Patria Investments Limited

Good day and thank you for standing by. Welcome to the PATRIA fourth quarter and full year 2020 for earnings conference call. At this time, all participants are in a listen only mode. After the speakers presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over your speaker today, Rob Lee, head of shareholder relations. Please go ahead.

Thank you. Good morning everyone and welcome to PATRIA's fourth quarter 2024 earnings call. Speaking today on the call are our chief executive officer, Alex Syke and our chief financial officer, Anna Russo and our chief economist, Louise Fernando Lopes for the Q and 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 forum 6K, files of the securities and exchange commission. This call is being webcast and a replay will be available. Before we begin, I'd like to remind everyone 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. 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 risks, including those discussed in the risk factors section of our latest forum 20S 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 US GAAP. Additionally, we would like to remind everyone that we will refer to certain non IFRS measures, which we believe are relevant in assessing the financial performance of the business, but 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. Now I will turn the call over to Al.

Alex. Thank you, Rob. And good morning, everyone. The fourth quarter kept a very exciting and indeed transformational year for PATRIA as we raised $5.5 billion, exceeding our full year fundraising targets of $5 billion. Fundraising included approximately 300 million we raised in our advisory business for third party managers for which we earn a placement fee. With a balance of $5.2 billion, contributing to our asset base. A wide variety of strategies and products contributed to our fundraising, most of which

did not exist at our IPO. We also achieved our

2024 FRE fee related earnings target of $170 million or $1.12 per share, reflecting the resiliency of our business and the momentum we have built heading into 2025. As we highlighted at our recent Investor Day on December 9th, the greater diversification of our platform is spinning off and we are confident in our new three year targets we introduced at Investor Day. Now, let me quickly summarize our full year 2024 and fourth quarter results before we move on

to some of the other highlights for the quarter. First, we are pleased to report that we achieved our

full year 2024 fee related earnings target of $170 million, up 15% from 2023, while fee related earnings per share reached $1.12,

up 13%. For the fourth quarter, fee related earnings

reached $55 million, up 35% from the prior quarter and 18% from fourth quarter 2023.

On a per share basis, fee related earnings of 36

cents in the fourth quarter rose 35%

from the previous quarter. From

the third

quarter and 13% year over year. Heading into 2025,

we believe we are on track to reach our full year fee related earnings target of 200 to $225 million or $1.27 to

$1.43 per share. Next, we generated over $41

million in performance related earnings or PRE, driven primarily by the previously disclosed sale of our Chilean disanalyzation project, Agua Specifico in Infrastructure Fund 3. With this monetization, we believe we are on track to deliver on our updated cumulative performance related earnings guidance through 2027 that we announced at -A-Day of approximately 120 to $140 million.

As a reminder, we expect our Infrastructure

3 Fund with approximately $47 million of net accrued carry remaining as of year end to be the primary source of carry generation through 2025. Since 2022, including Agua Specifico,

our infrastructure strategies will have returned over $2 billion to invest. Putting it all together, we

generated $189 million of distributable earnings for the full year and $89 million in the fourth quarter. On a per share basis, we delivered $1.24 and $0.58 respectively. Next, the net accrued performance fee balance of $319 million or $2.08 per share declined 30%, mainly due to our significant realization in Infrastructure 3, the appreciation of the dollar, which has partially reversed scores so far in the current quarter and lower marks on

publicly traded holdings in our carry funds. For perspective and not withstanding

declines in the value of the public holdings in our carry funds in the fourth quarter, underlying business trends at our private equity portfolio

companies generally remains strong. In local currency terms, EBITDA, our

private equity portfolio companies rose approximately 14% on average over the past year as of September 2024, as we focus on resilient sectors of the economy within private equity, such as agribusiness, food and beverage, and healthcare. Furthermore, within infrastructure, we invest in and develop across the region long duration assets, such as the Agua Pacifica desanization project mentioned previously that benefit from secular

strong tailwinds. Other examples include data centers, cell towers,

renewable energy and toll roads. These infrastructure assets often enjoy the benefit of long-term service contracts with inflation escalators and are sometimes denominated in US dollars, providing long-term resiliency against short-term fluctuations in interest rates and other macro factors. P earning AUM of $33 billion rose a robust 38% year over year, but declined 3% sequentially, driven substantially by dollar appreciation.

