Patria Investments Limited

Ladies and gentlemen, thank you for standing by, and welcome to the Patreon Investments fourth quarter 2020 earnings call. At this time, all participant lines are on a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Josh Wood, head of shareholder relations. Please go ahead, sir.

Thank you. Good afternoon, everyone, and welcome to PATRIA's fourth quarter 2020 earnings call. Joining on the call today are our Chief Executive Officer, Alex Saig, and our Chief Financial Officer, Marco DiPolito. After market closed today, we issued a press release and earnings presentation detailing our fourth quarter and full year 2020 results, which you can find posted on our investor relations website at ir.patria.com or on Form 6K filed with the Securities and Exchange Commission. Any forward-looking statements made on this call are uncertain, do not guarantee future performance, and undue reliance should not be placed on them. PATRIA assumes no obligation and does not intend to update any such forward-looking statements. Such statements are based on current management expectations and involve inherent risks, including those discussed in the risk factors section of our Form F-1 registration statement filed with the SEC in connection with our IPO, as well as our Form 20F annual report to be filed next month. As a foreign private issuer, Patria will report financial results using International Financial Reporting Standards, or IFRS, as opposed to U.S. GAAP. Additionally, we will report and refer to certain non-GAAP measures, such as fee-related earnings and distributable earnings, to help investors better understand our business alongside similar companies in our industry. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with IFRS. Reconciliations of these measures to the most comparable measures calculated in accordance with IFRS are included in our earnings presentation. Please note that we are reporting results for the fourth quarter and full year 2020, which preceded our initial public offering, and PATRIA was a private company for the entirety of these reporting periods. As a quick overview of the results, PATRIA generated $16 million in IFRS net income in Q4 2020 and $62 million for the full year 2020. On key non-GAAP measures, fee-related earnings were $20 million for Q4 2020 and $71 million for the full year. Using our post-IPO share count, after-tax distributable earnings per share were the equivalent of 15 cents per share for Q4 2020 and 52 cents per share for the full year. The first quarter of 2021 will be our first reporting period as a public company, and thus our variable dividend payment will begin based on those results. With that, I will now turn the call over to our Chief Executive Officer, Alex Saig. Alex?

