管理層發言
Good day, and welcome to the GCM Grosvenor Second Quarter 2026 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 *1 on your keypad to join the queue. If anyone should require operator assistance, please press 0 on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Driebusch Selinger, Head of Investor Relations. You may begin.
Thank you. Good morning. Before we discuss our 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 filings with the SEC related to these statements. We will also refer to non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of non-GAAP measures to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on our website. Thank you again for joining us. And now I will turn the call over to Michael Jay Sacks, our Chairman and CEO.
Thanks, Stacie. And thank you to all listening to the second quarter 2026 earnings call. I am pleased to report that GCM Grosvenor had another strong quarter, both generating returns for our clients while growing revenue and profits for the firm and our shareholders. We ended the second quarter with $97 billion of assets under management and $78 billion of fee-paying assets under management, an increase of approximately 13% for each from a year ago. Instructively, all investment strategies and all investor channels contributed to that growth. During the quarter, as expected, we saw an increase in fundraising from the first quarter's $1.5 billion to $2.3 billion in the second quarter, bringing first half fundraising to approximately $3.9 billion. Importantly, those results were again broad based across the platform. We continue to expect second half fundraising to exceed the levels experienced in the first half and are pleased to report that our pipeline remains full.
Credit was the largest contributor to second quarter fundraising, accounting for more than $900 million of the $2.3 billion raised in Q2, making credit $1.4 billion of the first half $3.9 billion of fundraising. John is going to go into some detail on our credit vertical in his remarks. It is worth mentioning that the individual investor and insurance channels were significant drivers of fundraising, representing 23% and 18% of our year-to-date fundraising, respectively, against the 54% of AUM they represented at the start of the year. As you know, both channels are areas of focus for us. From a revenue and profitability perspective, we saw second quarter fee-related revenue grow by 11%, fee-related earnings grew by 21%, and adjusted net income grew by 22% as compared to the second quarter of 2025. On the last couple of earnings calls, we have been asked about the impact of AI disruption generally.
We have maintained that we have more upside from AI disruption than risk associated with it, and noted that we have some direct exposure to disruptors. We continue to believe that. Last quarter, we were specifically asked about SpaceX. And we said that we thought that in the wake of a successful IPO, it would likely be appropriate to address that exposure. And so I want to do that now. GCM Grosvenor, in our ARS and private markets portfolios through primary fund allocations to managers, direct investments into dedicated vehicles, and secondary market share purchases, invested approximately $150 million in SpaceX, a conservative sum for our capital base. The average cost of our investment is approximately $6.37 per share, and as of last week's market close, those investments had a value of approximately $3.5 billion, split fairly evenly between ARS and private markets portfolios. While these gains have not yet been realized, and generally remain subject to lockup, that investment is the largest single issuer gain in the history of the firm.
For the overwhelming majority of our SpaceX exposure, the timing and form of exit is controlled by underlying managers. Should we receive shares in a distribution, we will decide on a course of action in real time based on facts and circumstances. The SpaceX investment is a good example of the strength of our origination platform and the breadth and quality of opportunities we can bring to investors, as well as the way our various verticals strengthen and enhance the whole of our firm for our investors. We are, of course, pleased with this investment thus far. Given the magnitude of the SpaceX success, real-time versus one-quarter lag timing difference in mark-to-market policy between ARS and private markets, and stock price variability, we feel it is important to highlight for all of our constituents ARS returns both inclusive and exclusive of SpaceX impact. For the quarter, our ARS multi-strategy composite delivered gross returns of approximately 14% inclusive of SpaceX and 10% excluding SpaceX.
Year to date, those numbers are 15% and 11%. It is worth noting that excluding SpaceX, ARS performance is very strong both on an absolute basis and relative to peer and benchmark performance. Pam will talk in a bit about how to think about SpaceX with regard to annual ARS performance fees. The combination of strong second quarter investment performance and positive net ARS inflows drove a 22% year-over-year increase in ARS fee-paying AUM as of June 30 and our ARS pipeline remains full. Investment results were also strong across private market strategies, without the benefit of the SpaceX IPO marks, where private equity, infrastructure, real estate, and private credit all delivered positive quarter-over-quarter performance. We remain long origination with considerable operating leverage, meaning our sourcing capacity meaningfully exceeds our current investment pace, leaving substantial room to scale activity without sacrificing selectivity.