However, it is important to put this in perspective. Net organic inflows in fee earning AUM in

the fourth quarter were a positive $380 million with each investment vertical except public equities, generating positive inflows. Our asset base remains very sticky with 20% in permanent capital vehicles and approximately 90% in vehicles

with no or limited redemption rights. As we highlighted at -A-Day, the fee related

earnings impact from FX volatility is modest given that most of our expense base is denominated in local currencies, providing

a substantial natural hedge. We estimated for every 10% change in soft currencies, our fee related

earnings impact is approximately 2%. And for perspective, only about 20% of our expense base is denominated in dollars versus over

55% of our revenues. Since year end, the dollar has

depreciated against most of the currencies relevant to our business. Dollar denominated fee earnings AUM account for approximately 55% of our asset base. With another 15% in other hard currencies. Dollar exposure includes close to 10% of our investments that are directly exposed to the United States, primarily through GPMF. As highlighted in the earnings presentation in local currency terms, investment performance in 2024 was strong, particularly within credit. Local currency returns are increasingly important as we source more assets from local investors to invest in local strategies. Moving on to fundraising, as I noted at the start of my remarks, we are very pleased to report that we exceeded our $5 billion fundraising target for 2024, raising $5.5 billion inclusive of approximately $300 million of advisory assets for third party managers, for which we earn a placement fee. Indeed, achieving our target for 2024 means we exceeded the three year fundraising targets we set back at our 2022 investor day as we continue to benefit from the greater diversification of our product offering

and distribution capabilities. We believe we entered 2025 with positive

fundraising momentum and are excited with the opportunity to achieve our 2025 targets of $6 billion as we are actively fundraising across a number of funds and strategies in addition to a variety of SMAs

in GPMF, private equity and infrastructure. Fundraising in the quarter and for

the full year

was

led by our credit and GPMF platforms where we raised approximately $1.4 billion

and

$2.3 billion respectively. Further, highlighting our progress in diversifying our platform and enhancing the growth profile of our business is the progress we are making in building our local investment and distribution capabilities. Approximately 70% of our fundraising in 2024 and 50% in the fourth quarter 2024 came from local investors investing in local products versus virtually nil in 2020, the year prior to

our IPO four years ago. Indeed, one of the benefits of our

expanding investment and product capabilities is that we can better serve shifting investor demands within the region in response to changes in the investing environment. In Brazil, for example, we have seen increased demand for our credit strategies as demand for more equity-oriented strategies have softened in response

to higher interest rates. Our efforts to

diversify our business also increases our resiliency in the face of near-term macro headwinds. For example, and contrary to common perception, Brazil represents less than a third of our investment exposure versus 90% plus at the time of our IPO only four years ago.

Reflecting on the macro environment,

it is also important for investors to recognize that despite near-term macro headwinds within the region, in addition to global uncertainty that has been created by the recent election in the United States and its potential impact on cross-border flows, we believe Patria is well positioned to weather and indeed thrive in these uncertain conditions. Latin America remains a very attractive destination for investors' long-term capital commitments, given its many positive attributes, including large internal markets with a growing middle class, global leadership in clean energy, and ongoing demand for infrastructure investments, not to mention competitive advantages in key business sectors such as agribusiness and low levels of geopolitical risk. These competitive advantages are increasingly being recognized by larger, sophisticated global investors, such as sovereign wealth funds, as well as local institutions that are often required to invest locally. Many of our private equity strategies, such as healthcare, logistics, and food and beverage businesses, focus primarily on serving local, domestic, and regional markets, and infrastructure by definition focuses on serving local market needs. In industries with an export-oriented component, such as agribusiness, Asia and Europe tend to be our primary export markets. Our direct investment exposure to Mexico is quite limited at approximately $1.2 billion, or less than 3% of our AUM,

with investments primarily in credit and public equities. Our GPMS business, which comprises

approximately 30% of our fee-earning AUM, is focused on middle market private equity investments within Europe and North America, with over 3 billion of our assets exposed to the United States, and $7 billion to European markets. In total, close to 10% of our assets are directly exposed to the United States, and our current direct exposure

to Canada is immaterial. We also wanted to take this opportunity to reiterate a theme that

we covered in depth at Investor Day, namely that our ability to deliver our expanding range of investment capabilities through a broader range of investment vehicles and structures allows us to reach and better serve new pools of investors globally. This is an underappreciated, but very important aspect of our evolution from a product-centric alternative manager to a client-centric focused investment solution provider for our investors. For example, our enhanced SMA capabilities allow us to develop customized solutions for large, sophisticated LPs, both globally and within Latin America. The inherent complexity and customization of an SMA creates a very long-dated relationship that often provides for the recycling and compounding of capital. We now have approximately 16% of our fee-earning AUM in SMAs

versus zero at the time of our IPO. We have also been expanding the number of domiciles in which our

investment products are registered and

offered.

