This is Samantha Platt from Bank of America. It's my pleasure to introduce Pam Bentley. Pam is the CFO at GCM Grosvenor. She joined in 2020 after 15 years with Carlyle, where she was most recently the Chief Accounting Officer. Grosvenor is a global alternative asset manager solutions provider with approximately $74 billion across private equity, infrastructure, real estate, credit, and absolute return strategies. Pam, thanks for joining us today. Thanks, Sam. Great to be here. Let's start with an overview of the company. You've grown pretty quickly, tripling your AUM from 2010 to 2021. Can you give some context for what you do as a solutions provider and how the business model is differentiated from peers? Absolutely. Again, thanks for having us here today, and good to see all of you. Grosvenor is actually a 50-year-old firm, so one of the oldest in the alts industry. One of the differentiators of the firm is we're one of the few firms that cover the full spectrum of alts liquidity, you know, from liquid public markets, our alternative return strategies programs, alongside our private markets business. We have a very diversified investment set, a pretty diversified client base. We are able to invest in multiple ways with our clients through primary investments, secondary investments, co-investment, and direct products, in separately managed accounts, as well as through commingled specialized funds. As one of the oldest alternative asset managers, can you discuss how the business model has evolved over time and some of the benefits of the multi-asset class strategy you have? Sure. Certainly, the business over the 50-year history has evolved and changed with the industry. We were originally in the liquid side of the business, and then we grew both organically and through acquisition into the private market side of the business. Since then, we've, you know, the tailwinds in the private markets side of the alts industry have certainly fueled our growth on that side of the business. That side of the business now represents almost 70% of our AUM and is still the fastest-growing part of our business. We see that, you know, those tailwinds on the private market side of the world continuing in a strong way. Let's move to customized separate accounts. They represent about 75% of your AUM. What are the benefits of these customized accounts versus specialized funds? You know, it's a good question. Three-quarters of our AUM is in separately managed accounts, and that's the core history, you know, the core business that our company was founded with. We work very closely with clients. The reality, to construct their portfolios based on the return profiles and the objectives and constraints of their program that they're looking for. We really don't care whether a client comes in as a separately managed account client or into a commingled specialized funds. The reason we don't care is because at the end of the day, we, you know, we want to do what's best for our clients. That's just a structural difference of, are you a fund of one, managing your own investment objectives, or do you want to be in a commingled vehicle that gives you potentially more, even more diversification across that particular asset class? We really don't care. We want to do what's best for the client, and we are very customized with our clients. We see both areas of the firm growing. In the separately managed account business, that's a very sticky business. We become very much an extension of our clients, and we really work with them to their investment objectives, at their direction on what is it that they're seeking in particular, in the small and middle market space that we play a lot in that is harder for them to get, you know, on their own, right? It's a very fragmented, large addressable market and growing market. It's very hard for clients unless they're very, very large and have built a very large alt platform to address that very fragmented small and middle market manager space. We also are very, very focused in and have been, and it's been part of our history before it was a thing in ESG and impact investing, and with small and emerging and diverse managers. That's a very large portion of our AUM and our overall platform. When we think about these customized accounts, what does one typically look like? You know, what's the profile? Who's the client? What's the typical duration? Sure. Again, our re-up rate with our separate account clients is over 90%. It's very Once we're in there, we have such a tight relationship with those clients, we have such a culture of client service, meeting the client, you know, a lot of rigor around meeting client objectives and becoming an extension of their staff and, you know, obfuscating that need for them to do these services themselves as well as providing a lot of other value-added and operational services around supporting those accounts. Those accounts tend to be pretty sticky. When we work with a client, we will start off in one particular area. It might be private equities in. They may say, "I want, you know, more exposure to private equity secondaries and co-investments." You know, historically, this world was, you know, what you heard as primary fund investing. The world has morphed, and most of the capital we raise these days are not in primary fund investing. It's in secondaries, co-investment, and direct investing strategies. It may be in a particular