The middle market, the area of private markets where we primarily operate, has held up better than the broader private equity market. While deal activity and realizations are not yet firing on all cylinders, we see the opportunity for a pickup in activity and acceleration of realizations going forward. The precise timing of that is not predictable. Importantly, as we have discussed in the past, we have a high ratio of firm unrealized carry relative to market cap, meaning that as the realization environment improves, there is significant upside to our earnings. We remain confident in our ability to achieve the profitability targets we laid out at our Investor Day and think that our durable, highly visible management fee growth, significant upside from embedded incentive fee earnings, full fundraising pipeline across verticals, operating leverage, and dividend provide an attractive value proposition for shareholders today and over the long term. And with that, I will turn the call over to John.
Thank you, Michael. Today, I will cover our credit platform, which is one of the fastest growing areas of our business and an increasingly important differentiator for the firm with clients. As of quarter end, our credit platform managed nearly $18 billion of assets. The credit vertical was the largest contributor to fundraising in the quarter, reflecting strong client demand and what has been, frankly, an uncertain credit environment. That, to me, is a great endorsement of our capabilities. We raised over $900 million for credit strategies in Q2, doubling what we raised in Q1. During the quarter, we successfully closed our inaugural credit secondaries fund, which raised approximately $1.2 billion across the flagship fund and related vehicles. We are pleased with that outcome, but believe it is just the beginning of what can be a huge opportunity for us. Secondary markets develop, of course, after the formation of the primary market.
But as the primary market matures, the secondary market growth almost always grows considerably faster than the overall category. And when you think about the total addressable market here, it is important to remember that the overall size of the credit markets far exceeds that of the private equity markets. So being early and meaningful in a category with such massive growth opportunities is an exciting opportunity for the firm. Providing liquidity to the private credit markets through purchasing other investors' positions in funds, or specified assets at a discount to market, is a huge opportunity. Not all of the headlines surrounding private credit this year have been positive. Certain parts of the market, particularly direct lending, have experienced increased scrutiny around valuation, exposure to software categories, leverage levels, and liquidity, particularly in the evergreen semi-liquid market.
Fortunately, our exposure to those more challenged areas is relatively limited. What continues to resonate with clients is the highly diversified and flexible nature of our credit platform. From an investment perspective, our competitive advantage begins with sourcing and broad coverage of the market. Across our global platform, we review 1,400 investment opportunities annually, spanning virtually every corner of the private credit market. That breadth of sourcing allows us to identify attractive opportunities across primary funds, co-investments, secondaries, and direct transactions, which we then combine into client portfolios diversified across strategy, sub-strategy, geography, vintage year, and industry. The result is portfolios with dozens of underlying investments, rather than concentrated exposure to a small number of transactions or a specific part of the credit market. Equally important is the flexibility in how we deliver those investments to clients.
Every client enters the credit market from a different starting point. Some have mature credit programs and are seeking complementary strategies or specialized exposures. Others are entering private credit for the first time and need assistance designing an allocation from the ground up. Our platform allows us to partner effectively with both types of investors. A couple fundraising examples from this quarter illustrate that flexibility. First, in credit co-investments, we expanded our relationship with a long-standing institutional client by developing a strategic partner designed to accelerate deployment into credit co-investments. The program combines our sourcing capabilities with the client's own deal flow and includes both discretionary investments as well as client-originated opportunities, enabling the client to pursue attractive opportunities that otherwise would have been difficult to execute on.
The result is a highly tailored solution that leverages the strengths of both organizations. A second example highlights the range of our broader capabilities of which credit is an important piece. We were selected by an institutional investor making its first allocation to private markets. Rather than starting with a single strategy, we designed a customized program providing diversified exposure across both private equity and private credit. The solution incorporated co-investments and secondaries alongside fund investments to accelerate deployment, reduce the J-curve, and provide immediate diversification. These examples exhibit that we are not tied to a single part of the credit market or implementation style. Instead, we begin with the client's objectives and then utilize the full toolset we have as a platform to deliver a solution that best fits the needs. We believe our position in delivering those solutions for clients has never been stronger. And with that, I will turn the call over to Pamela.
Thanks, John. Fee-paying AUM grew a healthy 13% year-over-year, ending the quarter at $78 billion. Contracted, not yet fee-paying AUM, grew to $9.7 billion, up 11% from a year ago, which provides a strong foundation for continued organic growth as that capital is deployed and converted into fee-paying AUM over the coming years. Private markets management fees this quarter continued to benefit from solid fundraising and investment activity, and increased 10% over the second quarter of last year. As we look ahead to the third quarter, we expect private markets management fees to increase in the mid-single digits year-over-year. As a reminder, based on the timing of our specialized funds in the market, we are not expecting material catch-up fees in the back half of the year. Absolute return strategies had another outstanding quarter driven by strong investment performance combined with positive net inflows.
