GCM Grosvenor (GCMG) Q4 2025 Earnings Transcript

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DATE

Tuesday, February 10, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Michael Jay Sacks
• President — Jonathan Reisin Levin
• Chief Financial Officer — Pamela Lyn Bentley
• Managing Director — Stacie Driebusch Selinger

TAKEAWAYS

• Absolute Return Strategy Gross Rate of Return -- 15% in 2025, driven by multi-strategy composite performance.
• Infrastructure Strategy Return -- Approximately 11% for the year, cited as the fastest-growing vertical.
• Fundraising -- $10.7 billion in total capital raised, including $3.5 billion in the fourth quarter, both firm records.
• Fee-Related Earnings -- Increased 11%, with a margin of 44%, 200 basis points higher than 2024.
• Adjusted EBITDA -- Up 15% from 2024, reflecting higher performance fees and operating leverage.
• Adjusted Net Income -- Increased 18% from 2024, supported by $68 million in Absolute Return Strategy performance fees.
• Gross Unrealized Carried Interest -- $949 million, a 14% increase ($113 million) from 2024, with $478 million allocable to the firm.
• Assets Under Management (AUM) -- Ended 2025 at $91 billion, representing 14% year-over-year growth and a new high for the company.
• Fee-Paying AUM -- Rose 12% to $72 billion; contracted not-yet-fee-paying AUM grew 27% to $10 billion.
• Individual Investor Channel AUM -- Increased 18% year over year, demonstrating momentum in retail distribution efforts.
• White-Labeled Wealth Channel Solutions -- Raised nearly $1 billion over the past two years across 11 new products.
• Private Markets Fee-Paying AUM and Management Fees -- Both up 106% year over year, driven by fundraising and conversion of not-yet-fee-paying AUM.
• Absolute Return Strategies Fee-Paying AUM and Management Fees -- Gained 155% year over year; ARS management fees are expected to rise about 5% sequentially from the fourth quarter.
• Total Fee-Related Revenue -- $416 million for the year, up 6% year over year.
• FRE Compensation and Benefits -- Held steady at $148 million for the year, averaging $37 million per quarter; expected to rise by $1 million in Q1 2026 from Q1 2025.
• Share Repurchase Activity -- 2.8 million shares repurchased in the fourth quarter at an average price of $11.11, totaling $31 million; $56 million remained authorized at year-end, with an additional $35 million approved, bringing the buyback pool to $91 million.
• Warrant Exercise -- 10 million shares issued at a $11.50 strike, generating just over $110 million in proceeds.
• Term Loan Prepayment -- $65 million prepaid, reducing annual interest expense by over $3 million.
• Dividend Yield -- Approximately 5% cited in management commentary; leadership emphasizes the dividend as part of a capital-light business model.
• SaaS Exposure -- Represents 4% of total AUM and less than 6% of credit AUM, explicitly noted as lower than peers.
• Management Pipeline Outlook -- Leadership indicates the fundraising pipeline is larger than a year ago, with broad diversification across geographies, channels, and strategies.

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RISKS

• The Advance Fund is “likely to come in smaller than the prior advance” due to “a steeper slope for this fundraise this time around,” driven by industry headwinds around emerging and diverse managers.
• Carried interest realizations were “light for the fourth quarter,” with the CFO confirming that realized carry was lower than expected, and management noting unpredictability in timing for carrying income.

SUMMARY

Management reported record-breaking fundraising, fee-related earnings growth, and an all-time high in carried interest assets. The call highlighted accelerating momentum in the firm’s individual investor and infrastructure channels, and management confirmed that broad-based growth was achieved alongside tighter operating discipline, reflected in stable expense levels. Leadership stated that private markets management fees are expected to remain stable in the near term, with ARS management fees projected to rise sequentially due to positive net flows.

• The ARS business delivered its fourth year in six of $50 million-plus annual performance fees, underscoring recurring incentive fee strength within that vertical.
• Shareholder capital returns intensified, with an expanded buyback program and additional term loan prepayment providing incremental financial flexibility.
• Leadership asserted that the fundraising pipeline entering 2026 is robust and more diversified, signaling continued confidence without raising official budget targets above 2025’s record levels.

