Patria Investments Limited

Good day, and thank you for standing by. Welcome to the PATRA first quarter 2024 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, please press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference call over to your first speaker for today, Andre Medina from Patras Shareholder Relations. Andre, please go ahead.

Thank you. Good morning, everyone, and welcome to Patria's first quarter 2024 earnings call. Speaking today on the call are our Chief Executive Officer, Alex Saig, and our Chief Financial Officer, Ana Ruz. We are also joined by our Chief Corporate Development Officer, Marco Dipolito, and our Chief Economist, Luis Fernando Lopes, for the Q&A session. This morning, we issued a press release and earnings presentation detailing our results for the quarter, which you can find posted on the investor relations section of our website or on Form 6K filed with the Securities and Exchange Commission. This call is being webcast and a replay will be available. Before we begin, I would like to remind you that today's call may include forward-looking statements which are uncertain, do not guarantee future performance, and undue reliance should not be placed on them. PATRA 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 statement on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any PATRA fund. As a foreign private issue, PATRA reports financial results using International Financial Reporting Standards, or IFRS. as opposed to US GAAP. Additionally, we would like to remind everyone that we will refer to certain non-GAAP measures which we believe are relevant in assessing the financial performance of the business, but which should not be considered in isolation from or 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. Now, I'll turn the call over to Alex.

Thank you, André, and good morning, everyone. The first quarter of 2024 marked a great start for the year, and I'm very pleased with the performance we delivered. We generated $35.1 million of fee-related earnings in the quarter, representing a 13% increase from 1Q23 with only 20% of this growth coming from acquisitions. We delivered more than $31.3 million of distributable earnings, or 21 cents per share, and announced a quarterly dividend of 18 cents per share. We raised $1.1 billion year-to-date through April and over $5.1 billion in the last 12 months. We are confident we are on track towards meeting our $5 billion fundraising target for the year. At the portfolio level, we generated solid investment performance, which helped offset the impact from realizations and FX movements, generating strong investment returns for our fund investors remain our primary objective and this strong performance continues to support our healthy net accrued performance fee balance of $514 million or $3.41 per share as of March 31st. Total AUM and fee earning AUM have grown more than 17% and 20% from one year ago, respectively, with only one-third of this growth coming from acquisitions. This past Monday, we were thrilled to announce the closing of our acquisition of Aberdeen's private equity solutions business. As previously announced, the acquired platform, when combined with PATRIA's existing global private markets vehicles, will form a new vertical, Global Private Market Solutions, or GPMS, with aggregate fee earning AUM of over $10 billion. We believe the breadth and scale of this new vertical positions PATRIA as a premier gateway to global private markets for underserved investors in LATAM. Also on the M&A front, We are marking good progress towards closing the pending acquisition of Credit Suisse's real estate business in Brazil with up to $2.4 billion in fee earning AUM as of 1Q24. We now have all the required regulatory approvals in place and expect to hold the necessary fund shareholder votes to approve the transfer of the management contract. Driven by strong organic growth and our accretive acquisition strategy, we remain confident in our ability to deliver our previously communicated 2024 FRE target of $170 million and our 2025 target of FRE in excess of $200 million, reflecting year-over-year growth of 15% and over 17% respectively. Digging deeper in our expanding platform and pro forma for acquisition, our 1Q24 fee earning AUM reached over $34 billion, representing over 4X growth in the three years since our IPO. Notably, pro forma for the acquisition Permanent capital comprises about 20% of our fee-earning AUM up from insignificant levels at the time of our IPO. The expanding breadth, scope, and earnings power of our platform is highlighted by the fact that, number one, we have grown from a two-product asset manager at the time of our IPO into a diversified alternative manager with pro forma $34 billion of fee-earning AUM spanning across a range of strategies and investment vehicles, including private equity, infrastructure, credit, real estate, public equities, and global private market solutions. The recent launch of our infrastructure private credit fund highlights how we are leveraging our expanded platform to bring new and differentiated investment solutions to our clients. Two, we offer an expanding range of product structures in order to meet investor objectives and with permanent capital, drawdown funds, and SMAs representing over 70% of our fee-earning AUM, underscoring the inherent stickiness of our management fee revenues and fee-related earnings. Three, we are diversified across currencies. And importantly, 70% of our pro forma fee earnings AUM is denominated in hard currencies, US dollars, British pounds, and euros. As we think about our path forward, it's important to emphasize that organic growth of existing and acquired