GCM Grosvenor Q4 Earnings Call Highlights

GCM Grosvenor (NASDAQ:GCMG) executives highlighted record fundraising, higher assets under management, and expanding margins while discussing fourth-quarter and full-year 2025 results, pointing to a strong pipeline entering 2026 and an increased share repurchase authorization.

Investment performance and market backdrop

Chairman and CEO Michael Sacks said 2025 investment results were “strong across the board,” calling them the cornerstone of the firm’s value proposition. In Absolute Return Strategies (ARS), the firm’s Multi-Strategy Composite generated a 15% gross rate of return in 2025. Infrastructure, which management described as its fastest-growing strategy recently, returned approximately 11% for the year. Sacks added that other verticals were positive and competitive in aggregate, and said the firm had about $12 billion of dry powder.

Sacks also addressed recent market volatility, which he said appeared driven by concerns over AI disruption and its impact on equity and credit valuations for SaaS businesses. He emphasized diversification across the platform, noting that typical portfolios include exposures to several hundred companies or assets on a look-through basis across markets, industries, asset types, and geographies. On SaaS exposure specifically, he said it represents 4% of total AUM and less than 6% of credit AUM, adding that the firm believes its exposure is lower than peers and “very limited” overall.

He added that the firm views SaaS businesses as differentiated and not “going away,” and said SaaS will benefit from AI. In SaaS-related credit, he said attachment points are generally protective against impairment. Sacks said the pullback created opportunity and noted the firm’s absolute strategies portfolio had positive performance in January, adding that this type of environment is often one where ARS can add value. He also said the platform has more exposure to AI “disruptors and beneficiaries” than to businesses potentially harmed by disruption.

Record fundraising and pipeline entering 2026

President Jon Levin said 2025 was the best fundraising year in firm history, with $10.7 billion of total capital raised, including about $3.5 billion in the fourth quarter—both records, according to management. Levin said the fundraising was diversified across strategies, with every investment strategy contributing meaningfully and all showing sizable pipelines heading into 2026.

Levin provided examples of client activity during the year, emphasizing cross-selling and long-term client relationships:

• A large public pension expanded a multi-asset private markets program focused on smaller-cap opportunities in private equity and real estate. Levin said the firm designed a new program to address the client’s “missing middle” of real estate opportunities, and the client also recommitted to original programs at more than twice the initial allocation.
• A long-standing client expanded into ARS in 2025, part of what management said was $1.9 billion of ARS fundraising during the year, the highest amount since 2021.
• In the individual investor channel, Levin cited demand for “white-labeled solutions,” saying the firm raised almost $1 billion across 11 such solutions over the past two years.
• An Asia-based institutional client increased exposure to Japan-focused ARS strategies through a customized program leveraging the firm’s global ARS team and relationships with Japan-based managers.

In the Q&A, management said its current pipeline is larger than it was a year ago, despite raising $10.5 billion through December 31. When asked whether 2026 fundraising could exceed 2025, Sacks said the firm’s bottom-up internal build would exceed last year, but management was not budgeting for that outcome and was not ready to state on the call that 2026 will surpass 2025. He said the pipeline could “give 2025 a serious run for its money,” with the base budget in line with last year.

AUM growth and wealth channel initiatives

Sacks said the firm ended 2025 with $91 billion of AUM, up 14% year-over-year and a new high watermark. Fee-paying AUM increased 12% to $72 billion, while contracted not yet fee-paying AUM increased 27% to $10 billion. He described contracted not yet fee-paying AUM as an important leading indicator of future revenue growth.

Management also highlighted progress in the individual investor channel, where AUM increased 18% year-over-year. Sacks said the firm launched Grove Lane Partners, a wealth management distribution joint venture, launched an infrastructure interval fund that is “now raising money every day,” and filed registration documents for a registered private equity fund that Grove Lane will support. While noting that new distribution markets take time to ramp, he said management remains enthusiastic about the wealth channel’s future.

Financial results, margins, and outlook items

Sacks said 2025 Fee-Related Earnings (FRE), Adjusted EBITDA, and Adjusted Net Income increased 11%, 15%, and 18%, respectively, versus 2024. He said FRE margin was 44% for the year, 200 basis points higher than 2024, and added that the firm believes it still has positive operating leverage. He attributed contributions to Adjusted EBITDA and Adjusted Net Income in part to $68 million of performance fees generated from the ARS business, noting 2025 was the fourth time in the last six years the firm generated more than $50 million in annual ARS performance fees.

