Patria Investments Limited

Good day and thank you for standing by. Welcome to the PATRIA fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's 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. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Josh Wood, Head of Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to PATRIA's fourth quarter 2021 earnings call. Joining today are our Chief Executive Officer, Alex Saig, and our Chief Financial Officer, Marco DiPolito. Earlier this morning, we issued a press release and earnings presentation detailing our results for the fourth quarter and full year, 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 factor section of our latest Form 20th Annual Report, with our 2021 filing to be completed in the coming weeks. Also note that no statements on this call constitute an offer to sell or a solicitation of an offer to purchase an interest in any PATRIA fund. As a foreign private issuer, PATRIA reports 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 industry measures which 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. As a quick overview of the results, PATRIA generated fee-related earnings of $29.3 million in 4Q21 and $86 million for the full year. Including performance-related earnings of $58 million, distributable earnings for the full year 2021 were $141.3 million, or $1.02 per share, in line with our guidance. Distributable earnings for the fourth quarter were $27.7 million, or $0.188 per share, and we declared a dividend of $0.16 per share, payable on March 16th, to shareholders of record as of March 2nd. bringing our full-year 2021 dividends to 86.9 cents per share. Note that PATRIA's combination with Moneda Asset Management closed on December 1st, 2021, and our P&L reflects the proportional impact from Moneda only for the month of December. Marco will provide more detail on this in his commentary. Our reporting for total AUM and fee-earning AUM reflects the year-end levels for Moneda, and we have enhanced our reporting on these metrics provide a breakout along asset class lines. With that, I'll now turn the call over to our Chief Executive Officer, Alex Tsai.

Thank you, Josh, and good morning, everyone. We hope that you are all well and safe, and it's great to be here with you again today. Just a few weeks ago, Patris celebrated the one-year anniversary of our IPO on NASDAQ, and it has been an incredible year of growth for our firm. Our investment platform is significantly larger and more diverse than it was a year ago. Our earnings have grown impressively, which of course accrues to our shareholders. And we have also grown in maturity as a firm, adding new talent in key areas and making significant advances in our corporate governance as we navigate this journey as a public company. I am honored with the privilege of leading such a dedicated group of people and excited for what we can accomplish moving forward. Just to put a finer point on what we have accomplished in this first year. Our 2021 fee revenue grew by 27% year over year, driven by a record pace of deployment with more than $2.5 billion deployed from our drawdown fund. We delivered $86 million of fee-related earnings in 2021, which represents year-over-year growth of more than 50% on a comparative basis. With continued value creation across the portfolio, our net accrued performance fees increased by $348 million, up 26% from one year ago even after realizing $58 million of performance fees during the year. As we guided you last quarter, we delivered just over a dollar per share of distributable earnings, of which 85% is distributed to our shareholders. This equates to a yield of 5% on our IPO price, which we believe is among the best yields in our sector for 2021, and it's four times the dividend yield on the SAP 500. Finally, with platform expansion as a major goal, we completed our first M&A transaction with Moneda Asset Management, which brings us a leading regional credit platform and adds critical expertise in Penn Latam and Chilean equities. We also recently announced an agreement to partner with Camarupim T&P in the launch of our growth exit strategy. Listen to our commentary over the course of the year. You have heard us to talk a lot about the inherent resiliency of the business model and how it allows us to thrive in times of volatility, especially investing in a region like Latin America. These results and metrics for 2021 are a perfect representation of that. The ability to grow our revenue earnings at a high rate over the last year underscores an important point, which is true for our entire sector. Asset managers with long-term capital can do some of their best work in times of market dislocation. We believe these are good times to deploy capital, and for PATRIA, deployment translates directly to management fee growth. If the environment is flipped to the other end of the spectrum, and it's a better time to sell than to buy, you may see deployment pace slow, but portfolio realizations should then also likely rise, generating more realizations for our LPs and higher realized performance fees for our shareholders. That structural balance in our revenue streams allow us to create value for our shareholders through the peaks and troughs of economic cycles and everywhere in between. Despite the headlines and equity market volatility worldwide, the major economies in Latin America held up well in 2021, as well as in early 2022. Higher asset prices reflect the receding pandemic together with constructive fiscal and monetary developments. On the health front, vaccination rates in the region now surpass much of the world. While in the fiscal area, there was a sharp reduction of budget imbalances in key economies