space that the client wants, such as infrastructure, for example, that they may want to get a large-scale separately managed account that's in a space that they may not be invested in after they've already gotten to know us through their, you know, typical private equity constructed portfolio with us. They will often, you know, add on adjacencies and white space in their portfolios and tap into the growing parts of the market, with us helping them construct those portfolios. As we think about scaling opportunities, you know, you're pretty mature in private equity, in absolute return strategies, but you are all across the spectrum here. Where do you see the most, you know, outsized growth if we look forward the next, you know, two, three, five years? Sure. I think there is opportunities. There's opportunities in both the expansion of client channels. Obviously there's opportunities in additional asset classes for our clients or growth in existing asset classes. We certainly, again, continue to see significant growth with our existing client base. High re-up rate, when those re-ups occur, we tend to see, you know, those account sizes increase 30%-40% on average, when those re-ups occur. You know, that's one way we grow. In terms of the channel opportunities, we recently launched in 2021, Grosvenor Insurance Solutions. We were one of the first to launch a collateralized fund obligation leverage product in that space to tap the insurance market in a way that allows them to meet their objectives to have exposure to private markets assets, but in an asset class through the use of rated credit and leverage, very similar to a CLO structure, to be able to access, you know, an alt allocation but with a lower risk credit risk type profile. That was the first of that type of product, and we were one of only two issuers at the time that kind of entered into that market. We tend to be very innovative with trying to get into those channels, those client channels, and we see additional growth opportunities with insurance clients in that space. We also will work with insurance clients, to have a separately managed account similar to our historical institutional client base. We are seeing growth in the non-institutional channels in addition to insurance. Much more of our capital raised this last two years has been in the non-institutional space, Obviously there's a very large addressable non-institutional market in retail that the industry is still figuring out how to tap into and working with the regulatory constraints that that plays. We do work in retail distribution through wirehouses, through, you know, typical qualified purchaser type products where those, that's really more your high net worth channels through the banks. There's such a large, you know, addressable untapped market as the industry continues to develop products that can be, you know, placed in and distributed through robust distribution channels into the, you know, mutual fund complexes. There's a lot to do, a lot to work out still, as we have all seen over the last 6 months in particular with these types of products. There is. Where there's a will, there's a way. Where there's profit, there's a way. Our institutional clients have enjoyed the benefits of having a significant alt allocation in their. To generate outsized returns relative to the public markets. There's no reason that the retail, you know, investor out there shouldn't also get to enjoy this. That's gonna be a large addressable market as we continue to figure out how to make that work. I think another strategy you've had some great momentum in is infrastructure. Could you give a little color on, you know, the strategies you have in market now, how that's evolved over time? Kind of where that's come from, you know, the demand side as well. Sure. Again, we've been an infrastructure player for a long time. We have $11 billion of our AUM is in infrastructure, of our $74 billion platform. We have a terrific infrastructure team. These are complex deals to do with that involve a lot of public/private partnerships and working with, you know, various labor organizations as well. These are very complex deals to do. Very under-invested area. Huge opportunity for, you know, private markets to come in to fuel the objectives of the local governments to get infrastructure projects done. We're seeing, you know, you're seeing a ton of success. The more that these public/private partnership projects are completed successfully, the more demand there is, obviously. The number one reason for demand is aging infrastructure everywhere. That said, we have a terrific infrastructure team. We have the ability to implement infrastructure programs, again, through separately managed accounts. If we have a very large client that wants to deploy several hundred million dollars just in infrastructure, we can customize a portfolio for them that can access primaries, secondaries, co-investments, and direct infrastructure exposure for them on an individual basis. Separately, we also have two specialized funds. Two of our specialized funds in the complex. One, again, is a direct infrastructure investing practice. The other one is what we call our Labor Impact Fund. We'll have that, our third in that vintage coming to market here this year. There's high demand for both. Again, to really when you've got a great team that really knows how to partner with labor, in getting these