Patria Investments Limited

Thank you for standing by, and welcome to the Petria Investment Second Quarter Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll press star-one-one on your touch-tone telephone. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to your host for today, Josh Wood, Head of Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone. And welcome to PATRIA's second quarter 2022 earnings call. Joining today are our Chief Executive Officer, Alex Dye, and our Chief Financial Officer, Marco DiPolito. Earlier this morning, we issued a press release and earnings presentation detailing our results for the second quarter, 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 latest Form 20F Annual Report. 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 IFRS measures are included in our earnings presentation. On headline metrics, PATRIA generated B-related earnings of $31.1 million in distributable earnings of $29.2 million, or 20 cents per share, for the second quarter of 2022. We declared a quarterly dividend of 16.9 cents per share payable on September 16th to shareholders of record as of September 2nd. With that, I'll now turn the call over to our Chief Executive Officer, Alex Tsai. Alex?

Thank you, Josh. Good morning, everyone, and we appreciate you joining us this morning. In the second quarter, PATRA continued to execute on both 2022 financial targets, as well as long-term strategic growth plans, despite the difficult backdrop across global financial markets. We remain on track for our 2022 full-year fee-related earnings guidance of 50% year-over-year growth, having delivered $63 million of fee-related earnings in the first half of the year. After generating 44 cents of distributable earnings per share and cumulative dividends of 37 cents per share through the second quarter, we are delivering an annualized yield of more than 5% in 2022 based on recent share price. We had $764 million of new capital inflows across the platform. putting us over $2.2 billion for the first half and more than halfway of our $4 billion fundraising target for the year across a diverse range of products in each of our verticals. We deployed about $650 million in our drawdown funds to drive continued fee revenue growth Our total assets under management and fee earning AUM are up 66% and 126% respectively compared to one year ago, illustrating the expansion and diversification of our platform in the short time since our IPO. We're also focused on building our base of permanent capital. Having grown to more than $1 billion, or 6% of total fee-earning AUM in a variety of new initiatives in real estate and infrastructure with a significant opportunity to scale and consolidate. Over 20% of new capital coming into the platform so far this year is permanent capital. Turning now to highlights across our strategies. Our biggest story of the quarter was the announcement of our acquisition of DVI, to anchor our real estate platform in Brazil. And we recently closed on the first trench of the transaction for 50% ownership. This transaction is a crucial step as we look to build out the real estate vertical, bringing an experienced and proven leadership team and over 5 billion reais, or more than 1 billion U.S. dollars, and a very high-quality AUM. where more than 70% is off permanent capital. In a Brazilian REIT market that has grown at more than 20% over the last five years and is still under-penetrated, VBI has grown even faster to become one of the largest independent players in an asset class that is the key gateway to alternatives for many local investors. With VBI as a core, We believe we are now well positioned to grow our real estate business in Brazil in a meaningful way and potentially replicate the strategy in other Latin American countries. In private equity, we made our first deployment for our next vintage fund, allocating $450 million to launch the first thesis in that fund. We are highly focused on our fundraising efforts with additional closings expected in the back half of 2022 and then finishing in 2023, and we continue to feel good about our targets. We also expect to hold the first closing of our new growth equity fund here in August at a time when market dislocations represent great opportunity in the space. Since our funds are largely denominated in US dollars, the strengthening of the dollar relatively to global currencies contributed mostly to the valuation impact in the quarter. While we of course see some impact from public company holdings and comps in our quarterly valuations, our overall portfolio comfortably outperformed Brazilian and Latin America public equity markets in the quarter. And we continue to lean forward with confidence on the quality of the portfolio. Private active funds 5 and 6 continue to deliver strong net IIRs at 24% and 16% respectively in U.S. dollars. Year-to-date portfolio company EBITDA is growing at a healthy 18% organically and 36%, including M&A, and we do not see deterioration in our overall business plan and target exit values. We remain very active within the portfolio, having now signed 18 M&A transactions so far this year, with at least as many targeted for the second half. In infrastructure, we continue to accelerate towards the lounge of infrastructure fund five, as fund four nears the end of its investing cycle. In the second quarter, the acquisition of nine hydro power assets drove incremental deployment of approximately $200 million from Fund 4. Just recently, we announced fundraising of nearly $200 million for our second core infrastructure fund, which adds more permanent capital AUM, and we will jointly invest in these hydro assets. This fund continues to build on our income-focused core offering, and provides better access for local investors in Brazil. Given the acceleration we have seen in the flagship fund timeline, we now expect a dedicated renewable spool of capital to be raised as a sidecar with Infrastructure Fund 5, as it would not make sense to raise a separate fund concurrently. We continue to see demand to scale the combined size by 50% relatively to infrastructure fund four, given the extensive and attractive pipeline to address in the region. The existing infrastructure portfolio continues to perform very well, with the latest two