Good day, and welcome to the GCM Grosvenor Third Quarter 2025 Results. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Thank you. Good morning, and welcome to GCM Grosvenor's Third Quarter 2025 Earnings Call. Today, I'm joined by GCM Grosvenor's Chairman and Chief Executive Officer, Michael Sacks; President, Jonathan Levin; and Chief Financial Officer, Pamela Bentley. Before we discuss this quarter's results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for the business, our financial performance and projections. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call. Please refer to the factors in the Risk Factors section of our 10-K, our other filings with the Securities and Exchange Commission and our earnings release, all of which can be found on the Public Shareholders section of our website. We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of non-GAAP measures to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are on our website. Thank you again for joining us. And with that, I'll turn the call over to Michael to discuss our results.

Thank you, Stacie. We are pleased to report another strong quarter for GCM Grosvenor, led by strong investment performance, strong fundraising, and financial results that exceeded expectations. For the quarter, our fee-related earnings, adjusted EBITDA, and adjusted net income were up 18%, 16%, and 18%, respectively, compared to the third quarter of 2024, and the results are similarly favorable on a year-to-date comparison. We're also seeing strong momentum sequentially with third-quarter fee-related earnings and adjusted net income growth of 13% and 16% over the second quarter of 2025. Our fee-related earnings margin for the quarter was 45%, which is approximately 350 basis points higher than it was in the third quarter of last year. We ended the quarter with a record $87 billion of Assets Under Management, a 9% increase compared to the end of the third quarter of 2024. Investment performance remains solid across each of our business verticals. Our Absolute Return Strategies (ARS) has delivered particularly strong performance to clients with our multi-strategy composite generating a 14.2% gross rate of return over the last 12 months. In addition to the strong ARS performance, we also enjoyed year-over-year portfolio appreciation across each of our private market strategies. Looking ahead, our teams remain focused on investing client capital and deploying our $12 billion of dry powder. On the capital formation side, our positive fundraising momentum continues. Year-to-date, we raised $7.2 billion, higher than our total fundraising for the full year of 2024. Over the last 12 months, we've raised $9.5 billion, the highest trailing 12-month fundraising period on record for Grosvenor. Infrastructure and Credit led our growth during that period. Jon will cover fundraising drivers and pipeline shortly, but I do want to note that in the quarter, we closed on a $490 million collateralized fund obligation that will be invested in private Credit secondaries. Beyond the management fees that we will receive from this vehicle going forward, we generated $2 million of transaction fees that were recognized in the third quarter. Importantly, in general, activity levels are high and our pipeline remains quite full. Our gross unrealized carried interest balance stands at an all-time high of $941 million, up $32 million or 4% from the end of the second quarter with approximately 50% of that belonging to the firm. During the quarter, we realized more than $24 million in carried interest, which is the highest level of quarterly realized carried interest we've seen over the last 2 years. While carry realizations are clearly trending in the right direction, and we're optimistic about 2026, it's worth noting that typically, the third quarter carry realizations are seasonally the highest of any given calendar quarter. A few weeks ago, we hosted our 2025 Investor Day, and we were thrilled to welcome investors and analysts to hear directly from the leaders who drive our business every day. The goal of the day was to provide a comprehensive look at GCM Grosvenor, who we are, how we've evolved, where we're going. Our team led by Stacie Selinger and August Klatt did a great job putting that day together. The deck and video are available on our website, and I think they're helpful in understanding the company. That said, I do want to highlight a few of the key themes we covered. First, we made clear that GCM Grosvenor is central to the alternatives ecosystem, bringing more than 5 decades of innovation, execution, growth and relationships to bear across Private Equity, Infrastructure, Credit, Real Estate and Absolute Return Strategies. Second, we showed that our investment platform is broad, built for performance and importantly, highly scalable. Across the firm, we have the capacity to deploy multiples of our current capital base using our existing investment engine. That scalability, combined with a rigorous and repeatable investment process has produced attractive risk-adjusted returns for clients in each of our verticals. Third, our growth outlook is compelling across each of our investment strategies. Each of our verticals from Credit to Infrastructure to Real Estate to Private Equity and Absolute Return has a path to substantial AUM growth over the next 5 years. We highlighted the fact that our team's execution over the last 5 years has translated into earnings growth with fee-related earnings having grown more than 90% since 2020. Importantly, we spoke about our path to double 2023 fee-related earnings to more than $280 million by 2028 and to drive 2028 adjusted net income per share to more than $1.20 per share. We also announced an increase in our quarterly dividend to $0.12 per share, reflecting continued confidence in our growth trajectory and our strong free cash flow generation. Finally, the day underscored what truly differentiates GCM Grosvenor, our client-first culture that is rooted in teamwork and alignment and is a key competitive advantage, delivering high re-up rates and significant growth. We hope that for anyone who participated or subsequently dove into the materials, it is clear that we are well positioned strategically, financially, culturally with multiple growth engines, a scalable operating model and a clear line of sight to meaningfully higher earnings and cash flow in the years ahead. We have a high degree of confidence that we can compound value for shareholders over the long term. And with that, I'll turn the call over to Jon.