Chief Financial Officer Pam Bentley said total fee-related revenue for 2025 was $416 million, up 6% year-over-year, and reiterated that FRE grew 11% with margin expanding to 44%. She said private markets fee-paying AUM and management fees grew 10% and 6% year-over-year, respectively, helped by fundraising and conversion of contracted not yet fee-paying AUM. In ARS, she said fee-paying AUM and management fees grew 15% and 5% year-over-year, respectively.

For the first quarter of 2026, Bentley said the firm expects private markets management fees to be relatively consistent with the fourth quarter and expects limited catch-up fees for the year given timing and fee structure. She also said ARS management fees are expected to increase by approximately 5% from the fourth quarter due to positive net flows and “terrific” investment performance.

On expenses, Bentley said FRE compensation and benefits were stable for the year at approximately $148 million, or about $37 million per quarter. She said the firm typically sees a seasonal uptick in the first quarter and expects FRE compensation and benefits to be about $1 million higher in Q1 2026 versus Q1 of the prior year. Non-GAAP general administrative and other expenses were just over $20 million in the fourth quarter, and she said Q1 2026 is expected to be in line with or slightly above Q1 2025. In response to questions about expense discipline, Bentley pointed to investments in scalability and technology, including AI, and said the firm is investing where it sees product growth, such as the individual investor business.

Carried interest, share repurchases, and balance sheet actions

Sacks said carried interest realizations were light in the fourth quarter, but the firm’s earnings power from carried interest continued to increase. He reported gross unrealized carried interest of $949 million at year-end, up $113 million, or 14%, from the end of 2024, with approximately 50%—$478 million—belonging to the firm. He said management believed the balance would increase again after closing the books for the end of the first quarter, citing “real-time positive developments.”

In the Q&A, Sacks said fourth-quarter carried interest was lower than the firm expected, while emphasizing that carry is difficult to forecast and highly diversified across many waterfalls. He said the change in carry at NAV matters because “you don’t know when you’re getting that money, but you are going to get it,” and said the carry asset increased in the fourth quarter even though cash realizations were limited.

On capital allocation, Sacks said the firm remains “capital-light,” highlighting the dividend and prior dividend increases. He said share repurchases are attractive at current valuation levels and noted the firm’s stock was trading at a lower earnings multiple than the S&P 500 and its alternative investment peers, while offering a dividend yield of approximately 5%, according to his remarks.

Management said it increased its buyback authorization by $35 million, leaving $91 million available to repurchase shares. Bentley added that during the fourth quarter, outstanding warrants expired, with a portion exercised resulting in about 10 million shares issued at a strike price of $11.50, generating just over $110 million in proceeds. She said the firm repurchased 2.8 million shares in the fourth quarter at an average price of $11.11, totaling $31 million, and that $56 million remained under the prior authorization at year-end before the additional $35 million approval.

Additionally, management said it is prepaying $65 million of its term loan, which Bentley said will reduce leverage and save more than $3 million per year in interest expense. Sacks said the firm can buy back stock, minimize dilution from stock-based compensation, and repay the term loan without a prepayment penalty.

Looking further out, Sacks reiterated the firm’s longer-term targets, saying it remains on track to more than double 2023 FRE to over $280 million and grow adjusted net income per share to more than $1.20 by 2028.

About GCM Grosvenor (NASDAQ:GCMG)

GCM Grosvenor is a global alternative asset management firm that specializes in customized investment solutions across a range of private markets and hedge fund strategies. The firm partners with institutional clients—including pension funds, endowments, insurers and sovereign wealth funds—to design and implement portfolios that span private equity, infrastructure, real estate, credit and multi‐strategy hedge fund products. Through its multi‐manager platforms and direct co‐investment vehicles, GCM Grosvenor provides diversified access to opportunities that can enhance returns and manage risk in client portfolios.

Founded in 1971 as Grosvenor Capital Management, the firm has built a track record of sourcing, structuring and monitoring alternative investments on behalf of its clients.