Patria Investments Limited

Good day, and thank you for standing by. Welcome to PATRA's third quarter 2025 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 this session, you will need to 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 over to your first speaker today, Andre Medina from Patras Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Patras' third quarter 2025 earnings call. Speaking today on the call are our Chief Executive Officer, Alex Saig, and our Chief Financial Officer, Ana Russo, 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 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. 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 risks, including those discussed in the Risk Factors section of our latest Form 20-F 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 issuer, PATRE reports financial results using International Financial Reporting Standards, or IFRS, as opposed to US GAAP. Additionally, we would like to remind everyone that we 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 an 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, Andre.

Good morning, everyone, and thank you for joining us today. Before we jump into the quarterly results, I would like to take a minute to celebrate an important milestone for PATRIA as our assets under management exceeded $50 billion as of the end of the third quarter, over 3.5 times higher than our assets under management at the time of our IPO in 2021. Looking back to our origins 37 years ago and seeing the diversified investment platform we have built is extremely rewarding. We could not have achieved this milestone without the hard work and dedication of our team, and most importantly, the trust our clients have placed in us. Since we went public in January 2021, PATRIA has grown from a $14 billion assets under management asset manager serving primarily a global investor base and focus mainly on private equity and infrastructure in Brazil to a broadly diversified multi-asset class manager serving both local and global investors with strong investment and distribution capabilities across Latin America and expanding capabilities in Europe and the United States. Congratulations to all of our amazing team members in reaching this milestone. Now, with that as a backdrop, the strong third quarter 2025 results further highlight our progress as organic fundraising surpassed $1.5 billion in the quarter. led by our infrastructure and credit businesses, and total organic fundraising year-to-date reached $6 billion. Therefore, we are well on track to exceed the high end of our previously upwardly revised full-year target of $6.6 billion. I'd like to note that for the last 12 months, organic fundraising inflows to assets under management total approximately $6.9 billion. I'd like also to point out that the aforementioned year-to-date $6 billion of fundraising inflows into assets under management do not include any acquisitions. a result of how we are leveraging the investments we have made in our platforms, mainly in our commercial areas. Redemptions have been trending lower and, year-to-date, represent approximately 30% less than what we saw last year, a clear reflection of our strong investment performance across our verticals. Strong fundraising supported by lower redemption rates is translating into solid net organic growth as we generated over $1.4 billion of net organic inflows into fee-earning assets under management year-to-date and $1.8 billion over the last 12 months. Year-to-date net inflows reflect an annualized organic growth rate of about 6%, which continues to highlight our ability to drive strong organic revenue and earnings growth. With that, our fee earning assets under management in the third quarter 2025 grew to $38.8 billion, up 4% sequentially, and 14% year-over-year. In the third quarter of 2025, we reported fee-related earnings of $49.5 million, representing 7% sequentially and 22% year-over-year growth, driven mainly by solid fee-earning assets under management growth and margin expansion as we continue to make progress integrating our acquisitions. On a per share basis, fee-related earnings of 31 cents in the third quarter of 2025 rose 8% sequentially and 19% year-over-year. Our momentum is further illustrated by the $46.9 million of distributable earnings we generated in the third quarter, or 30 cents per share, up a robust 22% sequentially and 31% year-over-year, driven mainly by the just-mentioned very strong fee-related earnings growth. In addition, during the third quarter, we entered a total return swap with a financial institution to repurchase 1.5 million shares. With that, as of the end of the third quarter of 2025, our share count stands at 158 million shares.

Anna Russo, our CFO, will provide further details in her comments.

While we did not generate performance-related earnings in this quarter, I am excited to announce that, subsequent to quarter end, we had multiple monetization events in our Infrastructure Fund 3 which we expect will generate approximately $15 million of performance-related earnings in the fourth quarter, bringing year-to-date total to approximately $16 million, with the potential to move higher if we have additional monetizations over the remaining two months of the year. We continue to expect Infrastructure Fund 3 to be the main source of performance-related earnings through 2026. As it relates to the macro outlook, it is worth noting the depreciation of the United States dollar against most of the other currencies which contribute to our revenues in addition to the dollar. Historically, periods of dollar weakness have acted as catalysts for international portfolio diversification, prompting investors to seek exposure to regions with stronger relative performance, lower correlation, and more attractive fundamentals. We are seeing this story unfold once again as many global investors move to reduce their overweight positions in United States assets. We believe there is still more to come as non-United States markets continue to offer compelling valuations and can serve as effective risk-adjusted options to rebalance portfolios and hedge against dollar depreciation.

This environment is likely to further support our fundraising efforts. As I noted at the start of my remarks,

We are pleased to report that we raised $1.5 billion in the third quarter of 2025, totaling approximately $6 billion year to date. And we are well on track to exceed the high end of our full year target of $6.6 billion. For the last 12 months, organic fundraising inflows to assets under management total approximately $6.9 billion. To provide some additional color on fundraising, we continue to see increased global interest in investments in infrastructure in Latin America, from which we continue to benefit as the leading infrastructure investor in the region. Over the first three quarters of the year, we raised four times more than in 2024, led by our infrastructure Fund 5 drawdown fund, co-investment vehicles, and other strategies. I would like to congratulate our infrastructure and commercial teams on the recently announced final close of our Fund 5 and related vehicles at $2.9 billion. almost 40% higher when compared to our previous vintage, making it the largest dedicated infrastructure vintage focused fund on Latin America. It is also important to highlight that our credit business continues to stand out and has surpassed total 2024 fundraising by almost 15% as of the third quarter of 2025, reaching $1.6 billion fundraised this year.