Thank you. As Michael noted, I will focus my remarks this quarter on our strong fundraising results and healthy pipeline. We covered this during the Investor Day, but the beauty of our business is in many ways we have to win with all types of clients. Our business diversification in terms of geography, asset type, client type, and implementation style is reflected in the diversification of our fundraising results. Looking at the record fundraising over the last 12 months, there's a few things I'd call out. First, Infrastructure and Credit together accounted for nearly 2/3 of our capital raised. These strategies are where we're seeing the highest demand in the market. In Infrastructure, we benefit from the market tailwinds generally and our broad platform that offers various strategies and numerous vehicles to meet the unique needs of investors. In Credit, our success is rooted in helping investors access the markets that they don't necessarily have the ability to access on their own, which means strategies outside of traditional direct lending and investment implementation styles outside of regular way fund investments. Our direct-oriented strategies in both Infrastructure and Credit are driving a significant percentage of our growth. Second, Absolute Return Strategies generated $1.5 billion of fundraising over the last 12 months. As Michael shared, the pipeline here is the best it's been in years on the heels of very strong investment performance. While we aren't changing our flat net flows budgeting assumption, the backdrop for ARS is increasingly encouraging, and we believe we can compound AUM growth through strong performance. Finally, Insurance clients accounted for approximately 14% of capital raised over the last 12 months and 40% of Q3 capital raised, driven by the almost $500 million collateralized fund obligation that will be invested in private Credit secondaries. Looking ahead to our pipeline, I want to emphasize the strength and predictability of our Separate Account business. We are perpetually in the market raising Separate Accounts from existing investors through re-ups and from new investors. If we do our job well taking care of our existing clients, re-ups and cross-selling into new strategies are our best sources of new capital. As is usually the case, we're also in the market with several specialized funds. We held our first close of our Private Equity Secondary fund, GSF IV. We also held the first close of our inaugural Real Estate fund, REV, which now allows us to offer our real estate investment strategy in specialized fund form, expanding our addressable market for that strategy. One particularly interesting note on REV is that one of the primary anchor investors in the first close is an RIA. We're also preparing to launch the fourth vintage of our diversified Infrastructure fund, Critical Infrastructure Strategies IV, CIS IV, which will hold its first close in the coming months. We're also successfully executing on our growth plans for the individual investor channel. Our distribution joint venture, Grove Lane, is rapidly ramping up with new hires and has already sourced dozens of new relationships for the firm year-to-date, around 40 of which have already contributed to an investment product. Flows for the Infrastructure interval fund are increasing week-over-week and the traction is very encouraging for what we believe is a highly differentiated product in the market and a significant opportunity for us over the long term. We're also preparing to launch a fund for Private Equity assets in the coming months, which will follow a similar model to CGIF, and we believe also has differentiated positioning given its expected high diversification and middle-market focus on co-investments. So the punchline here is that we have a clear strategic plan, and now it's a matter of executing well. Something we talk about a lot as a team is the importance of relentlessly focusing on execution for our clients as investors and as business owners. And with that, I'll turn it over to Pam.

