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A background video of a hydroelectric plant plays on screen with the title “Infrastructure” “ What Makes GP-Led Secondary Transactions a Compelling Opportunity? Presented by Scott Litman, Managing Director, Infrastructure Investments” overlayed on the screen. There is a white GCM Grosvenor logo in the bottom left corner of the screen.

Scott Litman: So what’s different about a GP-led single

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Scott Litman: asset secondary? Typically, what

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The video fades to a front view of Scott standing in an office talking.

Scott Litman: you have in a GP single asset

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Over the video of Scott, a blue box with white text “Single asset secondary transactions allow GPs and certain LPs to extend ownership in their strongest assets, while providing other LPs with an option to take liquidity” appears.

Scott Litman: secondary is the GP is making a decision that

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Scott Litman: they’d like to hold an asset for longer

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Scott Litman: because they see interesting and compelling opportunities

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Scott Litman: to maximize value that likely

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The text box fades away.

Scott Litman: will go beyond the end of the life of the

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Scott Litman: fund in which that asset sits.

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Scott Litman: Now some other features of these opportunities may

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The video of Scott fades to an aerial video of a busy cargo port with shipping containers lined up.

Scott Litman: be, and this is different from one to

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The video changes to an aerial view of a metal structure. The camera appears to start at the bottom between the building structures and pan upwards while looking down at the ground the whole time.

Scott Litman: the next, but it may be that these opportunities are

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Scott Litman: being pulled out of funds that are underperforming but

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The video changes to a man and a woman wearing hard hats and green work vests looking up and pointing at powerlines overhead.

Scott Litman: the assets themselves are typically

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The video changes back to Scott talking in the office.

Scott Litman: marquee assets that the GP has high

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Scott Litman: conviction in and that’s why this opportunity is really interesting.

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Scott Litman: So that kind of will set the table as to

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Scott Litman: what we’re talking about. We at GCM

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Scott Litman: think of these opportunities largely as very

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Scott Litman: close cousins of the co-invest which really comprises the

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Scott Litman: bulk of what we do and where we think

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Scott Litman: we’ve got tremendous expertise in the space.

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The video fades into a navy blue background with “Benefits of Single Asset Secondary Investments” appearing in white text on the top center of the screen.

Scott Litman: What makes them similar and what we are interested in here is

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A blue icon of a triangle with an exclamation point in the middle and white text stating “No blind pool risk” appears under the title on the screen. At the bottom of the screen, “Unless apparent from all context, all statements herein represent GCM Grosvenor’s opinion. No assurance can be given that any investment will achieve it’s objectives or avoid losses” is visible in white text at the bottom of the screen.

Scott Litman: that these opportunities don’t have any blind pool

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Scott Litman: risk, you’re not just underwriting a sponsor, there is

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Scott Litman: an asset. There’s a business plan. There are financials that

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Scott Litman: we can sink our teeth into that we can

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Scott Litman: do our typical diligence of and we can form

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The video changes back to Scott talking.

Scott Litman: our own view of valuation on

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Scott Litman: and that’s really interesting and it allows us to

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Scott Litman: get a much better picture of the opportunity.

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Scott Litman: Secondly, I mentioned that these are assets

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Scott Litman: that are sitting in the funds of a GP

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Scott Litman: that may be getting towards the end of

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The video changes back to the previous blue screen and under the blind pool risk text, a blue icon of a shield with a checkmark in the middle and white text stating “GP in a unique position to understand asset” appears on screen.

Scott Litman: their life. Why is that relevant? Because it

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Scott Litman: means that the GP has very good familiarity with

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Scott Litman: the asset.

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Scott Litman: So the GP may have owned this asset for a year,

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Scott Litman: two years, five years, seven years, and now they want to own

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The video changes back to Scott talking.

