’t know the number specifically of but it would be higher of clients who are multiple approaches within a strategy. So they’re a primary client, meaning we allocate on their behalf. They’re a secondary client and they’re a co invest client all within private equity. So if you looked at how we’re being utilized by our client base and how we’re being embraced and adopted by our client base, there’s really a lot of stickiness.

There’s a lot of penetration there. And find a lot of ways to add value. One of the things that is happening in the institutional world for alternatives is a kind of a you can see a desire for a kind of smaller number of large trusted relationships. We think we benefit from that. To the extent people want to chunk down their relationships a little bit and do more with a smaller number of people, we think that’s good for us.

And we probably have benefited from that already and we think we continue to. This whole space, this whole institutional space is projected to grow. I don’t remember the numbers in the latest survey, but it’s like high 70s percent or more that are of the institutional investors that are in alts that say they’re increasing their alts exposure. So this is a this core business that we have that we’ve done well with, that we’ve grown over the last five years as a public company that we think there is a great value proposition for the clients, that core business is growing. We’ll talk about some of the other avenues for growth in a minute.

This chart, I don’t know if you have these presentations, you take them home or not or you can get them online, but this just shows the value of an initial sale because you get we have like I think it’s slightly north of 90% re up rates. So when we make a sale, there’s an investment period. When the money is fully invested, the initial capital fully invested, we go back and say, okay, you’re out of capital. It’s time to re up for the next set of vintage essentially. 90% of the clients that we make an initial sale to re up.

85% of the 90 that re up, re up again. When you lay it on top of each other and by the way, they re up at a higher rate. So their portfolios have grown in the three, four year period of time. Their our performance hopefully has accreted during that three, four year period of time. So when they re up, they re up at a higher rate.

So they start at 100, they re up at 130, and you get 90% of them. When you lay it out, this is what it looks like, and your initial sale ends up being a relationship that grows for over a decade and generates fees for a decade and a half or longer. And it’s very valuable when you think about it in that context. Sometimes you just look at what happened this year, but when you think about the actual implication of this year going out for the next twelve, fifteen years, it’s pretty powerful model. It’s a good business essentially.

That is, I should mention, a frame of mind, which is I just look at our space and I look at our company and I think we’re growing faster than the indices. I think we’ve got a fundamentally better business, cash flow generation, margin, lack of need for ton of capital, EBITDA to free cash flow conversion, all those things. It’s a good business and I think we’ve a valuation that’s lower than the general market with an above average business. This is the specialized funds franchise as I’ve talked about. You see the growth there and you can see it here both in terms of how we’ve grown the entire commingled fund private markets commingled fund business, which we built from a pretty low level back in 2018 to and then how each of the funds have kind of grown over time.

And that’s a decent check on the viability of the franchise if you will for the particular verticals. One of the things we have a business development team that calls on clients. We cover clients at the firm. Business development, investment, senior management touches all the major clients in the firm. So we try to have essentially like a distributed management of our top clients.

So they know the whole firm. They of course know the investment people on their account. There’s a business development group that services them stays connected very regularly. And they all know me or our President, John Levin, or our CIO, Fred Pollack, our CFO, Pam Bentley. Like everybody kind of gets involved.

We try to distribute that relationship. We’ve worked on culture from the 90s. Nobody owns clients at Grosvenor. We work real hard to not have sandboxes at Grosvenor and it’s kind of one firm and we’re all working for that firm and for that common goal. When you think about that setup and you think about the cross selling opportunities, it makes a I think it makes a ton of sense and you think about like the long term value of a relationship.

We have second and third generation Grosvenor partners working for the same client. I’m one of the only ones left from 1996 when we added a few of these big clients and we’ve been able to kind of we’ve been able to kind of pass that down. From a business development perspective, on the commingled fund page specialized fund page, we have tried to get investment vertical leaders, particularly in the specialized funds where it’s much less primary allocation and more of the direct oriented strategies, we’ve tried to get them focused on actually raising capital. Don’t just rely on the BD team. Don’t rely on senior management.

You all take responsibility for growing your franchises. You get pieces of the carry, you get bonus pool grows when revenues in the vertical grow. And so we want you all to be thinking like business owners, trying to drive and grow your vertical. I think part of what I think happened in the alternative investment space is started out everybody was a generalist. I was a generalist.