Thanks, Jon. We are pleased with our third quarter results, which Michael highlighted, and I will cover in more detail. Given our strong fundraising and investment performance this quarter, Assets Under Management grew to $87 billion and fee-paying AUM grew to $70 billion, a 9% and 10% increase year-over-year, respectively. Our contracted not yet fee-paying AUM grew 17% year-over-year to $9.2 billion, providing a foundation for continued organic growth as that capital converts to fee-paying AUM over the next few years. Private Markets management fees year-to-date and for the quarter grew 10% and 7% year-over-year, respectively, from a combination of solid fundraising and conversion of contracted not yet fee-paying AUM. Absolute Return Strategies continued its strong investment and business performance. ARS management fees for the quarter grew 6% year-over-year. Our multi-strategy composite returns were a strong 3% in the third quarter, putting year-to-date growth performance above 9%. Total management fees for the quarter were $101.4 million, an increase of 7% year-over-year. We expect total management fees for the fourth quarter to be approximately $1 million higher than the third quarter. Our year-over-year fee-related revenue in the third quarter grew 9%, driven by strong business performance. As Michael noted, this quarter's fee-related revenue included $2 million of transaction fees related to the Credit collateralized fund obligation. This will not be recurring next quarter. That said, we do expect to launch additional structured solutions in the future. Turning to expenses, our compensation philosophy is centered on attracting and retaining top talent by aligning their interests with those of our clients and shareholders. We do this through a combination of annual and long-term incentives, including FRE compensation, incentive fee-related compensation and equity awards. We remain disciplined in managing expenses and third quarter FRE compensation and benefits remained stable at just over $37 million. We expect slightly lower levels of FRE compensation in the fourth quarter. Non-GAAP general, administrative, and other expenses declined from last quarter to $20 million. We expect non-GAAP general administrative and other expenses in the fourth quarter to return to the levels we saw in the first and second quarter this year. Pulling together these factors, our fee-related earnings for the quarter grew 18% year-over-year, and our third-quarter FRE margin expanded to 45%. Turning to incentive fees, our gross unrealized carried interest balance increased to an all-time high of over $940 million. And this quarter, we realized $25 million of total incentive fees, including $1 million of performance fees and more than $24 million in carried interest. Given our strong ARS investment performance year-to-date, we have approximately $33 million in unrealized performance fees as of quarter end in addition to the $7 million we've already realized this year. Third-quarter carry realizations are generally seasonally higher, and the improving realization levels are encouraging as we head into 2026. Our financial position is strong and our decision to raise our already healthy quarterly dividend to $0.12 per share reflects our consistent and growing cash flow generation. In addition, as of quarter end, we had $86 million remaining in our share buyback authorization. That said, our primary focus remains on strategically investing for long-term growth, and we remain confident in our goals to double our '23 fee-related earnings by 2028 and more than double our adjusted net income per share over the same time period. Thank you again for joining us, and we're now happy to take your questions.

And our first question will come from Ken Worthington with JPMorgan.

I guess I'll try two. First, on the CFO raise, you mentioned the $2 million of fees upfront. Are there ongoing fees for that product as well? Or is it the way it's structured, the fees just come in that upfront chunk? And then are these CFOs something you might regularly come back to market with more regularly? Or is what we saw really a one-off this quarter?

So thanks for the question, Ken. It's Michael. The CFO is absolutely a regular recurring management fee with some carry building over time, pool of capital. So, it's a $490 million raise, and we'll earn an annual management fee on that. And hopefully, we'll earn some carry on that as well. In addition to the normal fees that would accompany a $500 million raise, there was an upfront fee, and we specifically mentioned it so that when you saw it on the financials, you knew what it was and you knew that, that was not recurring. But we will start next quarter to enjoy management fees from that pool of capital. They will be recurring.

Okay. Great.

And the second question was, yes, we do hope to, and if I didn't say that, I meant to, we do hope from time to time to launch other fund obligations. This is our second as market conditions, investor demand line up and make sense to do it.

Great. And then just on ARS, you mentioned that we see a better turnaround the business, good returns. We saw better flows to start the year. It's been sort of quiet since, and we're going into what I think is typically the seasonally weak fourth quarter when we see bigger redemptions. So, I guess the question is, if things are going well and things feel good, why isn't this yet being seen in the net flows picture? And I guess, how is fourth quarter shaping up given it's seasonally a weaker quarter, but the environment feels better and you're doing better? Like how do we sort of add up?

Jon, maybe you can talk a bit more about pipeline. But what I would say, Ken, and we talked about this at Investor Day, there is no question that the interest level is higher and the opportunities for us to drive flows are higher. And that's just, that is a fact. So I don't know, Jon, how much; we're not going to make news, but go ahead.