investment platforms post-acquisition remains our top priority. This is highlighted by the fact that from year end 2018 through 2023, our fee-earning AOM, excluding the initial inflows of acquisitions, grew at a CAGR of 17%. While sensible organic growth is our top priority, diversification through inorganic expansion remains a key component of our strategy. We believe in the ongoing consolidation within the asset management industry, and as many times, M&A is the most efficient way to capture new avenues of growth. It can speed time to market and allows us to capture the opportunities we see in the region through the addition of skilled and culturally aligned investment teams with strong investment track records, complementary and differentiated investment strategies, and new distribution capabilities. In some instances, buying may also be cheaper than raising equivalent amounts of capital through placement agents. Overall, We are very proud of the differentiated and diversified investment platform we have built both organically and inorganically, making us the largest alternative asset management platform in the region in terms of direct assets under management, revenues, and fee-related earnings, as we remain very excited regarding our future growth prospects. Now let's have a closer look into our investment verticals. This past March, PrivateX International released its 2023 PEI Awards, ranking Patria PrivateX as the firm of the year in Latin America. This was our second year of participation and the second win in a row. The award reflects the market recognition of consistent performance sector knowledge, commitment, and leadership in Latin America. Investment performance excellence is highlighted by the 20-year pooled net IIR in U.S. dollars of our flagship private active funds of 17.5% as of the first Q24. For comparison purposes, as of 3Q23, the latest available market data from Cambridge Associates our pooled performance was 18.3%, which represented 11.9% of excess returns over the past 20 years relative to Cambridge benchmark returns in LATAM. Over the same period, Patriot Private XE also generated excess returns relative to Cambridge benchmarks when compared to emerging markets, Asia, and the U.S. with excess returns over 7.1%, 7.2%, and 3.3% respectively. In what remains a challenging private equity fundraising environment, this strong track record helps our fundraising efforts. In first Q24, we signed a new $65 million co-investment in our new vintage private equity fund, which is currently in the market. We have secured approximately $1.2 billion of commitments as of 1Q24 for our new vintage buyout fund, with fundraising outperforming in LATAM, Asia, and the Middle East, as the private active fundraising environment in the U.S. remains challenging. Nevertheless, we continue to see a path to reaching $2 billion of commitments. Beyond our flagship funds, our private equity platform, currently with $11.7 billion in AUM, also offers growth equity and venture capital funds, strategies that we did not offer at the time of our IPO. With regards to our infrastructure vertical and new product development, in 1Q24, we raised over $60 million for one of our infra-corporate funds with focus on mature energy distribution and transmission assets. This was the third capital raise for this specific vehicle, and it closed above our initial targets. This strategy, which represents permanent capital AUM, continues to gain scale and now totals more than $310 million in AUM. In contrast to the struggles many managers have been facing with regard to generating realizations, our flagship drawdown business has seen a pickup in realization activity for LPs, which is crucial driver of fundraising for our latest vintage flagship infrastructure fund, which is now in the market. As of 1Q24, we have already secured over $1 billion of commitments for the new fund and are making progress towards our goal of raising $2.5 billion. We believe the investment opportunity within infrastructure is very attractive and have already started to deploy this capital. To illustrate, in 1Q24, we announced a $110 million commitment to a greenfield solar plant in Columbia with a 360 megawatt installed capacity. representing the largest solar farm in the country, with $300 million of projected capex. Also, the first announced investment from this fund, a toll road concession in the south of Brazil with a 30-year contract protected against inflation and a 20-year traffic history, began operations during 1Q24 ahead of plan. Looking at investment returns, As of 1Q24, the pooled net IIR in U.S. dollars for our two latest vintage funds was 12.3%, outperforming the Hamilton Lane Global Infrastructure Medium benchmark and the Dow Jones Brookfield Global Infrastructure Index by 4.1% and 12.4% respectively. Finally, in 1Q24, we contributed 50 million Brazilian Reais or approximately 10 million dollars out of a limited capital exposure of 100 million Reais or approximately 20 million dollars in order to provide sea capital to Tria, our new and separate energy trading company. Tria was created to access a high-growth opportunity we see in a fragmented sector with compelling fundamentals. We believe PATRIA's investment team has the skill set and expertise to help build this business, which has significant synergies with our infrastructure portfolio companies. PATRIA, through its seed capital investment, holds a 67% stake in Triad, which began its operations this April. Other shareholders include four well-respected minority partners with recognized expertise in energy trading. Over time, our goal is to develop TRIA into an asset management business with the intention to raise private credit vehicles to fund both power generators and consumers with energy-backed contracts. Our credit vertical continues to generate strong and consistent returns to our investors. As of 1Q24, our three largest strategies, LATAM High Yield, LATAM Local Currency, and Chilean Fixed Income have each outperformed their relevant benchmarks for all reported periods. 