INDUSTRY GLOSSARY

• Absolute Return Strategy (ARS): An investment strategy aiming for positive returns regardless of market direction, often employing hedge fund tactics and risk management tools.
• FRE (Fee-Related Earnings): Profits derived from management and advisory fees, excluding performance or incentive fees and certain expenses, indicating core operating profitability.
• Carried Interest: The share of profits from investment funds allocated to managers as performance-based compensation, typically realized after certain return thresholds are met.
• Contracted Not-Yet-Fee-Paying AUM: Committed investor capital not yet deployed or earning management fees, representing potential future fee revenue.
• White-Labeled Solutions: Customized asset management products created for outside distribution partners under their own brand, enhancing channel diversification.

Full Conference Call Transcript

Stacie Driebusch Selinger: Good morning, and welcome to GCM Grosvenor's Fourth Quarter and Full Year 2025 Earnings Call. Today, I'm joined by GCM Grosvenor's Chairman and Chief Executive Officer, Michael Jay Sacks, President, Jonathan Reisin Levin, and Chief Financial Officer, Pamela Lyn Bentley. 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 10-Ks, 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.

Michael Jay Sacks: Thank you, Stacie. 2025 was a great year for GCM Grosvenor. Most importantly, we drove value for clients as our investment results, the cornerstone of our value proposition, were strong across the board. Absolute Return Strategy's performance was excellent, with our multi-strategy composite generating a 15% gross rate of return in 2025. Infrastructure, our fastest-growing strategy of late, returned approximately 11% for the year. All of our other verticals in aggregate were positive and competitive as well. We think the investment opportunity set remains strong, and we're pleased to have approximately $12 billion of dry powder. From a capital formation perspective, 2025 was the best fundraising year in the history of the firm.

We raised $10.7 billion of total capital, with approximately $3.5 billion of that coming in the fourth quarter. Both records. Jonathan will go into more detail, but our fundraising was broad-based, with all of our verticals, including ARS, having positive flows, and all investor channels and geographies contributed. Our pipeline of activity is very strong entering 2026, which bodes well for fundraising this year. 2025 financial results were similarly strong. Our fee-related earnings, adjusted EBITDA, and adjusted net income were up 11%, 15%, and 18%, respectively, when compared to 2024. Our fee-related earnings margin for the year was 44%, which is 200 basis points higher than our margin in 2024.

We continue to enjoy significant margin improvement since coming public, and we believe we still have positive operating leverage. Our adjusted EBITDA and adjusted net income were aided by the $68 million of performance fees generated from our ARS business. In that regard, 2025 represented the fourth time in the last six years that we have generated more than $50 million in annual performance fees from ARS. While carried interest realizations were light for the fourth quarter, our earnings power from carried interest continued to increase at a rapid pace.

Our gross unrealized carried interest balance stands at an all-time high of $949 million, up $113 million or 14% from 2024, with approximately 50% or $478 million of that belonging to the firm. Based on a number of real-time positive developments, we believe we will see another increase in this balance when we close our books at the end of Q1. We ended 2025 with $91 billion of assets under management, a 14% increase compared to 2024, and a new high watermark for the firm. Fee-paying AUM increased 12% year over year to $72 billion, and contracted not-yet-fee-paying AUM increased 27% year over year to $10 billion.

Our contracted not-yet-fee-paying AUM is an important leading indicator of future revenue growth with real embedded FRR growth in that number. Finally, 2025 marked meaningful progress towards several of our key strategic objectives, particularly in regard to the individual investor channel, where AUM increased 18% year over year. In 2025, we launched Grove Lane Partners, our new wealth management distribution joint venture. We launched our infrastructure interval fund, which is now raising money every day. And we recently filed registration documents for a registered private equity fund, which Grove Lane will support. While we always caution that new distribution markets take time to ramp up, we remain enthusiastic about the future of the wealth channel for our business.

Before turning the call over to Jonathan, I want to comment on the challenging market of the past couple of weeks. The consensus seems to be that the market stress has been driven by concerns of AI disruption and impact on equity and credit valuations with regard to SaaS businesses. While we probably prefer a somewhat less volatile environment, we are pretty sanguine with regard to recent developments. First, diversification is the defining characteristic of our investment and portfolio management process. In the private equity, private credit, and ARS space, all of our verticals, actually our typical portfolios, include exposures to several hundred companies or assets on a look-through basis.

