GCM Grosvenor Pacific, LP Private Equity and Infrastructure
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GCM Grosvenor Pacific, L.P. Private Equity and Infrastructure September 30, 2016 Quarterly Report THE NOTES AND DISCLOSURES FOLLOWING THIS REPORT ARE AN INTEGRAL PART OF THIS REPORT AND MUST BE READ IN CONNECTION WITH YOUR REVIEW OF THIS REPORT. THIS REPORT HAS BEEN PREPARED BY THE GCM CUSTOMIZED FUND INVESTMENT GROUP, L.P. (REFERRED TO HEREIN AS “GCM GROSVENOR PRIVATE MARKETS”) AND GRV SECURITIES LLC. © 2017 GCM CUSTOMIZED FUND INVESTMENT GROUP, L.P. ALL RIGHTS RESERVED GCM Grosvenor Pacific, L.P. September 30, 2016 Quarterly Report Table of Contents Page GCM Grosvenor Pacific, L.P. Update Letter ................................................................................................................................................ 1 . Summary Tables ............................................................................................................................................ 5 . Underlying Fund Investment Reports ......................................................................................................... 14 . Co-Investment Reports ............................................................................................................................... 41 Notes & Disclosures ............................................................................................................................................................... 54 Appendix – 3Q 2016 Market Overview .................................................................................................................................. 55 GCM Grosvenor Pacific, L.P. September 30, 2016 Quarterly Report Update Letter Dear Partner: We are pleased to provide you with the third quarter 2016 report for GCM Grosvenor Pacific, L.P. (the “Fund” or the “Partnership”). Fund Overview Since the formation of the Fund in September 2009, GCM Grosvenor Private Markets has pursued a disciplined, but opportunistic approach of implementing the stated strategy of identifying top quartile managers, and constructing a portfolio of investments in leveraged buyout funds and special situation investments such as mezzanine, distressed debt and secondary investments. The Fund also opportunistically invests in co-investments and potentially other non-traditional investments that may offer enhanced net returns, as well as accelerate capital deployment to meet SDCERS’ private equity allocation targets. GCM Grosvenor Private Markets has also actively targeted strategies that lessened the “J-curve” effect of private equity investing. In 2011, GCM Grosvenor Private Markets also began to implement the strategy of investing in infrastructure fund investments (primary and secondary) and infrastructure co-investments. GCM Grosvenor Private Markets pursues a global total return strategy while also seeking current cash and “J-curve” mitigation, with an emphasis on North American infrastructure and other U.S. dollar-based investments. A summary of the Fund as of September 30, 2016 is as follows: . Since inception, the Partnership has committed $756.3 million to 54 total underlying funds and 32 total co- investments. The Partnership had contributed a total of $502.8 million to investments, representing 66.5% of commitments to investments. Cumulative distributions from investments totaled $217.6 million, representing approximately 43.3% of capital contributed to investments. The Partnership’s investments continued to progress well during the third quarter of 2016. Top drivers of performance include1: Private Equity Funds . Avista Capital Partners II, L.P. was held at 2.11x cost, with 12 of its 15 investments marked at or above cost, generating a net IRR of 19.4%.1 . Castlelake Aviation II, L.P. (fka Airline Credit Opportunities II, L.P.) was held at 1.56x cost, with 30 of its 53 investments market at or above cost, generating a net IRR of 13.5%.1 . Cerberus Institutional Partners V, L.P. was held at 1.51x cost, with 85 of its 129 investments marked at or above cost, generating a net IRR of 16.7%.1 . Cerberus Institutional Partners, L.P. (Series Four) was held at 1.20x cost, with 13 of its 42 investments marked at or above cost, generating a net IRR of 21.0%1. Clearlake Capital Partners III, L.P. was held at 1.90x cost, with 18 of its 23 investments marked at or above cost, generating a net IRR of 33.2%.1 . Crestview Capital Partners, L.P. was held at 1.27x cost, with 5 of its 10 investments marked at or above cost, generating a net IRR of 27.3%.1 . Crestview Partners II (TE), L.P. was held at 1.28x cost, with two of its six investments marked at or above cost, generating a net IRR of 28.7%.1 1 GCM Grosvenor Pacific, L.P. September 30, 2016 Quarterly Report . Darby Asia Mezzanine Fund II, L.P. generated an infinite net IRR.2 . Darby Converging Europe Mezzanine Fund, L.P. was held at 275.16x cost, generating an infinite