Yes. I would just step back, Ken, and say we've obviously held to the convention from a budgeting, forecasting and guidance standpoint, we've had, frankly, since we went public 5 years ago, and we've been wrong about that in both directions, but kind of not really wrong about that in the aggregate. So if you look at the earnings presentation, for example, where we go through the flows picture and the supplemental information, you can look at 9 months in 2024. You can look at the 9 months year-to-date today, you can see how that's been an improving picture. If you look at year-to-date Absolute Return Strategies through the first 9 months, when you look at contributions versus withdrawals, distributions are a little bit of an anomaly because those are sometimes self-liquidating vehicles. It's slightly net positive. I think that the, so the trend and the attitude and the environment because of performance, because of investor interest, all of that is better. I don't know that I would, as Michael said, I don't know that we're changing our fourth quarter picture. I don't think that there's much, it might be an accident in history. I don't think there's much seasonally that you should actually look into a ton around the ARS business for the vehicles that have liquidity quarterly, that could be any quarter's activity. But I would say that you heard it, as Michael said, live at the Investor Day. David Richter, who runs that business, is feeling very good about things. And Michael, Pam, and I are also feeling good about things, but also waiting to see that picture change before we change how we talk about the forecasting and the guidance around the business.

And our next question will come from Bill Katz with TD Cowen.

Just maybe, Michael, just unpack a couple of things on the realization outlook. Forgive me for not knowing this already, but why is the third quarter seasonally so strong? And then as you look into next year, where do you see the greatest opportunity for those realizations? If I look at your disclosure, which is terrific, so thank you for that. A lot of it sits in funds 2017 forward. So, one of the themes we're hearing from some of your peers is like there's still some vintaging and aging and seasoning that need to go on along the way. So, I'm just trying to triangulate between the very strong realization commentary and what might actually flow through the P&L as we look out to next year or so.

Yes. So, I think the fact that the carry or the average distribution of the carry, if you will, has aged and it's in these 2017-plus buckets is somewhat overwhelmingly a good thing for us. And let me just start with that. So, I think it's a good thing for us. It's a good thing for us because when you have more recent vintages, these are you can, you have some carry that's got some value at a mark from 2008, but it hasn't exited yet, you're sort of skeptical about when it's going to exit, etc. You have carry in that 17-plus bucket that's kind of normal, that's supposed to be there, that's healthy and that's good. You're confident that your marks are appropriate and conservative. And so that's very much kind of live carry. The other reason that's a good thing is we own more of that. And so, we own a higher percentage of that 17 bucket than we do the earlier buckets. And I think those are both good things for us. I don't think we have any ability to generalize about when that carry might be realized or when it might accelerate aggressively. I think our carry revenue experience is pretty much consistent with what you're seeing and what we're observing from a macro perspective across the industry. And we are so well diversified in our carry on so many different lines that just when that, those realizations pick up, and they have picked up. So, as they continue to pick up and they continue to accelerate, we will participate. But there's nothing like we can't look at one big deal that's going to generate carry and determine the outcome for a year. It's too diversified, which we think is a benefit for the stability and the strength of that carry, but it makes it harder for us to point to timing. The last thing is the seasonality of the third quarter is related to when tax carry is paid in the industry in general. So a lot of the carry that you see in the third quarter for most sponsors you follow will include tax carry distributions that they're receiving that tend to take place in that quarter to a greater degree than they do the rest of the year. The carry from actual exits is much, I think, more random and spread throughout the year and doesn't necessarily have any predictable seasonality.

Okay. That's helpful. And maybe one for Pam. Just as I think through next year, can you give us a sense of how we should think about both stock-based compensation issuance as well as maybe the direction for share count despite the buyback, it did go up pretty substantially quarter-on-quarter?

Sure. Thanks, Bill, for the question. In terms of our stock-based compensation, we expect it to be at similar levels or slightly higher depending on the stock price at the time we grant any awards generally as part of our year-end compensation cycle. But don't expect any unusual anomalies. What I would say on both share count and how we manage dilution there, we've, from stock-based compensation and from stock-based awards, we've enjoyed less than 3% dilution over the last 5 years cumulatively. So we're very actively managing dilution through both buybacks and settlement options to make sure that we're very diligent and careful around the share count. The other item, as you may recall earlier this year in the summer, we had issued about 2% dilution. We raised $50 million in proceeds from a strategic partner that invested in the business from a primary offering. So that was the other, just less than 2% of dilution that you see in our numbers. So we're going to continue to, again, actively, we have $86 million remaining in our buyback. We're going to continue to actively manage dilution through the buyback programs and really don't see any significant changes in the near term.