Scott Litman: it for longer. So they are in our opinion

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Scott Litman: very well positioned to understand

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Scott Litman: what the value proposition is on the

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Scott Litman: back end even more so than they are when

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Scott Litman: they’re typically buying an asset from a third party because in

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Scott Litman: this case they happen to be buying and selling there on both

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Scott Litman: sides of the transaction.

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Scott Litman: So, we find that quite compelling and then we

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Scott Litman: have a lot of confidence in the GPs we work with on that basis.

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Scott Litman: Third,

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The video changes back to the blue screen and under the GP text, a blue icon of a network of people appears with white text next to it stating “Strong GP alignment”.

Scott Litman: these opportunities, because we come in as a buyer and in

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Scott Litman: many cases we come in as a lead buyer and we’ll talk a little more about that, we

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Scott Litman: think there’s an opportunity for strong alignment with

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Scott Litman: the GP and we can help negotiate those terms.

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Under the previous text, a blue piggybank icon appears with white text stating “Opportunity to roll GP economics into a continuation structure.”

Scott Litman: And fourth, when we’re looking

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Scott Litman: at these opportunities in the event that the GP is looking

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Scott Litman: for an incentive,

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Scott Litman: we can kind of build that into our model and kind

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Scott Litman: of build it into the purchase price, which means we may buy at a

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Scott Litman: discount in order to embed whatever the GP is going

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Scott Litman: to receive on the back end. So

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Scott Litman: these are some of the reasons that we find these opportunities

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Scott Litman: quite compelling.

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The video changes back to Scott talking.

Scott Litman: We think this is a market that’s growing. We think

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A blue text box appears on the bottom of the screen with white text stating “We believe this could represent ~$60B of annual infrastructure single asset secondary transaction volume in 3-5 years.”

Scott Litman: maybe north of $60 billion in total opportunity

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Scott Litman: value and infrastructure alone over the next three to five

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The text box fades away.

Scott Litman: years and to help you kind of think about where that number

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The video changes to a navy blue screen with “Market Supports Continued Secondaries Growth” in white text as the title at the top. On the left side under the title there are two charts on top of each other. The top chart is a bar chart showing light blue bars with the x axis showing values 2019, 2020, 2021, and 2022. The title is “Total Secondary Market Volume Capital: H1 2022 Secondary Market Volume.” The values are $85B, $60B, $50B H1 2021 with $85B predicted for H2 2021 for a total of $135B, and $53B H1 2022 with $62B predicted for H2 2022 for a total of $115B forecasted for FY 2022. The second chart is titled “Secondary Focused Capital” and states $137B of dedicated secondary dry powder (not including leverage, as of June 30, 2022) and $192B total secondary capital available with leverage. On the right side of the screen there is a single pie chart titled with a legend underneath “Increasing Percentage of Single Asset Deals: Type of GP-Led Transactions in H1 2022 (split by transaction value, purchase price + unfunded, per respondent. Definitions: continuation funds; restructuring/asset sales. Asset strip sales; acquiring a strip of a portfolio into a new vehicle.) The pie chart shows a total of ~$19B of transaction volume and the legend dictates it’s split by 51% single asset continuation funds, 40% multi asset continuation funds, 5% tender offers, 3% asset strip sales, and 1% direct sale. Data for all charts is sourced from Campbell Lutyens 1H 2022 Secondary Market Overview.

Scott Litman: is, I’m going to give you a broad picture of the market and

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Scott Litman: then we’ll narrow in on the GP space.

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Scott Litman: So here on this slide lots of graphs lots of

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The slide zooms in on the “Total Secondary Market Volume/Capital” bar chart. The other charts are no longer visible on screen.

Scott Litman: numbers, let me help you unpack this. What you’re seeing is how

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Scott Litman: this market has evolved. So 2019, $85 billion

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Scott Litman: of secondaries across the market. That includes PE, real

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Scott Litman: estate, infrastructure, everything that’s gone on the

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Scott Litman: market. It also includes LP- and GP-led deals.