projects done. When I think about your story, one of the most underappreciated parts is this double mix-shift to private markets and higher fee strategies. Can you give us some color on what's driving this mix-shift? Sure. I think, you know, where is there really appetite and where do we see our clients are historically underinvested while there's opportunity, it is in the secondaries in getting good access to co-investment flow, and getting, you know, continuing to get direct access to infrastructure projects and similar assets across the private market spectrum. You have, you really do have the ability to access, you know, access all of the secondaries market in a greater way. Similar to retail, the secondaries market is one that is very underdeveloped in private markets. There is the secondaries. there's such a You know, in the public markets, secondary trading is a huge portion of the market. In private equity, it's you know, it's minuscule relative to its size. There's a huge opportunity in the secondaries market space for that to continue to expand, and our clients are wanting us to help them construct portfolios that are putting them at the beginning, the forefront of being able to capitalize on that opportunity. We are certainly seeing the secondaries, certainly seeing good deal flow in the secondaries market, and obviously the GP-led deal flow in the secondaries market is exponentially growing faster even than the LP-led secondary. We're seeing good demand there. Again, because on the co-investment side, the reason our clients partner with us is we have a really strong access to co-investment deal flow from our very strong and deep manager relationships, again, particularly in the small and middle market manager space, which is really hard for them to access at scale and with a strong economic profile. We really do have, we are able to really source great co-investment deal flow through all of our primary and secondary manager relationships. Is this a trend You know, is there a certain amount of runway left, or is this something you see for the foreseeable future? I think there is, like I said, quite a bit of runway in this market. Again, I think you're seeing that probably across all the solutions providers that we're confident in our growth profile. We just had our earnings on Tuesday. We published pretty specific guidance that we expect our private markets revenues to grow in the high teens and our Fee-Related Earnings this year to grow in the mid-teens. Our margins are expected to continue to increase over time as well. We expect that type of growth, just organically in what we do today, is expected to be maintained for the foreseeable future, even beyond 2023. Moving to carry, you've talked about the momentum behind your carried interest earnings power. What's driving this and what opportunity does it present for shareholders? Sure. Either our separately managed accounts or our commingled funds, the more we continue to diversify into secondary co-investment direct opportunities, the carried interest opportunity continues to increase along with that. Those are higher fee rate assets and for us, you're also seeing this, as you said, in the double mix shift. You're seeing our fee rates continue as we raise more capital in the higher fee rate strategies and secondaries co-investment directs, as well as our specialized fund. You're not only seeing revenue growth from expansion of client relationships, but you're seeing revenue growth from the shift of assets into those strategies. It's I think also driving our carried interest opportunity, our current firm share of that we haven't allocated to even former owners. Our current firm share of carry is about $370 million. That carry, despite market conditions, is up 11% year-over-year. It kinda gives you an idea of how the mix shift is also shifting our carry profile over time, and also kind of our outsized returns in our private market portfolio is driving growth and carry despite current market conditions. That's an absolute asset to us as we go forward and expect realizations in that. We expect that to grow along with obviously returns and valuations in our business. We expect that that's going to provide significant earnings, power and capital back to the business and to shareholders over the future periods, near-term future periods. Something we haven't hit on yet is your capital allocation strategy. How do you think about investing for growth versus dividends and buybacks? Of course, we will continue to reinvest in the business where it makes sense. One strategy that we haven't talked about, is a strategy we just announced in early January. It's what we're calling our Sponsor Solutions program. We announced a strategy with an anchor investor, CalPERS, for a $500 million commitment to launch what we're calling the Elevate strategy. Elevate is going to be focused on the small emerging diverse managers, and really seeding those emerging managers and taking both LP stakes as well as GP stakes in those small emerging diverse managers. That is, that's an absolute, you know, exciting opportunity for us. We look forward to entering that and growing those types of strategies over time. As we think about your dividend, I know some competitors have, you know, a fixed dividend, some do a fixed plus a supplemental performance fee dividend. What do you think about your current approach and how it aligns with