You had to be a generalist. You look at the big New York firms, we did everything. There was no industry. Then you came to a point in time where someone could be just an investor, just a business development person, just this. We’re trying to push a little bit of that back.

And I think that by doing that, the probability that this chart here continues to go up into the right is high because these teams are now the fund four close ends and they start on fund five the next day. And that’s the culture we’re trying to build. I mentioned the long term tailwinds already, so it was 78 percent that are saying they’re going to grow their alts allocation over time. And you can see the AUM is just growing at terrific clip industry wide. That’s not going to change the value proposition I have talked about.

This particular slide is a value proposition in our absolute return strategies. We’re in a period of time now where there may be more of a premium on liquidity. We’ve always viewed absolute return as kind of a stable business that can compound over time, but we don’t see huge net flows there, net inflows. It is conceivable. You probably read about people the big secondaries deals that are getting done.

People are finding themselves a bit less liquid. There’s not been transaction activity to pay returns. And so we always like having this absolute return strategies business. It’s a great cash flow. It’s got a terrific DCF value.

It intellectually adds a lot of value and strategic value for our direct investment activities for the whole of the firm. And at some point, it will grow pretty good. And with the liquidity premiums, this could be one of those times. Private markets has been going gangbusters as I think you all know. Real assets within private markets, the real estate infrastructure, particularly infrastructure, very fast growth right now and also private credit, very fast growth right now.

And I think the way they’re growing it plays to kind of our strengths of being able to give a comprehensive approach, a diversified comprehensive approach. You can get some funds, you can get some direct investing, can get some co investing and some secondaries. So it makes a lot of sense. We have, as I mentioned, terrific we have depressed incentive fee revenue line. We look at what our fee related earnings are from the management fees, essentially what do we think we have turning lights on before you get to performance.

Our performance fee line, our incentive fee line, which is that both ARS and carry, I think has as I mentioned earlier, a lot of upside. This is the big upside story for us. We are not baking this into our numbers for ’25. We are encouraging people to be restrained in how they see this build. But the individual investor with huge, huge wealth is massively under allocated to private markets.

And where they are allocated to the private markets, they’re massively under diversified. So the portfolios of high net worth clients inside the RIA channel, kind of even inside the wirehouse channel and the IBD channel, they don’t look like institutional portfolios today. They are 5% allocated to alternatives instead of 25% plus, maybe 25 to 35%. And they have one private equity fund or maybe 2% instead of diversified private equity portfolio consciously and intentionally spread across vintages with primary, secondary and co invest in it to manage fee. There’s just not that level of evolution there.

There will be. There’s just no question there will be. It may and it will grind forward for a decade. So the amount of growth here I get asked sometimes, well, there’s Blackstone’s been there. Is it too late?

It’s so not too late. It’s not too late for anyone. And I said this in a meeting the other day, I predict that five years from now, there will be some today that is bigger than Rovner is today just in this channel. So there’s going be a ton of opportunity for anybody. Mark Rowan at Apollo was talking about how much opportunity there is in this space and how it’s not too late for anybody and it’s going to provide tremendous growth and backdrop of growth for the industry.

We believe that. We’ve made some pretty specific steps to do that. We launched a $300,000,000 fund that we’re now in market and we can see it’s going to be slow, but it will build. It’s grinding every week. It’s a little bit going a little more and you can track who’s requesting all your documents and we’re building an internal team.

We partnered with an external wholesaling team. So we’re very focused here and we think this has great upside. But we are caution we don’t want people to get ahead of us on this in terms of their models and things like that. It is all about, as I said, delivering the institutional experience to individuals. We’re public with a goal of doubling our 2023 fee related earnings by 2028.

And we said last quarter on our call, we remain confident in our ability to deliver on that goal. We were a little bit ahead of ourselves last year, so we got off to a good start with regard to that goal. And with that, I will turn it over to you to close or we’re going be in a room taking questions after this.

Adam Klauber, Analyst, William Blair: Well, you Michael. That was fantastic. We’ll do Q and A at the breakout in the second floor up there.

Michael Sacks, CEO, GCM Grosvenor: Thank you. This presentation has now finished. Please check back shortly for the

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.