net IRR. 1,2 . Excellere Capital Fund II, L.P. was held at 2.15x cost, with six of its eight investments marked at or above cost, generating a net IRR of 35.4%.1 . GCM Grosvenor Secondary Opportunities, L.P. was held at 1.43x cost, generating a net IRR of 35.5%.1 . KRG Capital Fund III, L.P. was held at 1.85x cost, generating an infinite net IRR.1,2 . KRG Capital Fund IV, LP was held at 1.53x cost, with 7 of its 14 investments marked at or above cost, generating a net IRR of 37.9%.1 . Revelstoke Capital Partners Fund I, L.P. was held at 1.31x cost, with its seven investments marked at or above cost, generating a net IRR of 24.3%.1 . Siris Partners II, L.P. was held at 1.39x cost, with five of seven its investments marked at or above cost, generating a net IRR of 24.5%.1 . TPG Opportunities Partners II (A), L.P. was held at 1.64x cost, with 44 of its 53 investments marked at or above cost, generating a net IRR of 17.5%.1 . TSG6, L.P. was held at 2.10x cost, with 12 of its 13 investments marked at or above cost, generating a net IRR of 40.0%.1 . The Veritas Capital Fund IV, L.P. was held at 1.92x cost, with 8 of its 9 investments marked at or above cost, generating a net IRR of 17.3%.1 . VIP I A L.P. was held at 1.17x cost, with 8 of its 12 investments marked at or above cost, generating a net IRR of 18.2%.1 Private Equity Co-Investments . The Private Equity Co-Investment Portfolio was held at 1.44x cost, with 27 of the 29 co-investments marked at or above cost, generating a net IRR of 27.2%.1 Infrastructure Funds . Alinda Infrastructure Fund I, L.P. (secondary) was held at 1.96x cost, generating a net IRR of 15.8%.1 . Alinda Infrastructure Fund II, L.P. (secondary) was held at 1.70x cost, generating a net IRR of 16.8%.1 . EIV Capital Fund II, L.P. was held at 1.51x cost, generating a net IRR of 22.8%.1 . HighStar Capital II, L.P. (secondary) was held at 1.65x cost, generating a net IRR of 17.8%.1 . IDFC Private Equity (Mauritius) Fund II (secondary) was held at 3.89x cost, generating a net IRR of 319.1%.1 . Infracapital Partners LP (secondary) was held at 1.39x cost, generating a net IRR of 18.2%.1 . KoFC Macquarie Korea Growth Champ 2010-1 Private Equity Fund (secondary), was held at 1.43x cost, generating a net IRR of 21.7%.1 . Macquarie European Infrastructure Fund I, L.P. (secondary) was held at 1.75x cost, generating a net IRR of 14.4%.1 . Macquarie European Infrastructure Fund 4, L.P. (secondary) was held at 1.30x cost, generating a net IRR of 21.0%.1 . Macquarie Infrastructure Partners I, L.P. (secondary) was held at 1.96x cost, generating a net IRR of 29.9%.1 . Macquarie Infrastructure Partners I, L.P. (Project Key) (secondary) was held at 1.51x cost, generating a net IRR of 53.3%.1 . Rockland Power Partners II, LP was held at 1.39x cost, generating a net IRR of 24.2%.1 Infrastructure Co-Investments . The Infrastructure Co-Investment Portfolio was held at 1.14x cost, with all three co-investments marked at or above cost, generating a net IRR of 6.0%.1 1 Returns do not take into account application of management fees, allocable expenses and carried interest, if applicable, at the GCM Grosvenor Private Markets level. Returns would be lower if net-of-fee performance was presented. Past performance is not necessarily indicative of future results. 2 Little or no capital has been funded in respect of this investment, which together with the current market value and distributions, produces an infinite IRR. 2 GCM Grosvenor Pacific, L.P. September 30, 2016 Quarterly Report Limited Partner Summary As of September 30, 2016, the estimated market value of San Diego CERS’ Combined Partnership interest plus cumulative distributions totaled $666.8 million, representing a net multiple of 1.35x cost. 1,2 Cumulative distributions totaled $192.9 million, representing approximately 39.0% of capital called. The net IRR on San Diego CERS’ investment was 16.1%.1,2 As of September 30, 2016 the estimated market value of San Diego CERS’ Private Equity Series Partnership interest plus cumulative distributions totaled $546.7 million, representing a net multiple of 1.37x cost. 1,2 Cumulative distributions totaled $149.7 million, representing approximately 37.5% of capital called. The net IRR on San Diego CERS’ investment was 17.5%.1,2 As of September 30, 2016 the estimated market value of San Diego CERS’ Infrastructure Series Partnership interest plus cumulative distributions totaled $120.1 million, representing a net multiple of 1.26x cost.1,2 Cumulative distributions totaled $43.2 million, representing approximately 45.4% of capital called. The net IRR on San Diego CERS’ investment was 11.2%.1,2 Market Overview Global fundraising in 3Q 2016 decreased by 14% compared to the amount raised in 2Q 2016.3 Global IPO issuance increased from $27.0 billion in 2Q 2016 to $29.0 billion in 3Q 2016.4 The global IPO market continued to make a recovery despite uncertainties surrounding Brexit at the end of 2Q 2016.