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Scott Litman: So this is the market, you see that market come in in 2020

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Scott Litman: that’s COVID related, it’s pandemic related, activity

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Scott Litman: was down and then you see a really nice pop and

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Scott Litman: growth in ’21 and ’22 and that’s

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Scott Litman: what we expect to continue. That’s the broad

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Scott Litman: market.

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Scott Litman: Where’s the capital that’s chasing these opportunities? Well

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The focus switches to the “Secondary Focused Capital” chart.

Scott Litman: that you see on the bottom left of the page.

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Scott Litman: $137 billion of dedicated dry

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Scott Litman: powder with nearly $200 billion

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Scott Litman: of dry powder when you think about the leverage that

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Scott Litman: can be added to this transaction. So there’s a lot of people with capacity

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Scott Litman: to chase these deals. Now, let’s

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The focus changes to the “Increasing Percentage of Single Asset Deals” pie chart.

Scott Litman: kind of narrow the lens a little bit $19 billion

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Scott Litman: of transaction volume in GP-led

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Scott Litman: secondaries. So it’s still a very small piece

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Scott Litman: of the overall market, but it’s growing quickly

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Scott Litman: and inside that $19 billion

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Scott Litman: for the first time in the

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Scott Litman: history that we’ve been tracking over the last four, five,

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Scott Litman: six years,

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Scott Litman: single asset continuation funds represent more than

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Scott Litman: half of all that volume.

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The video changes back to Scott talking.

Scott Litman: And this is the opportunity set that we see growing and

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Scott Litman: that we think is going to be quite compelling. So more

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Scott Litman: to come in ’23 in ’24.

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Scott Litman: and in the years following that and we think this is

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Scott Litman: going to be something that we’re going to track closely and be

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Scott Litman: able to execute on time and again over the course of

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The video changes to an up close of a digital screen building several charts. A blue box with white text stating “As GPs come to market looking for these opportunities, we tend to not only be an early call, but we often are getting phone calls in advance of these types of opportunities being in the market” appears on the bottom of the screen.

Scott Litman: the next three or four years. As this trend continues, as

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Scott Litman: GPs come to market looking for these opportunities, we

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The video changes to an aerial view of a bridge with cars driving over water.

Scott Litman: tend to not only be an early call but

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The video changes back to Scott talking and the text disappears.

Scott Litman: we often are getting phone calls in advance

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Scott Litman: of these types of opportunities being in the

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market to take our temperature on interest, on pricing,

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Scott Litman: on terms because we’ve done

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Scott Litman: so much of this.

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The video changes to an aerial view of a windfarm with rows of windmills blowing.

Scott Litman: So,

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The video changes to an up close of one windmill blowing.

Scott Litman: as I kind of wrap up here today I hope that you guys have started

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Scott Litman: to see what we find so compelling in the

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The video changes to a plane landing on a runway during a cloudy sunset.

Scott Litman: single asset space and infrastructure. We’d love

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Scott Litman: to do more of these deals and we’d love to do all of

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The video fades back to Scott talking.

Scott Litman: this with you all and should this be an opportunity that’s

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Scott Litman: compelling for you, we’d love to have you reach out

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Scott Litman: to us, and we love to take this conversation further with you into the future.

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The video ends with an over-the-wing view from inside an airplane as the plane taxies with a glowing sun around it. “GCM Grosvenor Infrastructure Platform” appears in white text at the top of the screen for a title. “2005 – first year of investing”, “2,535+ deals sourced”, “160+ deals”, and “$11.1B assets under management” appear in white text under the title. At the bottom of the screen, a footnote appears stating “AUM as of December 31, 2022. Infrastructure investments data as of September 30, 2022. Deal count methodology changed in 2013. As a result, deal flow count for years prior to 2013 are an approximate count, updated annually. Employee data as of October 1, 2022. No assurance can be given that any investment will achieve its objectives or avoid losses. Past performance is not necessarily indicative of future results.”

Scott Litman: Thanks so much.