ARS management fees in the quarter increased 11% year-over-year. ARS management fees are primarily charged in advance. So given the strong second quarter investment performance, we expect third quarter ARS management fees to increase by approximately 10% sequentially which would equate to a nearly 20% growth rate year-over-year. Total fee-related revenue for the quarter was $111 million, an increase of 11% year-over-year reflecting solid management fee growth across both private markets and absolute return strategies. Turning to expenses, we remain disciplined in managing our expense base, while investing thoughtfully in the business. FRE compensation and benefits totaled approximately $38 million during the quarter and we estimate FRE compensation to be $1 million higher in the third quarter. Q2 non-GAAP general administrative and other expenses were almost $22 million, in line with our expectations.
While we continue to invest in technology, including AI initiatives across the firm, we remain focused on driving operating leverage and expect G&A expenses in the third quarter to remain relatively consistent with Q2. Putting these factors together, fee-related earnings for the quarter were $50 million, representing growth of 21% year-over-year and our FRE margin was 45%. We believe there is significant scalability embedded in our business and remain confident in our ability to further expand margins over time. Turning briefly to incentive fees. Investment performance across the platform remains strong. We earned approximately $7 million of annual performance fees in the first half of the year. And we estimate, based on recent ARS investment performance, we have approximately $35 million to $40 million of unrealized annual performance fees. The majority of our performance fees crystallize in the fourth quarter, so the amount of performance fees ultimately realized will depend on ARS investment performance in the second half of the year, of which SpaceX is an important driver.
Specifically, as Michael discussed, SpaceX has been a great investment for the firm and is a terrific example of our origination power. We made investments across many different ARS and private markets portfolios that were appropriately sized for the risk at the time, and we have generated billions of dollars of profits for our clients. Given the current size of the position, you can expect some variability in our unrealized incentive fees as the price moves. The $35 million to $40 million of unrealized performance fees I mentioned assumed $110 per share for SpaceX. That number would be higher as of the end of last week. Each additional $10 movement in SpaceX's share price is worth about $4 million of performance fees. Ultimately, performance fees will fluctuate based on broader ARS investment performance for the year. As of June 30, gross unrealized carried interest was $965 million, with $493 million attributable to the firm's share.
A variety of factors can cause fluctuations to our unrealized carry balance from quarter to quarter. Our private markets portfolios are marked on a one-quarter lag, meaning that next quarter's unrealized carry balance will reflect valuations as of June 30. For example, the SpaceX exposure in our Q2 unrealized carried interest was marked at $84 per share, so we could see a meaningful increase in our unrealized carry next quarter due to our SpaceX exposure, again, given the one-quarter lag. Our balance sheet remains strong, providing us with significant financial flexibility. We are maintaining our quarterly dividend of $0.12 per share, while also investing in the long-term growth of the business and opportunistically repurchasing shares. We continue to actively manage dilution through our buyback program, repurchasing 1.6 million shares for approximately $17 million during the quarter. We have $55 million remaining in our buyback authorization.
Overall, we are pleased with our results for the second quarter and first half of the year. Accelerating fundraising, strong investment performance, expanding management fees, growing embedded incentive fee earnings, and ongoing operating leverage position us well for the balance of 2026. We remain confident in both our near-term outlook and our long-term financial objectives. Thank you again for joining us today. We would now be happy to take your questions.
分析師問答
Thank you. Once again, *1 for questions. We will take our first question from Chris Kotowski with Oppenheimer.
Yes. Good morning, and thanks for taking the question. Pamela mentioned that the mark on SpaceX was $84 a share, I think, at March 31. I am curious what that was at year end. And then I guess, how typical is that kind of lift in the marks between, say, six months before an IPO or monetization event and the ultimate outcome? And I guess I am curious if you think about some of the other high-profile IPOs that are in the pipeline, is that a typical lift that we might expect if some of these major IPOs come to fruition in the next three, six, nine months?
Thanks, Chris, for the questions. I do not think anything about SpaceX is typical. I think it would be a mistake to look at that and try to project that onto anything. A lot of these companies have built tremendous revenue streams and tremendous value in a short period of time, and there are a range of views as to how that plays out going forward. SpaceX is just, in many ways, unique, and I would not look to put that onto anything else. You saw, from the fourth quarter of last year to the first quarter to the IPO and since the IPO, a tremendous amount of movement in valuation and, for what it is worth, they seem to have done a terrific job. Some of the concerns with regard to the magnitude of expiring lockups seem to have been a bit overinflated. But I do not think you should project anything from that onto other situations. Okay?
