The financial services industry has witnessed an increasing number of big-name asset managers trying to court retail investors. GCM Grosvenor, a global alternative asset manager with $80 billion in AUM, is the latest big name to enter the fray. The firm has offered products for ultra-high-net-worth investors/qualified purchasers for close to two decades. Now, it has announced the launch of its first interval fund, which will allow it to target non-accredited investors.
GCM Grosvenor has partnered with CION Investments, an investment manager with a robust retail distribution channel, to create the CION Grosvenor Infrastructure Fund (CGIF). The fund will invest in assets in the transportation, digital, energy, energy transition, supply chain and logistics sectors, as well as infrastructure-adjacent assets.
The two firms are using approximately $300 million of seed capital from a major institutional investor to launch the vehicle, coupled with an additional cash commitment of approximately $80 million. Before starting distribution, the fund will merge with a portfolio containing $200 million in GCM Grosvenor’s currently owned infrastructure assets. Minimum investments for CGIF will be $2,500 for regular accounts and $1,000 for retirement plan accounts.
Since 2020, the asset manager has raised $3.1 billion from individual investors globally, with 58% of those funds coming from investors in North America. The figure represents approximately 10% of the firm’s overall fundraising over that period. Today, according to Jon Levin, company president, 5% of GSM Grosvenor’s total AUM comes from the private wealth channel through structures such as commingled funds and separate accounts. However, until now, the money has come primarily from qualified purchasers or RIAs investing on behalf of multiple clients.
“Now, obviously, through this infrastructure fund, we’ll have the ability to reach all types of investors,” Levin said. “So, this is a further step and a further evolution, but it’s building upon a set of experience and history that’s been in place for a long time and a meaningful part of our business for a long time. We expect it to become more meaningful over time, which will mean continued investment in new product development and continued investment in further distribution resources to help us cover the market appropriately, both through partnerships like we have with CION and through our own internal capabilities.”
As Levin revealed during the firm’s third-quarter earnings call, the next stage of the firm’s growth plan for the private wealth channel will focus on launching private market interval funds that will be accessible to both accredited and non-accredited investors. The products will be sold through RIAs, independent broker/dealers and wirehouses.
Kevin Buchheit, managing director with GCM Grosvenor, noted that interval funds hold strong appeal for individual investors below the qualified purchaser level because of features such as 1099 tax reporting, up to 5% quarterly liquidity, no accreditation requirements and the ability to subscribe daily.
At the same time, the firm felt that infrastructure was one of the best asset classes to pursue in this new venture because of its cash yield component, attractive overall returns, an inflation protection component and limited correlation with the broader markets, added Levin.
“And we think there is plenty of room because it’s a less mature area of asset management for more products to be available to investors,” he said. “GCM Grosvenor, with 20 years of experience in infrastructure, is one of the most experienced global players in the space. So, we felt the combination of the investment characteristics themselves, as well as GCM Grosvenor’s experience in infrastructure and the partnership with CION, we are able to offer it in a product in a wrapper that doesn’t exist to a large degree in the market and creates an interesting opportunity all around.”
In addition to CGIF, Grosvenor’s debut in the interval fund space includes serving as an investment partner and core independent manager for Axxes Private Markets Fund (Axxes), a registered interval fund launched by private markets investment firm Axxes Capital Inc. in September. Axxes will focus on the private equity space with a portfolio of direct access co-investments and secondaries.