Thank you, Josh, and good afternoon, everyone. We're thrilled to be here with you today on our first earnings call. As Patra begins this new chapter in our journey, for 30-plus years, we have served our clients and LPs by delivering strong investment performance, which resulted in significant growth for our firm, and recognition as a clear leader in private markets investing in Latin America. Now, with our initial public offering, we offer that same commitment to value creation for our shareholders, and we believe Patria has a very compelling opportunity as we look to the future. We greatly appreciate the support of investors who participated in our IPO, or invested since then, and the confidence you have placed in our firm and our management team. Today, for the benefit of anyone who may be new to our story, I want to spend a few minutes introducing you to PATRIA and how our differentiated approach to investing in Latin America sets us apart. I will also provide some perspective on the current macro environment and the very attractive secular trends and opportunities that can drive significant growth for PATRIA looking forward. Marco, our CFO, will then discuss recent results as well as the important key metrics we will share with you on a regular basis to help understand our overall business performance. But first, I wanted to take a moment and recognize the key pillar of success for our firm, our people. Over the last year in particular, Patriot and companies across the globe have been challenged like never before. When faced with the onset of the coronavirus pandemic early last year, our first priority was the safety and health of our employees, and we quickly transitioned to a remote working environment. In every area, our professionals showed the ability to improvise, adapt, and maintain the same standards of excellence in our business operations. Without a doubt, our employees are our greatest asset, and I am incredibly proud to lead the world-class team that we have built at Patriot. Now, how did Patrick grow into what we are today? Our roots date back to 1988 when we were effectively an investment banking partnership with Salomon Brothers. Our first private equity fund was raised in 1997, which shifted the firm's focus to alternative investments and set us on the 20-plus year course to where we are today. For the last decade, we have enjoyed a fantastic partnership with Braxton, the firm which truly sets the bar for our industry on a global basis. This relationship really helps to institutionalize our firm and prepared us in so many ways to navigate the road ahead. As of year end 2020, our assets under management were $14.4 billion in representing nearly a 20% analyzed growth rate since 2009. Our two flagship asset classes, private equity and infrastructure, account for more than 90% of our current AUM and drove this growth with substantial scaling in each new fund vintage. We have been diligent about not just growth, but smart growth, at a rate where we have confidence in our ability to deploy capital efficiently and successfully. Our AUM is comprised of capital from the most sophisticated institutional investors across the globe, with over 80% of commitments coming from outside Latin America, and including 10 of the world's 20 largest pension funds and 6 of the 10 largest sovereign wealth funds. Our LPs are loyal, with more than 60% investing with us for more than 10 years. And they also invest across our platform, with nearly 80% of commitments from LPs who invest in more than one product. The only way to generate and maintain that level of LP loyalty is investment performance. And PATRA has demonstrated a rare ability to deliver consistent performance in the Latin American market. Pooled net IIR since inception on a cash-weighted basis is 16% for our flagship private equity strategy and 6% for infrastructure. In Brazilian reais, those same returns are 22% for private equity and 19% for infrastructure. We attribute our performance to a time-tested investment approach, which we believe is key to success in the region. Our strategy targets resilient sectors, producing stable goods and providing essential services with a low correlation to GDP growth, healthcare, logistics and transportation, power and energy, food and beverage, data infrastructure, and agribusiness. We focus on operational leverage and value creation, and our returns are generated using little or no debt, which is a stark contrast to the default assumption of our industry. We also practice gradual and disciplined portfolio construction, staging capital deployments into investments over time, which mitigates foreign exchange and execution risk, and allows our investment teams to concentrate capital in our biggest winners over the life cycle of a fund. Portfolio company leadership is also critical to our strategy, and we take a very hands-on approach in this regard. More than 50% of our partners and managing directors have executive experience within our portfolio companies. Over multiple fund generations, this retrograde investment strategy has delivered exceptional returns for our LPs and generated high demand when our funds come back to the market. With that perspective in mind, where are we today? And what opportunities lie ahead? In terms of macroenvironments, Private capital continues to benefit from tailwinds across the globe, driven by abundant liquidity in the financial markets, and an ever-present search for yield and higher returns amid the historically low interest rate environment. These trends in Latin America are even more pronounced, and we believe the region is still in the early stages of a secular transformation, as the penetration of private markets relatively to GDP is still quite low compared to the more mature markets around the world. The private market asset base in Brazil represents only about 2% of the Brazilian GDP, compared to about 8% globally, and between 10% to 30% in developed economies such as Canada, Singapore, the United States, and the United Kingdom. Regarding the investment environment in Latin America today, we believe attractive opportunities remain intact in our target sectors, despite the news of turmoil that tends to dominate recent global headlines. We correctly forecasted that the adverse shock of the global pandemic would affect our core geographies comparatively less than developed regions like Europe, meaning a less severe economic downturn and a faster recovery. By maintaining a disciplined investment approach, we were able to benefit from widespread prices locations and make very attractive portfolio investments. Our thematic focus on basic human needs like healthcare, food, and basic infrastructure also made our portfolio particularly resilient in a time of crisis. To be clear, the pandemic and related economic impact is still far from over, and the response to the crisis in the region was in many ways inadequate. But the launch of COVID vaccination programs, like in Chile and now in Brazil, is a critical step in the right direction. Additionally, structural reforms, including laws granting autonomy to Brazil's central bank, as well as growing infrastructure concessions in Colombia and Brazil, are all positive news for our investment risk outlook and hints at a strong pipeline of investment opportunities. Against this backdrop, I believe that PATRA is well positioned for success in the years to come. Our strategy for future growth is two-pronged. First, we want to continue the strong growth trajectory of our established flagship businesses, private equity and infrastructure. I mentioned that these funds have scaled impressively in prior vintages. We believe that trend can continue with strong growth in the overall private markets AUM in the region. even if we make conservative assumptions about Patria's market share. Our reputation was built with investment success in these businesses, and we will remain highly focused on delivering returns to our global LP base and attracting larger amounts of capital through our highly sophisticated fundraising organization. Second, Given the financial deepening taking place across many countries in Latin America, we also have a compelling opportunity to grow our newer strategies targeted at local investors. With interest rates in Latin America falling even more sharply than the rest of the world in recent years, there is a significant search for yield among local high network and retail investors and a booming appetite for liquid products like REITs and core infrastructure, as well as credit products. Just last week, in fact, we announced the closing of our first core infrastructure fund, a publicly traded evergreen vehicle that is yield-focused and will target high-quality operational power generation and transmission assets in Brazil. These strategies account for just over a billion dollars in AUM, but we believe there is a sizable opportunity to proceed. If we are successful in executing both our flagship business and key growth areas, we believe there is a significant potential for shareholder value creation. Through growing our base of fee-earning AUM, we can drive operating leverage for the firm and grow our fee-related earnings, which is a highly valued and predictable earnings stream. Through continued strong investment performance, we can also deliver significant performance fees as our portfolios exit over time. With our variable dividend policy, those earnings streams will be largely shared with our shareholders at approximately 85% of distributable earnings, making Patria a compelling holding for both income and growth-minded investors alike. Now, putting that all together, I speak to you today with great pride in Patria's achievements to date and a real sense of excitement and determination as we enter this new phase of our journey. Please know that we take great care in our role as fiduciaries of our shareholders' capital, and we look forward to communicating with you every quarter about our results and key developments for the firm. Helping me in that effort is our Chief Financial Officer, Marco DiPolito, who is a 16-year veteran of Patriotum. and I am thankful for his leadership through our IPO process. I will now pass the call over to Marco to provide more depth of our recent financial results and key metrics. Marco, please.