Within credit, for example, we redomiciled our flagship dollar-denominated high-yields credit fund from Chile to a more widely accepted Ireland-listed fund. This greatly enhances the ability of global investors to invest in the SMAs to efficiently and at low cost access this important strategy, as do our new Luxembourg-based UCITs, UCITs

structure, and a US-focused credit fund. We also continue to build locally

domiciled vehicles to take advantage of our local investment capabilities and investors' home country bias in order to attract both retail and institutional investors. Prime examples being our Columbia-focused private equity and infrastructure funds

that

co

-invest alongside our flagship funds. Pulling this all together, our financial results and

strong fundraising provide additional evidence that our strategy to diversify and grow our business both organically and inorganically while also increasing its resiliency is paying off. It's been only four years since our IPO, but as we highlighted at our investor day, which is available on our website, over that brief period of time, we have greatly expanded our regional and global investor base and distribution capabilities and have significantly diversified our investment and product platforms. We are proud that we have been able to deliver on the targets we set out at our IPO, as well as our first investor day in 2022, and are excited to deliver on the fundraising, fee-related earnings, and other targets we unveiled

at our recent investor day this past December. Now, let me turn the call over to Anna to review our financial results in more detail. Thank you.

Thank you, Alex, and good morning, everyone. As Alex mentioned, the fourth quarter kept an exciting and transformative year for Patra as we significantly enhanced the diversification, growth potential, and resiliency of our business, achieve our 2020 for FRE and fundraising goals, and unveiled our new three-year targets at our recent investor day. We believe we are entering the year with the momentum necessary to meet our 2025 objectives. Let's review our full year and fourth quarter results. As Alex highlighted earlier, we are very pleased that we achieve our fundraising target for 2024. Our fee AUM rose 38% year over year to approximately $33 billion, and this increase was largely driven by 11 billion from acquisitions, mainly in GPMS and real estate, partially offset by an FX impact of about 1.9 billion due to the appreciating dollar, of which 1.5 billion occurred in the fourth quarter. Total inflow to fee AUM of 4.2 billion were offset by the planned step down of private equity fund four that we reviewed on our last earnings poll, as well as expected realizations in GPMS, dividends across the platform, and redemptions in public equity. In the quarter, Pacha generated approximately $380 million of net inflows despite outflow pressure in public equity. However, mainly due to the appreciating dollar, fee AUM declined 3% quarter over quarter. Although the appreciation of the US dollar negatively impact fee AUM, it had little impact on our FRE in the quarter. As we reviewed our investor day, our FRE has limited sensitivity to FX movements as our expense base provides a substantial hedge against currency movements that may impact fee AUM and our fee revenues. Based on our current asset class mix, 10% variance in soft currencies against the dollar impacts FRE by only about 2%. It's worth noting that since the end of fourth quarter, the dollar has depreciated against most currency, including the real. Assuming the average exchange rates in the relevant currencies in the past two weeks, we estimate fee AUM and net accrued performance fees would recoup approximately one third and 50% of the FX impact experience in the fourth quarter respectively. Total fee revenue in the fourth quarter and full year reached $93.2 million and $300.8 million, up 41 and 25% from a year ago respectively. Four quarter total revenues increased 27 million versus Q423, driven by the full impact of the GPMS, credit fees, VBI and nexus acquisitions and higher fee AUM. Additionally, fee revenues for the full year benefit is from the 13.8 million of incentive fees, 12.3 million of which were recognized in the fourth quarter. As a reminder, incentive fees are primarily realized in the last month of the year. And in 2024, we're driven mainly by our credit platform and more specifically from our La TAN and Chilean high yield and Chilean local currency strategies, which continue to generate strong performance and new business flows. Our management fee rate for the year averaged 96 basis points. As reviewed at our investor day, we are diversifying our business and introducing new investment strategies and product structures, which are key drivers of our growth. Consequently, our management fee rate will continue to evolve and we expect our fee rate over the coming years to trend towards approximately 90 basis points. Moving on, operating expenses, which include personnel and G&E expenses, totaled 37.6 million in the quarter and 128 million for the full year. The