Those positions are diversified across markets, industries, different asset class types, and geographies. And we have always believed this diversification is a core tenet and a significant part of the value we deliver to clients. Second, with regard to our SaaS exposure, we believe we have less exposure than peers and very limited exposure generally. SaaS exposure represents only 4% of our total AUM, less than 6% of our credit AUM. Third, our view generally is that not all SaaS businesses are the same. That SaaS businesses are not going away, and they also will benefit from AI. With regard to SaaS-related credit specifically, existing credit attachment points are generally protective with regard to impairment.

Fourth, we believe last week's significant pullback was without differentiation across companies, which always provides opportunity. Our absolute strategies portfolio had positive performance in January, and in general, this is the type of environment where ARS strategies often add value. Finally, we believe that across our platform, we have more exposure to the disruptors and the beneficiaries of disruption than we do to the businesses where disruption to business model or future prospects is of concern. Simply said, we have more net long opportunity from AI trends, including direct exposure to AI and to all the related AI beneficiaries, than we have exposure to loss from those disrupted.

Of course, our stock has not been immune to the recent market dislocation. And we ourselves are a good example of a proverbial baby being thrown out with the bathwater. With our stock trading at a lower earnings multiple than the S&P 500, and that of our alternative investment peers, with solid growth prospects and with a current dividend yield of approximately 5%, we believe we represent good value today and that buying back stock represents an attractive use of capital. Consequently, we have increased our buyback authorization by $35 million, leaving us with $91 million to repurchase shares.

Given our ample cash balance generated in part from strong cash flow generation and in part from the proceeds from warrants exercised in November, we can buy back stock, minimize dilution from stock-based compensation, and also repay $65 million of our term loan, which we are doing this week without prepayment penalty. In closing, 2025 was a very strong year, momentum remains strong, and we remain on track to achieve our goals to more than double our 2023 FRE to over $280 million and grow adjusted net income per share to more than $1.20 by 2028. And with that, I'll turn the call over to Jonathan. Thank you.

As Michael noted, my remarks will focus on our strong fundraising results for the year 2025. Our $10.7 billion raised, in addition to being a firm record, is notable for its diversification across strategies, which is best illustrated on page 10 of our earnings presentation. Every investment strategy contributed meaningfully to our results this year, and all have sizable pipelines heading into 2026. The numbers only capture part of the story. So to bring our fundraising to life, I'm gonna take you through a few real examples of 2025 wins.

First, as we've discussed in the past and at our Investor Day, evolving alongside our existing clients through cross-selling has been a key driver of our growth, generating approximately 20 to 25% of our fundraising in any given year. One such client is a large public pension that has partnered with us for years on a multi-asset private markets program focused on smaller cap opportunities in private equity and real estate. Through our ongoing dialogue, our client described that they had strong demand for what they called the missing middle of real estate, sitting between smaller and very large opportunities. We designed a new program specifically to address that gap.

Importantly, the client also re-upped their original private equity and real estate programs, committing more than twice their initial allocation. It's a strong example of listening closely, adapting quickly, creating durable solutions, and growing alongside our clients. To that point, our AUM with this particular client is four times what it was when they launched their first program with our firm. A second example highlights similar expansion within the absolute return strategy space. In this case, we've worked with the client for almost twenty years, managing small, middle-market programs across private equity, infrastructure, and real estate.

As a result of this evolution, our AUM with this particular client has many, many multiples of what it was when they launched their first program with us almost twenty years ago. The programs we manage serve as an alpha generator by attacking less trafficked areas of the market, incorporating significant fee efficiency due to meaningful exposure to co-investments and direct investments. In fact, in this particular relationship, we do everything from direct control investing to co-investing to fund investing across private equity, real estate, infrastructure, and absolute return strategies.

Stacie Driebusch Selinger: The fund investing activity serves as a farm system of relationships.

Jonathan Reisin Levin: That ultimately transition to the client directly. In 2025, we expanded that relationship by introducing ARS, making this one of the many programs that comprise the $1.9 billion of ARS fundraising in the year, the highest amount since 2021. Michael mentioned our growing success in the individual investor channel, and I'll highlight a key example of that momentum: strong demand for white-labeled solutions. We've long believed that the differentiation that's made us successful in the institutional market, serving as a customized separate account partner, would translate well in the individual investor channel. And we're seeing that thesis play out. Over the past two years, we've raised almost a billion dollars across 11 white-label solutions in the wealth channel.