like Brazil. Inflation traded higher in Latin America sooner than other regions. forcing central banks into a head start on the fight by raising benchmark interest rates in the first half of last year. And now it seems we may be cresting the cycle as other regions and economies are only beginning the tightening process. We have seen local currencies appreciate in recent weeks, and it is possible we are moving towards a more benign scenario that will provide momentum to ramp up our divestment activities. Looking across the platform, our flagship private equity strategy made strides in all phases of the investment cycle in 2021. We deployed more than $1.6 billion, driving management fee growth and positioning ourselves to raise our next vintage fund well ahead of schedule. We indicated last quarter there was room for one additional allocation out of our private equity fund six, And indeed, we committed nearly $400 million in the fourth quarter into our agribusiness, cybersecurity, and grocery retail thesis. In a year that was particularly difficult for divestment, we also successfully sold our stake in Aliar, allowing us to realize $58 million in performance fees from Private Equity Fund 3. Our overall private equity portfolio continues to perform very well, with underlying investments appreciating more than a billion dollars and ending the year with a combined 266 million of net accrued performance fees. In infrastructure, our team continued to capitalize on the vast opportunity set in the region, deploying more than $750 million in 2021 from infrastructure fund four. About 300 million of that came in the fourth quarter, driven by our success in Brazil's 5G spectrum auction, where our telecom platform, Winity, won a concession to build more than 5,000 towers and distribute mobile coverage to operators through an innovative wholesale model. The strategy also saw meaningful expansion last year into toll roads and data centers, areas where we can see attractive dynamics and opportunities. The performance fee potential of the infrastructure platform is also emerging, with net accrued performance fees up to $81 million at year-end, more than three times the accrual from one year ago. With the moneda combination complete, credit becomes the third major strategy vertical in our platform with $5 billion of AUM. Already here in the new year, we are hard at work introducing Moneda's products to our global investor base. And we are excited about the potential for this asset class in the region. Moneda's largest product is LATAM High Yield Credit, which is both denominated in US dollars and also invests in US dollar denominated fixed income. The primary funds in this strategy returned 10.5% in 2021, outperforming its benchmark by more than 800 basis points and underscoring how these credit strategies can thrive in a rising rate environment. Over the 21 years since inception, the fund has outperformed its benchmark by nearly 400 basis points, a long and impressive track record for attracting global capital. To solidify Patria as the leading diversified asset manager in Latin America, our aim is to build a platform that global investors will view as a comprehensive package for allocated capital to the region. Likewise, we want to acquire or develop products to attract more local capital and leverage the long-term financial deepening playing out in our own backyard. Moneda advances that goal not only through a world-class credit platform, but also with PEN LATAM expertise in public equities and greater geographic reach and distribution capabilities in the region. With our pending acquisition of Kamado PIN, we're also laying a foundation for a growth equity vertical that will be highly complimentary to our flagship private equity strategy. These are great strides in our first year post IPO. But in my view, we're just getting started. Now, let me close with just a few words on our goals in the year ahead. We told you that we expect fee related earnings to increase by more than 50% from the $86 million we delivered in 2021. We are set up very well to meet this target. and leadership across the firm is aligned and focused on delivering their budgets. Fundraising is a top priority as we enter another major cycle. We are in the process of raising our next vintage flagship private active fund, with initial closings taking place here in the first quarter. We're also raising our first dedicated renewable energy fund, with our next flagship infrastructure fund soon to follow. Our sales team is on the road and highly engaged with our LPs across the globe to drive much higher influence than we saw in 2021, which was more of an off-cycle year. Investment performance is everything in our industry and never out of focus. Our portfolio teams are executing on our business plans to deliver the continuous stream of value creation that sustain our track record. This year, we aim to move earlier vintage funds like Private Active Fund 5, which is currently generating a 27% net IRR in U.S. dollars, further into a Harvard-y phase and into a position to monetize their performance fees accruals. We will continue to pursue strategic M&A opportunities to further expand and diversify our platform. We see interesting opportunities from both an asset class and geographical perspective, and we will be diligent but persistent in these efforts. As I finish here, I want to again thank our entire team for delivering great results in 2021. as well as our limited partners and, of course, our shareholders for your confidence in PATREA as a steward over your capital. Our business is built on performance and trust, and we know that we must deliver one to warrant the other. I'll now turn the call over to Martin.