increase were driven by acquisitions with the remainder attributable to increased personnel expenses reflecting salary increases and bonus and continuing investment in our business in addition to the impact of inflation. The increase in personnel expenses in the fourth quarter compared to the 2023 also reflects the 2023 impact related to the equity-based compensation program that we launched by mid 2023 and a seasonal increase in expense. Putting it together, Patrick delivered fee-related earnings of 54.8 million in the quarter, up 18% versus the prior year, and 170.1 million for a full year, achieving our target and reflecting an increase of 15%. Our FRA margin in the fourth quarter was 58.8%, helped by high margin incentive fees while our full year margin was .5% within the range of our 56 to 58% guidance. Overall, as we enter 2025, we remain confident in our fundraising target of six billion and in our ability to achieve our FRA target of 200 to $225 million with an FRA margin between 58 to 60%. On the subject of FRA and FRA targets, we also wanted to remind everyone that with our M&A in 2024 now fully reflected in our results, we are very focused on generating organic growth and we expect only about 10% of our 2027 FRA target of 260 to 290 million to come from acquisitions. Next, as Alex highlighted, we realized a healthy performance fee in Q4 out of the infrastructure fund three. The realization put us well on the way to reaching our updated FRA target through 2027. Also, our net financial and other income and expense in Q4-24 totaled at negative $3.7 million and a negative 9.2 million in 2024. This line item mainly reflects interest expenses on our credit facilities, partially offset by income generated in our new energy trading platform, TRIO. Our effective tax rate in 2024 was .5% representing an increase of 1.6 percentage points versus 2023, reflecting our evolving business mix and new platforms located in higher tax jurisdictions. Our full year tax was within our six to 8% guidance and is expected to trend towards 10% at the end of the three-year target period in 2027. Regarding distributed earnings, we generated 89 million in the quarter and 189 million for the full year, up 26 and 2% respectively. On a per share basis, Q4-24 and full year 2024 DE were 58 cents and 1.24 respectively. Fourth quarter DE per share was up 22% versus 23, mainly on higher FRA and PRE, but full year DE was essentially flat year over year due to higher financial expenses, lower PRE, higher taxes and higher share counts. With regard to the share count, we finished the year at 153.6 million shares in line with expectations and continue to expect the share count to average between 158 and 106 million from 2025 through to 27 inclusive of share repurchase, which will be focused on offsetting stock-based compensation. Shifting to balance sheet as planned, we finished the year with approximately 190 million of net debt as we funded M&A related payments and other year and obligations. Our total funding is expected to reduce throughout 2025 in line with our objectives mentioned during PAC day. As we previously discussed, we expect to use proceeds from PRE, mainly to pay down M&A related debt. Finishing up on capital management items, in keeping with our guidance, we announced a fourth quarter dividend of 15 cents per share. We did not per repurchase share in the quarter, but it remains our intention to repurchase share in 2025. Finally, why we believe FRIE and DE are the best financial metrics with which to measure our results and ongoing earnings power and are the metrics that are most comparable with our alternative manager peers, we would like to comment on some of items in our DE to net income reconciliation. You will notice that transaction costs, our M&A related expenses rose in the quarter to $13.7 million. This mainly reflects the year end catch up of expenses related to M&A, including legal, regulatory and consulting fees, among others. We would expect an M&A expenses to approach nearly zero in 2025, as we have no current M&A plan over the next several quarters. Also, our stock based compensation was 7 million in the quarter, bringing our full year total of 20 million dollars. For 2025, we expect our full year stock based compensation to total around 28 to 30 million as our program enters its third year. Subsequent to 2025, we expect the pace of growth in our stock based compensation costs to moderate. Overall, we are pleased with our 2024 results and the momentum we have built as we continue to diversify and improve the resilience of our business. We believe we are on track to meet our FRE targets for 2025 and we are excited regarding the growth opportunities that lies ahead. Thank you everyone for dialing in and we are now ready to take your questions.

As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please lend yourself to one question and one follow-up. You may rejoin the queue if you have any additional questions. Please stand by while we compile the Q&A roster. Our first question comes from Beatrice Abruc with Goldman Sachs, your line is open.