We believe these customized solutions will be a meaningful contributor to our growth in this channel going forward alongside everything we're doing from a product standpoint. The last example is an Asia-based institution for whom we've managed an ARS program for more than two decades, alongside providing broader advisory and value-added services. The client wanted to increase their exposure to Japan-focused ARS strategies. And despite having a large and sophisticated investment team, they sought our partnership to leverage our experience and capacity in that market. Leveraging the depth of our global ARS team and long-standing relationships with Japan-based managers, we designed a customized Japan-focused ARS program tailored specifically to the client's objectives.

These examples represent only a snapshot of how we partnered with clients over the past year. Collectively, they reflect the power of our platform, the strength of long-term relationships, and our ability to tailor solutions across client types and channels. While each client relationship is unique, our success is driven by a common foundation: a broad, flexible platform that lets us adapt to market conditions, tailor creative solutions, and deliver across a wide spectrum of opportunities. With that, I'll turn it over to Pam.

Pamela Lyn Bentley: Thanks, Jonathan. Both our fundraising and investment performance led to strong asset growth in the fourth quarter and the year. Private markets fee-paying AUM and management fees grew 106% year over year, respectively, from a combination of solid fundraising and conversion of contracted not-yet-fee-paying AUM. Growth in all of our various earnings drivers throughout the course of '25 sets us up well for continuing momentum and earnings expansion. As usual, let me touch on key figures for the upcoming quarter. For '26, we expect private markets management fees to be relatively consistent with the fourth quarter.

It's also important to note that given the timing and fee structure of our specialized funds in the market, we expect limited catch-up fees this year. As noted, absolute return strategies had strong investment performance and capital formation, resulting in ARS fee-paying AUM and management fees growing 155% year over year, respectively. For 2026, as a result of positive net flows and terrific investment performance, we expect ARS management fees to increase by approximately 5% from the fourth quarter. 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 our FRE compensation and benefits remain stable for the year at approximately $148 million or an average of $37 million per quarter. As a reminder, we typically see a seasonal uptick in compensation in the first quarter of the year, and we expect FRE compensation and benefits to be approximately $1 million higher in '26 versus Q1 of last year. Non-GAAP general, administrative, and other expenses were consistent in the fourth quarter at just over $20 million.

We expect non-GAAP general, administrative, and other expenses in 2026 to be in line with or just slightly above 2025. Turning back to 2025, in addition to strong AUM metrics, it was a productive year on our financial drivers. I point you to Pages four and five in the earnings presentation for a summary of the key metrics. Total fee-related revenue for the year was $416 million, an increase of 6% year over year. Our fee-related earnings grew 11% year over year, and our fee-related earnings margin expanded to 44% for the year. Adding our strong incentive fees, adjusted net income grew 18% year over year.

During the fourth quarter, our outstanding warrants expired, with a portion exercised resulting in the issuance of approximately 10 million shares at the strike price of $11.50 per share, generating just over $110 million in proceeds. We also repurchased 2.8 million shares during the fourth quarter at an average price of $11.11 per share, or a total of $31 million. As of year-end, $56 million remained under the existing share repurchase authorization. And today, we announced that our Board has approved an additional $35 million for share buybacks. Additionally, we are prepaying $65 million of our term loan, reducing our leverage and saving over $3 million per year in interest expense.

While these actions enhance our financial flexibility and support shareholder returns, our primary focus remains on strategic investment for long-term growth. With strong fundraising, excellent ARS investment performance, steady FRR growth, margin expansion, and upside from incentive fees, we believe we have all the ingredients in place for a very strong 2026. Thank you again for joining us, and we're now happy to take your questions.

Operator: Thank you. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions. The first question will come from Jeffrey Paul Schmitt with William Blair. Hi, good morning. Could you discuss your capital allocation plans just with balance sheet cash up on the warrant exercise? And Pam had mentioned you paid down some debt over the last week or two. In up share buybacks. But what are your plans from here? Should we expect additional debt pay downs?

Michael Jay Sacks: Thanks, Jeff. So it's Michael, and then Pam jump in if I leave anything out here. But, you know, we've always talked about the fact that we're a capital-light business. We've paid a healthy dividend and increased that dividend a number of times since going public. And we've said, you know, numerous times, and we intend to sort of stay a capital-light business. So we did, you'll you saw in the Q4, we bought back shares post-warrant exercise. And we are gonna pay some debt down now.