1Q24, one year, three years, five years, and since inception. Specifically, our long-term high-yield strategy with $3.6 billion in AUM has outperformed its relevant benchmark by more than 370 basis points since inception in early 2000. In the last 12 months, we raised over $900 million for our credit product, including approximately $300 million in 1Q24. Fee-earning AUM grew more than 19% organically from one year ago and more than 4% sequentially. In addition to the three aforementioned strategies, PATRIA's diversified credit platform with approximately $6 billion in AUM offers funds in private credit infra-private credit and receivables. Private credit strategies continue to see strong momentum globally, and expanding this vertical both organically and potentially through M&A remains a key priority. To illustrate, we are currently raising a U.S. dollar denominated LATAM-focused private credit fund with a first closing expected for the second quarter of this year. We hope to have more news on this soon. Turning now to public equities, let me take a moment here to congratulate Pablo Echeverria, Moneda's founder and head of Patriot's public equities, for our Pionero Fund, for which Pablo has been the portfolio manager since its inception. Focused on small and medium sized companies in Chile, Pionero reached its 30th anniversary this March with impressive performance along the way, including a 19.6% return in the past 12 months and a 13.5% annualized return since inception, which translates into a 45 times multiple for capital invested in day one. This investment platform with 2.8 billion in AUM offers a range of products, including PEN Latam, large and small caps, as well as Chilean large and small caps, and private investments in public equities, or PIPES. With regard to PIPE, we were very pleased to launch our PIPE Chile this quarter, and closed and fund with an initial $55 million raised in 1Q24, and which we believe is well positioned to scale. Focusing on our next vertical, real estate fundraising continues a solid path. Over the past 12 months, we generated over $1 billion of organic inflows, and total AUM reached $3.8 billion. For perspective, as of 1Q23, AUM totaled $1.6 billion, This organic growth included a strong 1Q24 with $235 million of new capital raised. Beyond the attractive organic growth, we continue to pursue what we believe to be great opportunities to consolidate the real estate investment trust market in the region. In November 2023, we closed our new partnership with Bancolombia, adding a $1.4 billion real estate investment trust, and best-in-class distribution capabilities in the Colombian market. One month later, we announced the agreement to acquire Credit Suisse Real Estate Business in Brazil, or CSHG Real Estate, a platform with $2.4 billion in assets under management. Altogether, we have grown our real estate vertical to pro forma AUM of over $6 billion with approximately 90% being permanent capital. Finally, let's do a quick overview of our newest platform, Global Private Markets Solutions, or GPMS. This new vertical focuses on serving clients as a gateway to private markets on a global scale through proprietary and third-party products. On the proprietary front, we currently offer primaries, secondaries, and co-investment strategies across various drawdown funds and listed vehicles, which are permanent capital, in addition to separately managed accounts, or SMAs. With a 10 to 15-year track record, these three strategies, primaries, secondaries, and co-investments have generated consistent and strong returns, with pooled IIRs in euros of 18%, 20%, and 20% since inception, and as of 2Q23, respectively. On a pro forma basis, it manages over $8 billion in fee-earning AOM. In addition to the recently acquired business as 1Q24, Patria managed $1.9 billion of fee-earning AOM in third-party funds, of which $1.5 billion were through feeder funds that direct Latin American capital to global private markets, a business we have been active in for over a decade. The feeder fund business has raised over $300 million in the last 12 months, with approximately $60 million raised in 1Q24. In aggregate, our GPMS platform is being launched with over $10 billion in fee-earning AUM and represents a complementary pillar of growth as we serve as a gateway for Latin American investors to private markets on a global scale. Before I handle the call over to Anna to give you more details on the numbers for the quarter, let me take a quick moment to give another perspective on the diversification of our vectors of growth. Prior to our IPO, close to $7 billion of our total $8 billion of fee-earning AUM, or over 85%, served global clients looking to invest in Penn Latam alternatives. Today, pro forma for the pending CSHG real estate deal of our $34 billion in fee earning AUM, approximately 35% continues to be sourced from global clients looking to invest in PEN LATAM alternatives. 35% is sourced from local clients seeking to invest in regional strategy. 25% is from local investors focused on local alternative products. And finally, 5% comes from local clients investing in global alternatives. I believe this clearly illustrates the amazing job this team has been doing on executing our growth plans and diversifying our business. Now, I turn the call over to Anna.