Hi, good morning everyone. Congrats on the results and thank you for taking my question. I have two questions. The first one would be a clarification on PRE. So on the sale of Agua's Pacifico press release, you mentioned that the sale would be completed in one queue although the transaction was signed in the last quarter of 2024. So just wanted to understand if we should expect something or an additional distribution on PRE or if all the distribution happened in four queue. Also, if you have any visibility regarding other exit strategies of infra fund three, anything you're able to comment on that will be really helpful. A second question would be on the redemption on public equities and credit strategies in four queue. If you see that trend continuing or reverting into the first quarter of 2025, thank you.

Thank you Beatrice, or Beatrice, good morning. Thank you very much for your question. This is Alex here and nice to talk to you again on PRE and then the credit redemption. On PRE, I think we did sign the deal late 2024. All the conditions precedent to the deal as of today have already been completed. So the closing of the deal actually happened last week. So the deal is basically done. Of course, now you know that these M&A's, this is kind of the normal process. Now you sign and then there are conditions precedence that includes several regulatory bodies, antitrust, this and that, da da da. We have other regulations, conditions precedence also that has to do with this particular deal. But again, all the conditions precedence were completed and resolved by last week, so the deal was closed. It did generate approximately 60 million of performance fees. All 40 million, approximately 40 million counted for the general partner and 20 million as bonus. We do break down the performance fees in 35% goes to the team, so 35% of 60 million, approximately 20 million that's paid out to the team. So we do not account for that. That's not run through our P&L. This is paid directly to the team. And 40 million, we account as performance fees, approximately 40 million, which is 65% of $60 million. All accounted for in the fourth quarter because the deal was signed in the fourth quarter and by accounting procedures and measures, we have to account it in the fourth quarter. Just as a general comment, I feel comfortable that we are on target there with the guidelines that we gave in our last backstage, December 9th of 2024, the $120 to $140 million of performance fees over the next three years. So that's already accounting for that. Or if you go back to backstage 2022, $180 million for the 2023, 2024, 2025 period. If you sum what we already had since the 2022 backstage to today is 110 more or less. So another 70 to go for the 180, which is the guidance that we gave in 22 or the guidance that we're giving now, the 120 to 140 for the next three years. So I think we're gonna be able to reach any kind of guidance there that you see fit. Continuing on your question on other divestments, yes, of infrastructure fund three that you asked. Yes, there's several other assets that we are pursuing exits. Yeah, we have, in infrastructure fund three, is still several very interesting assets, like a thermal power plants that we did construct to get it with Mitsubishi and Shell. So it's already in operation, so which is the first thermal plant in Brazil that uses the gas from the pre-salt oil exploration as energy. We also have toll roads in that fund. We also have a participation in a parking lot business that we sold to Indigo, the French company. And all of these companies are in discussions for realizations. So we continue to see a good momentum of realizations for infrastructure funds, which was your question, and also for other assets as well in other funds of the portfolio, but specifically infrastructure fund three that you asked, yes, because it is already in the carry zone, which is the most obvious ones that will generate performances for 2025. On the redemption, I think we know specifically, I think that if I understand your question, we saw a redemption for our high-use credit fund in late 2024, but that was already reinvested or recommitted early 2025. It was basically, it's an SMA, the mechanic of this SMA that once we have realizations in this SMA, this is a credit strategy SMA with an ex-Latam quasi-sovereign fund in North America. And the mechanics is that once we have realizations, we have to give the money back to the investor, and then this investor actually recommits, and which this investor did early 25. So it was more of a movement that has to do with this particular client and this particular SMA and the way that the SMA was constructed. It's a North American quasi-sovereign fund that invests with us for more than 20 years, and we have this SMA with them for more than 10, 15 years. And you will see that once we do post the first quarter results for 2025, that these resources were already reinvested back in the credit strategies. We actually, the redemptions for our credit strategies in 2025 were not very, very small compared to the size of the funds. I think going back to 2022, we had the redemptions that were basically driven from because of the Chilean pension funds issues that we had back there that you know because of COVID, and then in 2023, redemptions started diminishing, and in 2024, they were basically insignificant for the size of the fund. And we foresee that in 2025, that's gonna continue to be the same small redemptions for the credit strategies with a positive net new money flows for those strategies, okay? I hope I answered your question.

That was very clear. Thank you, Alex.

Thank you.

Thank you. And our next question comes from William Berenyart with Itaú BBA. Your line is open.