And I think, you know, that with the current authorized exercise and the current and the debt pay down we announced this morning, that kinda puts us back in a pretty, you know, comfortable range. Obviously, we have a quite healthy dividend yield, not getting a ton of appreciation for that. So while we probably, you know, do have cash flow to be able to increase that dividend, it doesn't seem to get me rewarded particularly, by shareholders sort of focused on increasing that buyback.

Jeffrey Paul Schmitt: Okay. And then continue to see really good operating leverage in the business. I think the fee-related margin was 44% for the year. It's up a lot over the last five years. Can you continue to keep expense growth low as this business scales out through '28, which was sort of your medium-term outlook, can you continue to drive margin expansion over that period? Thanks.

Michael Jay Sacks: We believe we can. And so, we do think I think I mentioned it in my comments, we believe we have continued operating leverage and we think that we can and will continue to drive FRE margin and overall margin through '28.

Jeffrey Paul Schmitt: Okay. Thank you.

Operator: Thank you. And the next question comes from Kenneth Brooks Worthington with JPMorgan. Hi, good morning and thanks for taking the question.

Kenneth Brooks Worthington: The absolute return business had a great quarter, had a really solid year. You've been highlighting for some time the expectation of flat flows. How are you feeling about the business, and how do you feel about that business returning to organic growth as we look to the future? Given sort of the successes you've had in the past couple of years?

Michael Jay Sacks: Well, Ken, we're gonna flash back to our Investor Day conversation, you know, when we were out in the hall. We're not changing our budgeting. And we're not changing and making any proclamations on a call like this. And as you know, anybody who was at the Investor Day or watched that Investor Day recording knows we definitely have people in the firm in that vertical that are more bullish on the vertical than we are budgeting. But we're not changing that budgeting at this time. And I could point out, Ken, that budgeting relates to flows, which obviously translates directly into management fees.

But it also does, you know, relate to performance expectations and kinda what we sort of talk about as run rate performance fees at budget. And I did highlight that for the last six years, we've beaten the run rate at budget on the performance fee side as well.

Kenneth Brooks Worthington: That was an elegant way of answering, so, appreciate it. As we think about I just wanna dig into it too. It's John. Sorry. Yeah.

Jonathan Reisin Levin: Let me add one thing. I mean, I agree with everything Michael said. I do just make sure we make the important distinction because you framed the question in the context of where organic growth. If you if Pam gave, you know, guidance for the '26, and you might have been specifically referring flows as opposed to just FRR. But that guidance for the '26 does have embedded in it, obviously, FRR growth from that vertical in light of the success we've having. So I just want to make sure that you when you file back and look at those that script, you catch that piece.

Kenneth Brooks Worthington: Cool. Thank you. And just on two funds, maybe first Advance, how much has been raised thus far in the strategy, and how much time is left until that fund closes? And then CIS is back in the market, just remind us how big the prior fund was.

Operator: Sure. Let me

Michael Jay Sacks: take John, let me take Advance, and you just give the specific number on CIS. So, Ken, we are in market with for Advance. We actually have the ability to extend the period to raise funds for Advance, and we have talked to our LPAQ about doing that. And so we'll be continuing to try to raise money for Advance, you know, going forward the next, you know, several, you know, next, you know, quarter or so. Advance is in my view, likely to come in smaller than the prior advance. It'll be one of the few funds we've, you know, ever had where a successor is smaller than the predecessor.

And as you know, Advance focuses on emerging managers, which is emerging and diverse managers. And there's been a lot of conversation about diversity and diversity, equity, inclusion, over the course of the last year or so. And it's been a steeper slope for this fundraise this time around. And I think that's just a fact. That's a fact we've been living with. And when we have our final close, we don't announce the numbers along the way, but when we have our final close, it will be, I think, smaller than the prior fund.

I would say that as given the size of the prior fund, you know, it's not gonna be all of our forecast and everything incorporate the idea that it's gonna be smaller. So we've understood that. We understand the landscape. We've been up that fund has been operating in, for a while now. And that's baked into our guidance and our expectations.

Kenneth Brooks Worthington: K. Thank you. And just CIS, the prior one?