Okay. Fair enough.
And then you saw from the fourth quarter of last year to the first quarter to the IPO and frankly since the IPO, you have just seen a tremendous amount of movement in valuation and, again, for what it's worth, they seem to have managed it well.
And then can you remind us how is ARS billed? Is that billed at the beginning of each quarter or at the beginning of each month?
Yeah. For the most part in ARS, fees are quarterly in advance based on the beginning-of-quarter AUM number. So the performance of the second quarter is in the third quarter beginning AUM number. You bill on that number for the third quarter. You then have your inflows and outflows, and you have your appreciation and hopefully not depreciation, and then you bill for the fourth quarter and so on.
Okay. Great. That is it for me. Thank you.
Thank you. We will take our next question from Bill Katz with TD Cowen.
Okay, thank you very much. I want to come back to a couple different things. In your prepared remarks, you were quoted saying you're excited around the momentum on the franchise. Wondering if you can maybe as you look ahead, where you see the greatest lift. It sounds like a lot of good things are happening on the ARS side. Maybe just broaden out the pipeline and what your perspective is on that, the 'exciting momentum.' Thank you.
Yeah. I think, Bill, and I'm not going to overstate it, we are doing well everywhere. This would have been a good upbeat positive call without the SpaceX conversation. The reality is that the SpaceX IPO and the increase in value in Q2 did not really impact revenue at all in Q2. We have been focused on our insurance efforts, our individual investor efforts. We highlighted credit, which we think has real momentum. We mentioned our pipeline. So we are just head down, working. Nobody's taking anything for granted. We have all been around for a long time and get that, but we are enthusiastic about a lot of different areas of the business right now, and it feels good to us.
Bill, I would just add one other comment, which is we mentioned that we thought second quarter fundraising would be larger than first and it was. We mentioned again that we think second half fundraising will be larger than first half, and what we see in our pipeline and in our activity gives us the confidence to make that prediction.
Great. Thank you. Just as a follow-up, you mentioned that you also feel good about the realization opportunity. How should we be thinking about that on the line of sight you have given your footprint? And then just from a technical perspective, when we think through the compensation waterfall, how are we thinking about maybe the carry payout ratio and then the overall firm payout ratio once you get to the net level? Thank you.
Let me take the last piece first, and then get back to the macro market environment. We have maintained roughly a 50% margin where the firm holds about 50% of the firm's share of incentive fees for a long time. We have said a number of times that at the beginning of the year we hold a little bit less, see how the year evolves, and we have landed at about 50% in the last two years. We have said at times when we start to see that carry asset cash flow more, or you see extraordinary performance fees out of the ARS business, we think the firm can hold more of that over time. So we do think we have margin there over time when we start to see the real value of that come through. We have never put a specific target number on that, and we are not going to put a number on that now. The 50% assumption's been a safe base case for the last couple of years. But we do think we have opportunity in excess of that over time because, as you have noted in the past, it is a very big asset relative to our market cap.
As far as realizations, they are improving but not yet robust. You have a better IPO market in some areas, but the middle market is a bit different. In our co-invest business, transaction activity is up pretty significantly from this time a year ago, and the number of transactions completed inside our co-invest portfolios is up significantly, which is a positive sign. But we cannot predict timing. The whole industry has been waiting for this and it's been a volatile world. The important thing is that the assets are there and the value of the assets is growing, which Pamela touched on. We are going to see a lift in that unrealized asset next quarter as Q2 values roll through for the Q3 mark. SpaceX alone is going to give you a lift there, so that value continues to move in the right direction. Thank you.
We will take our next question from Jeffrey Schmitt with William Blair.
Hi, good morning. On the ARS business, performance was obviously really good. Michael, I think you mentioned the timing of fees earlier. So is that what drove the average fee rate down a bit? The strong AUM growth and the denominator effect versus any sort of fee pressures?
Yeah. No fee pressures. Anything that impacts fee growth is really just about mix of investor size and the size of money coming in. There has been no rewriting of fees and we are not feeling pressure on fees. I do not believe the second quarter numbers were impacted by anything that happened with profitability in the funds or marks in Q2; that would not affect the second quarter numbers.
Okay, great. And then on international fundraising, it has been pretty strong. I think you recently added some senior talent in a couple of markets. Just curious how scalable is your international platform today? Will you need to make additional investments as you scale or would you expect to see operating leverage from here?