Thank you everyone for your time. I have two questions here. I think the first one is more related to the fundraising figure expected for 2025, which in the release is around $6 billion. If you could give us a little bit more color on how you expect the breakdown of it by the strategies. And my second question is on that figure you disclosed, so net debt of 190 million in USD. I just wanted to check if the indication given from you during the investor day of that debt per FRE are maintained. So if it is maintained, it is okay if I should expect the current gross debt levels to be maintained throughout until 2027.

Yes, thank you very much, William. Nice to talk to you as well. Thanks for your questions. I'll try to answer the fundraising question and then I'll turn over to your question on the net debt. We like to give us the flexibility on the $6 billion fundraising target. It's very hard to pinpoint exactly. Of course, we have a very, very well organized planning for the whole year of 2025 and for 26 onwards per asset class. We have 38 different strategies within these asset classes, six asset classes that we have. And per channel, per geography, it's extremely well done and organized by the commercial team that today is headed by Danielle Sorentino, my partner. But we don't give out the breakdown of the $6 billion because we like to keep this flexibility. And maybe we raise more here, maybe we close on an SMA. SMA, they are chunky, right? Normally, SMAs are $500 million plus to a billion dollar, to a billion and a half dollars. So these chunks of SMAs can close and the SMA for a specific strategy and that can change the mix as we move forward during 2025. However, as we see things during the year, as we mentioned, we did raise around 5.3, 5.4 billion in 2025, 300 million of those work or placement agents related to fundraising, which does not add to our fee earnings AOM base. We just receive a fee. So we have to go from 5.2 billion to six. So it is, of course, a jump, but given what we have been doing and growing this ability of fundraising and more products, more strategies, more geography over time, we feel comfortable that we're gonna get there. Now, having said that, what I can say is as I look into 2025, at least within the Latin American region and then going to Brazil specific, and then I'll talk to about the other countries, given the high interest rates in Brazil, still for 2025, we're probably gonna see more appetite for credit related strategies and infrastructure related strategy because of the inflation protection that you have for the infrastructure, for our infrastructure strategies versus equities related strategies. Number one, also we also see in other countries in Latin America, but in Chile, because of already the low inflation and low interest rates environments in Chile and heading down, we see a turn in Chile already for equity related strategies as investors wanna position themselves before the market actually starts moving up again. So these are notes. So it's country by country, I'm giving you a general color. As we move out of Latin, we still see a very intense interest in our GPMS strategies. Interest rates in the US continues to be high and you know everything there about the general view of the US interest rates with that, the divestments or for the private equity funds in general with the US continues to be smaller than investors expect. So the general partners and limited partners look for deals in the secondary market, which benefits our GPMS strategies in the US and in Europe. So I see outside of that time, GPMS will benefit from this macroeconomic situation and in Latin America, it's country by country. But in the end, I think it's, we like to keep the flexibility and not give a specific breakdown on the $6 billion fundraising. I'll turn to Erna now on the net debt.

Hi, good morning. So our net debt, as we go up 190 dimension in the score, is in line of our expectation. I think if you remember when we discussed our earnings call, the last earning calls in Q3, this is what our expectation and this net debt is impacted that our funding was impacted by our M&A payments and also the year end obligations that we have. So this was something that we expected to, it was in line with our expectation. When we look going forward, we look into two things. First is we have a likely reduction in the first half of the year, which as we progress the first quarter and the second quarter, but a more, I would say, it's like a higher reduction in the second half of the year, but our debt to FRE ratio is expected as we discussed during the past day to be likely below our one to one debt. So it's gonna be likely below. So when we look into that, you can look into a reduction throughout the year as we progress through our 2025.

Thank you. Thank you very much for the complete answer. Thank you, William.

Thank you. As a reminder, to ask a question, please press star one one on your telephone. Again, that is star one one to ask a question. Our next question comes from Ricardo Buczpigo with BTG Pactual. Your line is open.