Jonathan Reisin Levin: Yeah. It did it's about between it's right roughly a billion dollars. We there were some sidecar vehicles that invest alongside that fund, but for the CIS three, plus or minus a billion dollars were, as you said, now in market critical infrastructure solutions for And you know that we've talked a lot about the success we're having generally in the infrastructure space. And so when you look at the total capital formation for infrastructure vertical across separate accounts and various products, this is just a piece of it, but we feel as good about this piece as we do about the broader infrastructure strategy, which is obviously going quite well.

Kenneth Brooks Worthington: Great. You very much.

Operator: And the next question will come from William Raymond Katz with TD Cowen.

William Raymond Katz: Great. Thank you very much for taking the questions. So John, you spent a lot of time about the depth and breadth of the gross sale dynamic for 2025. And I think between you and Michael sort of hinted at a pretty good '26. Was wondering if you could maybe unpack the drivers for 2026 and maybe break that down between, specialized versus maybe the SMA side of the equation, retail or global wealth versus institutional, any other metric you think sort of sailing for us as we sort of work through our math. Thank you.

Jonathan Reisin Levin: Sure. You know, I don't know, Bill. If I broke it down, I would break it down much differently from what the flows formation and the makeup of that formation has been over the past couple years with the relevant embedded trends in it. So when you think about it being broad-based globally, when you think about being broad-based across the channels, and when you think about it being highly diverse or broad across many of our verticals, The mix between separate accounts and specialized funds being roughly the same mix as that's represented in our AUM at seventy thirty. You know, with the underlying trends still being relevant to that.

Infrastructure is strong, and we're in a market with a bunch of infrastructure stuff. And the individual investor market's growing faster than the We had individual investor AUM up close to 20%, which is larger than our what our overall AUM growth was. Continued growth from the capital from the insurance channel as compared to what it represents in AUM. So I don't think that I would call for something kinda markedly different in any period of you know, reasonably long period of time that you would capture capital formation over, I would say that our expectation would be a continuation of the trends we're seeing, which is a very healthy environment capital formation.

And us benefiting from the diversification and breadth of the business and where we're making investments in particular to get behind the tailwinds that we're all collectively seeing in the market.

Michael Jay Sacks: Bill and Michael, I don't think we said in the script which we often do. So glad that you asked and happy to say it now, our pipeline you know, we've talked in the past how we track pipeline, and we have near-term pipeline, a couple categories in near-term pipeline. Etcetera. After raising $10.5 billion through December 31, our pipeline today is larger than it was a year ago. So just and to John's point, and it's completely you know, diverse on channel, on jurisdiction, on geography, etcetera. So, that's I think we normally mention that, and we didn't, this time, I don't believe. So thanks for asking.

William Raymond Katz: Okay. Thank you. And maybe a follow-up for Pam. Maybe a two-part question. You've been able to really hold the line on expenses year on year even as the business continues to scale. What is it that's driving that, the ability to sort of tamp down particularly on the OpEx side and the comp side? And then as we look ahead, so unrelatedly, how are you guys thinking about the realization opportunity on the carry side equation, and which bucket do you think it comes from? Thank you.

Pamela Lyn Bentley: Appreciate the question, Bill. I think on the OpEx side, I would say, obviously, we're focused on continued expense management, but also just continued investment in scalability and technology. There's a lot of great efforts going on that are enabling us to achieve that scale and including AI and we spoke a little bit about that at Investor Day as well. And we are also, again, just disciplined in making sure we're still investing in the areas of the business where there's product growth such as in the individual investor space. So we're investing where it makes sense, and we're holding the line and reducing expenses where we can through really investments in technology.

And I think, Bill, if you can remind me the second part of your question there.

Michael Jay Sacks: Yes. Sure. Sure. I'll take it, Pam. It was the carry question. Where is it gonna come from? And how good do we feel about it, and what's our you know, how do we characterize it? And I think, Bill, that's where I would start that where I would start on that is the I think the most important piece, and I wanna begin a little, is it how we mostly think about it is it's not a it's not an if, it's a when. And so when matters, time value money matters, absolutely for sure. You know, sooner is better. That said, that asset is appreciating very rapidly.

And I, you know, encourage everybody to listen to my comments in the script with regard to that asset, look at the appreciation, over the year, last year, quarter over quarter, that asset's appreciating rapidly. And what to me is very encouraging about that asset when you have a carry asset on your balance sheet, one of the things you worry about is sort of old carry. And is the old carry just kinda stale and sitting there and you're not gonna really collect it? If you look at our collections, our old carry has come way, way, way, way down. We've collected, you know, most of it. So it's live. It has been a when not an if question.