your overall strategy? As you were saying on the capital strategy, our capital strategy is that we're going to continue to invest in the business and invest in programs like Elevate. My long-winded Elevate answer was those are the types of, you know, additional verticals, product verticals that we will go ahead and invest in personnel and talent to be able to launch. In addition to scaling from existing personnel. Separately, we are not going to be balance sheet heavy, we do believe in returning capital to shareholders. We have a pretty strong dividend yield. Our dividend has increased from $0.06- $0.11 over the two years since we've been public. We have, you know, approximately 4.8% dividend yield. As our earnings grow from both carried interest and management fee growth, there's no reason we shouldn't see our ability to re-return capital to shareholders through a strong dividend over time. We also have a pretty active share buyback program. We have $45 million remaining under our share buyback program, and we're gonna use that to also return capital to shareholders and manage any dilution. As we think about potential M&A opportunities, are there any white spaces you currently see in the business or geographies you wanna grow to? How has the opportunity set, you know, kind of changed over the last six, 12, three months? Yeah. Sure. First of all, we're, as you can tell, pretty confident in our ability to continue to organically grow the business, through innovation as well as just through expanding our existing client relationships. That said, I think, you know, what we have, we have done a, obviously a large acquisition and done it well. It's these are difficult to do in our space, and so the bar has to be pretty high. There has to be the right cultural fit. There has to obviously be the right economic alignment with shareholders and with the business that, any, management team that wants to partner and join with us wants to have skin in the game. And will be in it for a long time with us and really become part of our fabric. It has to be beneficial to our clients. I should have said that first. First and foremost, it has to be beneficial to our clients, and it has to fill a niche and a need that our clients are seeing in their alts portfolio. Pretty high bar for inorganic activity. Where are some of those opportunities? It is potentially like we talked about a little bit in the retail distribution space. That's a tougher one. There's obviously still a lot to figure out, like I said, on the regulatory side, on the how to make these products work. That's an area where it could be easier to buy versus build, if you find the right partnership. I think there's various areas of opportunistic credit that could be interesting and make sense. We're seeing some of those transactions recently. I think those are probably two areas where I'd say that they look interesting. On a more macro level, you know, you get to sit there, and you get to see conversations and how they've been evolving with investors. How has that been changing? If you're thinking about your LPs, where are they looking to allocate now? Are they still wanting to allocate the same amounts, less? You know, how has that been evolving over the last couple of months? The pipeline is strong. Despite, again, the macroeconomic environment, our client discussions are frequent. Again, on our existing client base, we have pretty strong visibility as to when they're and often we're helping them manage their cash flow and develop their capital deployment plans with us and know when their programs are gonna be ready for re-up. We have pretty strong visibility to our fundraising. Pipeline with our existing clients. We have pretty strong demand with our specialized funds that are in the market. We're seeing that there. For us, again, if you look at our you know, micro factors, that's not saying there aren't challenging conversations in the or challenging market conditions relative to fundraising and the denominator effect that you hear all of us in the industry talking about, that clients are, you know, liquidity constrained if portfolios and the M&A market doesn't pick up, and they're not seeing a lot of cash flow, is there a short-term challenge in being able to expand their alts allocation? Sure. On a micro level with us, again, we're having conversations with clients where they want infrastructure exposure that they just need in their portfolio and don't have, and they don't wanna miss that boat. They're in particular, ESG and impact investing. We were a very early, again, pioneer in that space. We have over $21 billion of ESG and impact assets, and there's a very high demand for that asset class. Hence, again, I'll refer to Elevate and the CalPERS $500 million anchor commitment that we received on December 31st. That is an example of, certainly, I'm sure CalPERS is also and has been public around the denominator effect and liquidity. At the same time, they know they need to invest and go in hard on that asset class. That's part of their objectives. you know, it's a for us, it's about really being a part of the client, being close to our clients, and knowing where they need us and helping them construct those portfolios to meet their objectives. Great. I think that's a good place to pause and see if we have any questions in the room. Yeah. Oh, I think he's coming. She's coming with a mic. This might be