vintages delivering 28% and 12% net IIRs in US dollars. Second quarter valuations were up to $135 million excluding currency impact, driven by investments in renewable energy, data centers, and toll roads. Turning to credit. Despite a tough quarter for the asset class across the globe, the Moneda high-yield credit strategy outperformed its benchmark by more than 400 basis points in the second quarter, and now 700 basis points year to date. 600 basis points of that outperformance is attributable to selectivity or the team's ability to pick the best performing assets with the remaining 100 basis points attributable to actively shorting the duration of the fund. Both high yield and investment grade credit yields in Latin America are among the highest in the world, with Moneda's high-yield fund currently delivering an impressive 12.3% yield at the end of July. Our in-house bottom-up credit analysis shows that Latin American corporates face low refinancing risks with very reasonable liquidity and falling leverage, demonstrating that even at these yield levels, There is low expectation of credit defaults compared to other emerging markets. With highly active management, our team can swiftly react to the environment to be opportunistic and take advantage of mispricing relative to the fundamentals. We also saw the recent announcement of a key 500 million reais anchor commitment for our new infra credit fund as we seek to ramp efforts on that fund in the back half of the year. This fund will have a closed-end drawdown structure, like our flagship funds, and will seek to capitalize on the credit size of the sizable infrastructure opportunity that I referenced just a moment ago. In public equities, although macro certainly impacted absolute returns in the quarter, There is also clear demonstration of portfolio quality with our more constructivist Chilean small cap strategy outperforming its benchmark by 1,400 basis points in the second quarter. Now, zooming back out, the first half of 2022 brought challenging conditions to every corner of the investment world, driven by a combination of persistent inflation rising interest rates, and disruption of trade. It comes as no surprise that global equity and credit markets had a tough quarter. Patria and our peers are not immune to some of the short-term impacts of this environment, but importantly, it does not define our success. As fundamentally long-term investors, we are confident the alternative asset management industry will continue to be a model of resilience, secular growth, and access returns. Our business model is built to be patient and opportunistic, and not just to weather these storms, but to do some of our best work in times of dislocation. Within our industry, we also believe PATRA differentiates itself in some very interesting and attractive ways in the current environment. And I want to spend just a few minutes reinforcing some of those points. First, the default assumption about rising interest rates is that returns in private active portfolios will be squeezed by the higher cost of leverage. Put simply, Patra's private active business is not running the traditional LBA model and does not depend on leverage to drive transactions or target returns. It has simply never been practical operating LBOs in our region of the world. In developed markets, private equity net debt 3D DA ratios average near five times at the time of acquisition, compared to just 0.4 times historically for Patria. Our strategy generates alpha through consolidation, organic growth, and operational improvement, and eventually multiple expansions. as we de-risk and institutionalize businesses to create market leaders. In our infrastructure business, leverage is typically in the form of project finance with a debt fixed and structured alongside long-term revenue contracts. And in credit, our exposure to predominantly floating rate debt minimizes risk and even allows us to benefit from rising rates. Second, Focusing in Latin America, Patriot has operated and grown its platform amid high interest rates and inflation since our inception. And the environment today does not feel like an exception to us. Our investment strategy has been forged over the years of experience, now entering our seventh vintage for private equity and fifth for infrastructure with many lessons learned. The result is an investment portfolio focused in core basic needs sectors that we can weather persistent inflation and GDP volatility, thus outperforming through economic cycles. Third, we think Latin America continues to look well positioned as a destination for global capital in the current backdrop, and especially within allocations to emerging markets. The region is a net exporter of commodities that are in high demand, and we believe the resulting gains in terms of trade will continue to be an economic tailwind. Latin America has historically demonstrated both low geopolitical risk and a comparatively low correlation with the U.S. and developed markets. And right now, the region is likely near the peak of its monetary tightening. cycle compared to the US and Europe. Therefore, it is no surprise that the expected economic growth is being revised upward in Latin America and downward in developed countries. Finally, there are significant benefits of scale in our industry, and these apply at the regional level as well. Latin America and emerging markets present distinct challenges relative to develop markets, and we believe PATRIA has a real home field advantage. We offer a compelling combination of proper scale and localized industry expertise, with the scale allowing us to pursue complex projects that smaller local competitors cannot, and the boots on the ground providing a competitive advantage that large global players would find hard or inconvenient to replicate. We are able to deliver on our regional consolidation strategy with three MLA transactions now to date, in large part because of our people, the strength of our brand, and our public equity currency. As a firm, we believe Patria is uniquely positioned to thrive as a dominant alternatives manager focused in Latin America, and our story is only in its early chapters. Let me now turn things over to Marco to cover the results in more detail. Marco, over to you.