Sure. In general, I would say yes and yes. The business overall is scalable, so our ability to continue to raise assets from all of our channels — insurance, individual investor, institutional in the U.S. and outside the U.S. — is something we've proven the ability to do over the last several years as we continue to raise capital. The nice thing is those are relatively modest investments because we have been able to do that with good expense controls. That said, we are always looking to add talent where we see opportunities to accelerate distribution efforts, and we continue to think there is great opportunity out there, particularly for our business that can meet anyone where they are on their alternatives journey.
Great. Thank you.
We will take our next question from Kenneth Worthington with JPMorgan.
Hi, good morning, and thanks for taking the question. Solid fundraising quarter. You mentioned the $900 million in credit. How much of the $2.3 billion this quarter was in private market funds versus the SMA business?
John, do you have that number handy or Stacie?
Stacie, I do not know if I have that right in front of me. Do you?
Maybe asked another way: which of the funds in market had closes this quarter and about how big were those closes?
Let me just say, Kenneth, what is interesting is we are in market all the time with different funds across different channels. We are in traditional institutional markets with closed-end specialized funds and in the wealth channel with open-end products. Which fund had a close and when that fund closed are a little less impactful today compared to seven years ago, with the possible exception of catch-up fees. We still try to give you a sense of what catch-up fees we are looking at, but there is always a lot going on and always funds in market now. John, do you have anything specific to touch on?
I think year-to-date, about $400 million of it is for private market specialized funds.
That is correct. But just to add perspective around it, Kenneth, we probably have at any given time 10 to 12 specialized funds in market. So about half of those are closed-end private market funds, and the other half are evergreen, which could either be ARS or for the individual investor channel. So at any given time, there is a lot going on. The number John gave is really the traditional closed-end institutional specialized or commingled funds, not including the wealth channel where you had other flows in the first half in those channels.
So that just puts a point on the number John gave you.
Perfect. And then you mentioned the pickup expected for second half. You clearly see the pipeline. Where do you expect the pickup in second half sales to come from?
I think it will be pretty broad based, Kenneth. Just like what we have seen so far this year. You will see it in specialized funds that are traditional private market funds, in evergreen specialized funds which could be ARS or semi-liquid or individual investor channels, and in separate accounts. You will see it across asset classes. Credit and infrastructure tend to be leading contributors right now. We expect to see it from all different channels and geographies. The strength across our pipeline is pretty broad based.
We will take our next question from Crispin Love with Piper Sandler.
Thank you. Good morning. I'm looking at Slide 9 focusing on the 20% plus real assets CAGR. Definitely a step function higher looking at 2025 relative to 2024 and then solid momentum recently. With all of the anxiety year-to-date around direct lending and credit uncertainty, as you referenced, have you seen investors lean more into real assets? And can you just share what you have been seeing as it relates to demand in infrastructure versus real estate?
John should address it. One thing I'll say is we have seen growth in credit even in a tough environment with lots of headlines. Demand is significant everywhere. Real assets demand has been strong for a while and is growing at a terrific rate. It probably has fewer headwinds and less noise than credit has had recently, but we've experienced growth in credit as well. John, want to add?
Infrastructure has been on a long run and I do not see that stopping. It is a fantastic asset class for investors looking for stable return profiles, yield, inflation protection, and long-duration assets that match liabilities. Infrastructure was 25% of our quarterly fundraising and has been a top contributor over the last 12 months. Our platform there is experienced and flexible. Beyond that, global needs for infrastructure investment are massive, so I think it has a lot going for it. I do not think the recent credit headlines are the sole driver of infrastructure's strength; rather, infrastructure competes well with other private markets asset classes and is a natural part of a well-constructed portfolio.
Great. Thank you. And then can you just discuss what you are seeing in Grove Lane recently, the wealth channel distribution? Any update there would be helpful.
We mentioned in the prepared remarks that the individual investor and insurance channels have been meaningful contributors to our capital formation relative to the AUM they started with, and our investments to expand distribution are paying off. It is still early, but there is a tremendous amount of growth opportunity and product creation opportunity in wealth. We have infrastructure product, ARS registered product, and we discussed previously a private equity registered product that we think will be differentiated. As Michael has cautioned, it will be some time before all that momentum meaningfully impacts financial results, but the efforts are going well and should be a strong growth driver for years to come.
With no questions in queue at this time, I would like to turn the call back over to our speakers for any other closing remarks.
Thank you. I appreciate everyone joining this morning, and thank you for your questions and engagement. We look forward to speaking with you again next quarter. Have a great day.
That will conclude today's call.