Good morning, everyone, and thank you for the opportunity of making questions. I have also two here on my side. So first we saw that Chile approved a patient reform this year that would add more money for the low-compension funds. And I imagine that credit and public equity will be very benefited with that. So I wanted to hear a little bit more on your thoughts on the potential this reform could add and talk a little bit about the timing on how you're expecting potential impacts with that. And also related to the reform, I think another possibility that we could have is more inflows coming from pension funds to infrastructure and private equity local products, right? You mentioned in the call, they are looking to build more kind of a local specific product for each region. So I wonder if you guys are already kind of preparing to build more local Chilean private equity and infrastructure funds in order to seize this opportunity. And another thing that I wanted to ask is if you could talk a little bit about your expectations on real estate inflows this year, right? Because it's a classic question that I believe it's more connected to the funding in Brazil, right? And given the macroeconomic scenario we are facing, it's fair to expect that perhaps it will be harder for you to launch new funds or do follow on these years given the exposure and perhaps most of the growth will come from other regions in the real estate segment. Thank you.

Yes, thanks for the questions, Ricardo. Nice talking to you as well. And starting on the pension fund reforms in Chile, I think it's taking one step back. I think it's not only Chile. I think that in general, given the kind of governments that Chile, Colombia, Mexico have recently elected these three countries, all of these three leaderships, these three presidents of these three countries have actually approved reforms to increase the contributions to the pension funds. Of course, the increase of these contributions comes mostly from the employer, not the employee. But whatever. So in Mexico from around 6% to around 12%. In Chile, the same trends of increasing contributions to the pension funds. In Colombia, the same. So actually, we're here in the Bank of America conference. The Bank of America Mexican economist did put out a report that the total pool of pension fund managed money of the Mexican pension funds, Colombian, Peruvian, Chilean and Brazilians, which total approximately 700 and something billion, will basically double to 1.5 trillion in the next five years because of exactly what he said, plus of course, NAZ appreciation. So these pension funds, they do have a home-biased approach to investing plus regulatory restraints in investing outside of the country. And in addition, in Colombia and in Mexico, pension funds are also required to invest in assets that promote the development of the economy and private equity and infrastructure fits right into those categories. So they investing in our funds in Colombia and in Mexico private equity and infrastructure funds, they comply with that requirements of the regulation. And we're seeing that the same might happen in Chile as well. And interesting enough, the same is actually now being considered to happen in the UK, in the United Kingdom, which the current labor government is also proposing a legislation that UK pension funds will have to invest a percentage in promoting the local economy, the UK economy. And so our funds as well there in the UK can benefit from that. Specifically in Chile, yes, and I think the strategy and in Colombia and in Brazil, and as we move into Mexico, not at this moment, we don't have this strategy implemented in Mexico, we started then developing local products for local investors. So I'll tell you about the most recent ones. We are now currently raising a private equity and infrastructure fund in local Chile, Colombian pesos for the local Colombian pension funds. And we already got a significant commitment from some local Colombian pension funds to this private equity and infrastructure fund. We did the same in Brazil for local institutional investors, mainly pension funds, private equity and infrastructure. In Chile, for example, as we mentioned a couple of minutes ago, the Agua specific divestment, the desalination plant in Chile that we divested. The investors of this, the acquirers, the group of investors that acquired this assets, one of them was a Chilean pension fund. So you can see the interest of these pension funds in infrastructure related assets. So for all of our strategies, don't take a double click down, be it infrastructure, private equity, credits, public equity, we are, we have and we continue to develop local strategies. In credits, and a question that you asked, we do have a local Chilean credit strategy, which is extremely popular with our investors because, and the very, very good returns. We also launched now a local Colombian business credit strategy for Colombian investors. We have a local public equity strategy in Chile, which is our renowned Pionero Fund that actually did reach its 30 year anniversary last year with Pablo Giveria being the manager of this and co-founder of Moneda with amazing returns since inception. We're also launching as we speak, a Brazilian public equity strategy. And the way that we see that our manual products are developing, that for every asset class, we will have a pen regional dollar denominated strategy. We're gonna have a pen regional local currency denominated strategy, and we're gonna have a country by country, country by country is these five countries that I mentioned, Mexico, Colombia, Peru, Chile, Brazil, a local to local strategy for the five different asset classes. So we have, for example, in credits, a pen regional dollar denominated credit strategy. We also have a pen regional local currency denominated strategy, which invests in these five countries in local currencies. And we have a specific Chilean credit strategy, a specific Colombian credit strategy. So investors can actually choose, and mostly investors that are outside of Latam, they like the pen regional dollar denominated strategy. That focuses more on buying dollar denominated securities, and the local pension funds because of their home buyers, because of regulatory issues, because they like to have assets and liabilities in the same currency. They prefer investing locally in the local strategies. So yeah, this is exactly the core of our strategy. We think it's a major differentiating factor of Patria. I don't see any other global alternative asset manager being able to do what I just mentioned because of the boots on the ground that you need to have in these five countries. We have over 80 people in Colombia today. We have over 150 people in Chile today. We have over 200 people in Brazil today developing these local strategies for these local investors. As we develop this with our brand name and the Moneda brand name, and the bank Columbia JV in Colombia, not only we reach the institutional channel, we also reach other channels, like the multifamily offices, the single family offices, the digital platforms, the independence and financial advisors, et cetera. So going also into retail, and mostly our retail related products are the listed funds and the more liquid strategies because of the nature of this and the profile of this retail investor. So very excited, this is core of what we're doing and I think we mentioned during my part of the earnings call script here that over 50%, over 70% of what was raised last year and over 50% of what we raised in the fourth quarter of last year came from local investors in these local strategies. As we talk also about the real estate inflows in Brazil, yes, high interest rates do affect, I think the inflows for our real estate funds, but I would break down our real estate funds into major categories, what we call the bricks and mortar strategies and the security strategies. So we have these two strategies. We are market leaders in most of the sub-segments of the real estate industry, investment trust industry in Brazil. So as you know, this industry in Brazil is segmented by thesis, so you have a strategy that focuses in corporate offices, a strategy that focuses in logistics assets, another strategy that focuses in retail assets, all real estate of course, and strategies that focuses in buying securities, buying the CRIs, the CRIs. That strategy I think is gonna be very successful this year because as other strategies might suffer because of the high interest rates, on the contrary, the security strategies do benefit from that and we see demand for those strategies and our funds have been performing very well where their market value are very close to NAV, sometimes even some of our funds even with a premium to NAV. So we see raising money for those strategies, but yes, I think the brick and mortar strategy will be affected negatively because of the high interest rates in Brazil. Outside of Brazil, we have a real estate strategy in Chile and in Colombia. In Chile, as I mentioned, we see interest rates coming down, so that's the opposite. We see investors actually willing to invest in the real estate related strategies to lock in duration. In Colombia, not yet. I think in Colombia, the interest rates are coming down, but not at the velocity that we see coming down in Chile. So it depends on the country, it depends on the strategy that I just mentioned, but brick and mortar specifically in Brazil suffers with high interest rates. I hope I answered your question, thank you.