And we'll now return to Bill Katz from TD Cowen.

So just, Jon, maybe one for you. You ticked off a fair amount of data on or just details on the retail business, and I was trying to keep up with you. Could you maybe unpack a little bit of your disclosure? You mentioned that you're getting onto a number of additional distribution partnerships, I think, and that you're seeing really nice growth week-on-week. Can you provide maybe just level set of where you are in terms of AUM and what products specifically you're in the market for? Just trying to make sure we have a full accounting of the opportunity set in front of us.

Sure. So I think let me just kind of start with level setting on some data. And some of the data, Bill has not obviously changed materially from a couple of weeks ago when we had our Investor Day and had a few slides on this, just in case you want to go back to it after the call. But it's about $4 billion of AUM today, just in general from the individual investor channel. A pretty significant percentage of that has been capital that's been raised over the past several years. That capital that's been raised over the past several years has been for separately managed account for institutional 3C7 kind of private closed-end funds, largely across the wire houses. I think what we've highlighted at the Investor Day and what I tried to highlight on the call is if you look and while it's not material yet to our economic profile, as Michael has kind of gone to pains to mention on many calls in the past, like this is the type of thing that we're super excited about is growing, but it will take time for it to really move our needle. But if you look over the more recent period of time, what's been exciting for us is the partnership with Grove Lane, which is meant to focus on RIAs, and that partnership is less than a year old, and we have picked up another probably 3, 4 dozen RIA relationships over the past several quarters, which in a long sales cycle business is tremendous momentum to us even if it's not huge dollars yet. We are still marketing separately managed accounts, which we think will be a competitive edge for us in the Individual Investor Channel. We're still marketing kind of traditional closed-end private funds in that channel. And as you know, we also launched our Infrastructure interval fund, which goes alongside interval fund product or I should say, registered product that we have in the Absolute Return Strategies space. That's very early days, but it's raising money every day and raising money through the RIA channels, both from our partnership with our distribution partner as well as through Grove Lane. And then the other point that I think we mentioned at Investor Day or certainly mentioned on the call or mentioned right now is that we expect to also follow on our Infrastructure product with something similar in the private equity space. And so I just think it's all good. It's all investing more of our time and resources and all just building towards kind of momentum and platform such that we can take advantage of what we see as our role in that ecosystem and the opportunity set in that ecosystem, which is to help individual investors build diversified portfolios across different market cap sizes, across different implementation styles to complement what they're already doing in kind of the mega-cap space.

And the next question will come from Tyler Mulier with William Blair.

The collateralized fund obligation raise from the private Credit raise. It seems like the non-insurance raise would have been a little lighter and there have been notable bankruptcies in the Credit space. Just curious if you've seen any concerns from clients or changes in the landscape there on private Credit. Did you hear that, Michael?

Yes. I think that the first couple of words, Tyler, that you said didn't come through, but I think you were saying, were you saying excluding the.

Yes.

So I guess a couple of things. One is we're not seeing Private Credit slowing down. And we're not seeing that slowing down. There's all this talk about Credit quality. There have been a couple of high-profile Credit issues. I think those were all, or the biggest ones were Credit issues where it wasn't strictly direct origination private. There were plenty of traditional lenders in there, I think, as well. And that, we're just not seeing those issues. So there's a lot of conversation there, but that the asset class is growing, the allocations are growing. They're going to continue to grow. It's going to continue to be a fast-growing strategy for us. And I would just say that pretty much every strategy goes through cycles where people are questioning its future and questioning what's happening. And these are just very good solid ways to invest, have been over very long periods of time through different cycles, and that's not changing and you're in a kind of a major, I think, uptrend, upswing in the allocations to Private Credit. There was a significant amount of capital that came from insurers inside that structured product. And so, we are still seeing a productive insurance sector, and we believe that the insurance sector will continue to be productive as we go forward. Is that helpful?

And that does conclude the question-and-answer session. I'll now turn the conference back over to you for any additional remarks. Thank you.

Thank you for joining us again today. We appreciate all of the time and the interest. If you have follow-up questions, please feel free to reach out to our team. If not, we look forward to speaking with you again next quarter. Thank you. Have a good day.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.