repetitive, I apologize. Obviously, you guys were one of the longer-standing alts, but smaller in terms of market size, have pretty a powerhouse investment team with you coming from Carlyle, Stacy coming from Morgan Stanley, and then Jon Lippman, obviously coming from KKR. Strategically, and this is kind of piggybacking on Sam's question, what are the components of your experience from those three alternative asset firms that you would bring to Grosvenor, and what are the things that you might not want to bring to Grosvenor? You may not want to answer the second question, but certainly the first. They're all distinct, as we all know, Morgan Stanley. Sure. Carlyle and KKR. Sure. I'll actually start with the second part of your question. I think there's a lot of good stuff, more than bad stuff to glean from the larger alts and their experience of, from, you know, 2006 forward, of navigating rocky markets and going public and bringing an industry that is so difficult for that was so difficult to understand and trying to make it more digestible. They certainly have made it easier for players like us to follow, right? To tap in these markets to, you know, and be a public company. It helps us accelerate our growth and serve our clients better. We shouldn't be public if our clients also, you know, our alignment with our clients wasn't maintained through that. It drives us. I think that's a good thing of, you know, the alts players being public. Stacy can speak to Morgan Stanley, but Morgan Bank. I do think, you know, I do think our experience with John and I in particular and other member, we have a strong team at Grosvenor, a lot of terrific investors, and client personnel and operations professionals. Really strong team of people that do a lot of them have either come from large public institutions and bring that expertise and that institutionalization and that professionalism and that spirit of client service. We also have a very, an incredibly strong foundation of people who have, in some respects, had their career at Grosvenor. Really, a really special place with a special culture that I think is unmatched. Yet, having been in this industry for a long time and did other alts work even prior to being at Carlyle 16 years, I'm quite old. You know, this is, I can honestly say from being at Carlyle, which is a great firm, excited for their new leadership change, and they're gonna continue to do great things. I can honestly say that the culture at Grosvenor is unmatched. Great place to be. Just one follow-up technical question. More tactical. You talked about the secondaries market, and it's certainly niche, it's growing, and there's a lot of inefficiencies there. Is there an opportunity to build a capital markets business around that to get some of the fees? I think, you know, Carlyle has a little bit of it. KKR was first in really developing a full capital markets business, and I think Apollo is getting more aggressive there. Given it's obviously a smaller niche, is capital markets a business that you guys would get into to help monetize some of those inefficiencies in that market? I think there is absolutely opportunity there in the secondaries market. You know, we are really well positioned given the amount of flow that we can access and the amount of managers we work with. We are pretty well positioned and, in some respects, already see a capital markets level of flow through our sourcing engine. Yes. Is there opportunity there? Absolutely. I think that's an area, you know, you'll continue to see the marketplace evolve. Okay, maybe I'll sneak one more in. Given the higher volatility and uncertainty in the market, are you seeing higher demand for the absolute return strategies today? We're hearing that. I'm sure a lot of you heard that in some of the presentations from the more traditional players this week. I think, in terms of our growth, that we're forecasting in terms of our mid-teens earnings, Fee-Related Earnings growth that we forecasted on our earnings call this week, I think that our liquid book has done exactly what it should be doing, which is, you know, protecting clients' capital in this time of market dislocation. It's certainly the book is performing incredibly well. You know, rocky start to the year along with everyone else. The last nine months we've had terrific return in our liquid books. We are not assuming in terms of our earnings guidance, that there'll be significant inflows. If anything, we're forecasting modest outflows in that business. Where the growth is gonna come is if we continue to keep performing well, and generating alpha, especially in these periods of market volatility and high interest rates. As that happens, we should be able to start to see that business compound through performance, right? It's not really flows dependent to grow earnings there. It's really about generating performance fees there are charged on NAV. As you compound performance there, we should be able to start to see that business pick back up from that perspective, but not certain given the liquidity challenges in people's alts books, that they really do have the dollars available yet to start to deploy back in hedge funds, even though that's what we're also hearing and what it sounds like everyone's hearing. Great. With that, I'm out of questions, and we're out of time. Thank you so much on behalf of everyone at Bank of America. Thank you, Sam. Appreciate it.