That's very clear and just a very quick follow up, how much is the brick and mortar strategy over the total AUM from the real estate?

Real estate in Brazil is approximately 23 billion reais. I think there's other questions coming and I'll come back to you. Page 17 will give you the

investment performance, it will also give you the breakdown of the AUM and by type.

Ricardo, I think with the investor presentation, Rob is just mentioning here, the investor presentation on page 17, we give all of our real estate investments that trust AUM, NAV and performance. And we'll do the math as I answer the other questions here over the call, but I know that the total is approximately 23 billion reais, I'll give you the breakdown in a couple of minutes if you don't mind,

thank

you. Thank you,

thank you very much.

Thank you, Ricardo.

Thank you, I'm showing no further questions at this time, but as a reminder, if you'd like to ask a question, please press star one one on

your telephone. I'm showing no further questions at

this time. Now I'd like to turn it back to Alex Sige for closing remarks.

Okay, great and just as a side note, Ricardo, we're just doing the math, we'll reach out to you offline to give you this breakdown of the 23 billion reais of REITs, how much is brick and mortar, how much is securities. So thanks for your patience. Now coming back to the question about the real estate closing remarks, again, we're very, very pleased and extremely honored and happy with the team. At the end of the day, we managed to reach these results. Again, the guidance and reaching the target of 170 million dollars of fee earnings at UAM and distributable earnings of $189 million with performance fees of $40 million plus, et cetera, an extremely good year for us, extremely happy. We are a people business and I really wanna congratulate the huge effort that was done in environments that sometimes were not very pro business that we faced in globally, geopolitical issues, whatever around the world. And now going into 2025, we're very excited. We had a good January already looking into the year. As I mentioned, I think we feel very comfortable in reaching the $6 billion fundraising targets. Also, we see that we will deliver on the $200, $225 million FRE and also with good perspective of generating additional performance fees with the sale of several of our assets or funds that do generate carry. Excited here and thanks for your patience. Thanks for keeping up with us here for this call. I hope to see you presently in this conference here or shortly as we visit you at your offices. Thanks a lot. Talk to you guys soon, bye bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.