And we have, you know, every confidence that carry at $4.79 firm share now is a when, not an if, and that number is gonna go up. Which we touched on. And there is a ton of carry at work behind that doesn't really appear anywhere. Right? Because it's just carry that's not yet in the money to be counted and carried NAV, but it's working. We're deploying the capital. And we're creating the investment returns to turn that into carried NAV. And there's a ton of that we've, you know, generated in the last six years or so.

And so we're hopeful that the same experience you've seen with our carry asset over the time period that we've been public where we've, you know, we've tripled three and a half x, whatever it is, the size of the asset while collecting a lot of cash, that, you know, not saying specific dollars amounts, but that same pattern is gonna occur again on top of the $4.79. We think that this we think this is not you know, like, if you look at our carry asset today, at $4.79, it's a big chunk of our total enterprise value. Relative to peers. It's worth noticing that.

And then you think about the dry powder the carry that we have behind that, and it's a very significant asset for Grosvenor. That we sort of feel, you know, and it will start cash flowing to a higher degree. Just a question of when. And when we done, we when it does, we think it will be, you know, significantly appreciated.

William Raymond Katz: Okay. Thank you for taking all the questions.

Operator: Press 1. Again, that's 1 if you would like to ask questions. And we'll take a question from Crispin Elliot Love with Piper Sandler.

Crispin Elliot Love: Thank you. Good morning, everyone. First, on the fundraising outlook broadly, very strong in 2025. Just curious on how you're thinking about 2026 just given the momentum you have built up, least it compares to 2025. You said pipeline is stronger than a year ago. Does that mean that we should assume that you expect fundraising in '26 to exceed 2025? Or am I going a little bit too far there?

Michael Jay Sacks: Our bottom-up granular build coming in from the business development team and the investment teams lands at a number that would exceed last year. Given how good last year's fundraising was, given it was a firm record, given the sort of massive increase over 2024, we're not budgeting any, you know, we're not standing on the call today saying, you know, that '26 fundraising will exceed '25. But, you know, we've certainly got the pipeline, you know, to give, you know, to have them give '25 a serious run for its money. And as I said, our teams, you know, think we should have a bigger year.

But our base budget is, you know, is in line with last year, and we'll keep, you know, updating that as we get through the, you know, go through the year. And when we're confident that we're gonna exceed it, we'll announce that.

Crispin Elliot Love: Perfect. That makes, that makes a ton of sense. And then just performance fees, very strong in the quarter, but my question is a follow-up on the carried interest side. Was the softest for carried in '25? First, was that a surprise for you? I know third quarters are typically the strongest, so not a major surprise to see a little bit lower in the fourth. But just curious on the absolute level for the fourth quarter. And I do appreciate the difficulty in forecasting these levels and how

Operator: 's time to be a driver. It was it was lower than expected than we

Pamela Lyn Bentley: expected.

Michael Jay Sacks: That said, you know, carry is not the revenue the easiest revenue stream for anyone to. And so, particularly when your carry is a quite, you know, is a highly diversified carry with, you know, lots of different waterfalls. It's not like, you know, work on one deal and generate carries. So it's, it's the hardest revenue stream for us to predict. We would love it to, you know, the we would love the realizations to increase. We've, you know, been looking for that to happen since kind of the slowdown in 2022-2023. We do see, you know, you know, interesting, you know, more activity teed up everywhere, public market, private market.

And so you know, we are expecting, you know, some, you know, expecting increased revenues there. But that movement in the carry at NAV is super important. Because

Pamela Lyn Bentley: you don't know when you're getting that

Michael Jay Sacks: money, but you are gonna get it. And so tracking the asset matters a lot. And, you know, we that asset moved a bunch in Q4 even though we didn't collect a lot of cash.

Crispin Elliot Love: Great. Thank you, Michael. I appreciate taking my questions.

Operator: And at this time, there are no further questions.

Stacie Driebusch Selinger: Thank you again to everyone for joining us today and taking the time. We appreciate the engagement in the questions. If there are follow-up questions, please feel free to reach out. If not, we look forward to speaking with you next quarter. And hope everybody has a wonderful day.

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

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