GCM Grosvenor gets new Neutral rating at BofA as FRE growth offsets AUM

Sep. 07, 2022 2:53 PM ETGrosvenor Capital Management, L.P. (GCMG)By: Liz Kiesche, SA News Editor

Risk or reward symbol. Turned wooden cubes and changed the word "risk" to "reward". Beautiful white background. Risk or reward and business concept. Copy space.

Dzmitry Dzemidovich

BofA Securities analyst Samantha Platt initiated coverage of GCM Grosvenor (NASDAQ:GCMG) with a Neutral rating, noting that the alternative asset management service company is expected to achieve double-digit fee related earnings growth, but most of its assets under management is in lower growth segments.

"While we are bullish on the growth from its private markets business and insurance opportunity, we are more cautious on the absolute return strategy ("ARS")," Platt wrote in a note to clients.

Fee-earning AUM is split 60% private markets and 40% ARS and is expected to move to 65%/35% by the end of 2024. "While private markets are growing quickly and ARS is relatively stagnant, we view most of the growth to be a relatively small portion of private markets (infrastructure, real estate, credit) given that private equity is one of the most mature asset classes," she said.

About 65% of the firm's AUM is in lower growth segments, chiefly hedge funds and private equity, both mature markets.

Platt's Neutral rating aligns with the Quant rating of Hold and contrasts with the average Wall Street rating of Buy.

Take a look at GCM Grosvenor's (GCMG) income statement reports over the past 11 quarters here.

In July, GCM Grosvenor (GCMG) and Blue Wolf Capital Partners acquired Hallcon, a provider of transportation services and infrastructure.

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