It is worth noting that 2024 was already a record year for fundraising for credit.

Our success in fundraising for infrastructure and credit is supported by a global economy experiencing persistent inflation and consequently high interest rates. Finally, GPMS has raised $1.7 billion year-to-date, continuing to highlight the strong support from our clients and the success of the integration of this business onto our platform. We believe that GPMS will continue to be a strong contributor to our future growth. As we expand our business, a large portion of the capital we raise will flow into fee-earning assets under management as capital is deployed. Our current pending fee-earning assets under management totals about $3.2 billion. While the level of pending fee earning in assets under management can vary over the short term, over time we would expect it to grow as our fundraising grows and we can raise more capital in drawdown funds, SMAs, and similar fund structures. It is also important to note that our fee earning assets under management and management fees are very sticky and highly predictable. Indeed, approximately 22% of our fee-earning assets under management are in permanent capital vehicles, listed vehicles with no redemption policies, and approximately 90% in vehicles with no or limited redemption policies. Additionally, it is worth noting that over 50% of our fees are charged over net asset value or market value, which here today has contributed approximately $2 billion to fee-earning assets under management, reflecting our very strong investment performance. We also like to highlight that our fee-related earnings have limited exposure to foreign exchange volatility. Based on our current assets class mix, a 10% variance in soft currencies against the dollar impacts fee-related earnings by only about 2%.

As we head into the fourth quarter,

and we gain better visibility into our expected full year 2025 and 2026 results, we believe we are well on the way to delivering on our targets. With regard to fundraising, we are confident in our ability to exceed the high end of our 2025 full-year target of $6.6 billion. Additionally, as disclosed during our December 9, 2024 Investor Day, our objective is to raise $21 billion from 2025 through 2027. Comprised of $6 billion of fundraising in 2025, $7 billion in 2026 and $8 billion in 2027. As we expect to exceed the $6.6 billion upper end of our previously upwardly reviewed 2025 guidance, this increases our confidence that we can surpass our announced 2026 targets of $7 billion. Accordingly, we believe total fundraising for 2025 and 2026 combined could reach $14 billion. Considering our $8 billion fundraising target for 2027, we believe we are well positioned to exceed our total three-year objective of $21 billion. As it relates to our full-year fee-related earnings, we expect full-year fee-related earnings to be slightly higher than the entry level of our fee-related earnings target range of $200 to $225 million for 2025. Additionally, as we look into the next year, we are introducing the 2026 fee-related earnings target range of $225 to $245 million, or $1.42 to $1.54 per share. When taking into account our share count guidance of 158 to 160 million shares, Our 2026 fee-related earnings objective reflects approximately 15% year-over-year growth in fee-related earnings per share at the midpoint of this range. Importantly, we remain comfortable with our fee-related earnings 2027 target range of to $290 million or $1.60 to $1.80 per share. Finally, we are reaffirming our performance fee-related earnings target range of $120 million to $140 million from the fourth quarter of 2024 to the end of 2027. of which we already realized $42 million. And we expect to realize an additional approximate $15 million in the fourth quarter of this year. Pulling this all together, our financial results and ongoing fundraising momentum provide additional evidence that our strategy to diversify and grow our business both organically and inorganically is paying off. Now, let me turn the call over to Anna to review our financial results in more detail. Thank you very much.

Thank you, Alex, and good morning, everyone. Over $50 billion in AUM is indeed a landmark to be proud of. And as Alex mentioned, our strong momentum continues as we raise $1.5 billion in the third quarter and $6 billion year-to-date. Our fundraising success shows how the strategic investments we have been making in our investment platforms, products, and distribution capabilities are paying off. We entered the fourth quarter confident in our ability to achieve our objectives for this year. Now, let's review our third quarter results in more detail. In light of our robust fundraising year to date, we are well on track to exceed the high end of our full-year target of 6.5%. $6 billion, again, a backdrop of increased global uncertainty and volatility. Our fee went from 14% year-over-year and 4% sequentially to approximately $38.8 billion. The strong year-over-year growth reflects the combination of solid organic net inflows of $1.8 billion, positive contribution from a strong investment performance, and the acquisition of the Brazilian risk discussed during our last earnings call and concluded this quarter. Our fee-earning AUM growth continues to highlight our spending fundraising capabilities and deployment opportunities coupled with the thickness and resilience of our asset base. In addition, our fee-earning AUM is also benefiting from a declining rate of redemptions. Pending fee-earning AUM of $3.2 billion combined with our fundraising goals, the 22% of fee AUM that are in permanent capital vehicles, the almost 35% of fee AUM in drawdown funds with an average life of six years, and the overall thickness of our asset base together highlight our ongoing ability to generate net organic fee AUM growth over time. Total revenue in the third quarter reached $84.6 million, up 11% year-over-year and about 4% sequentially. This quarter included $1.3 million of catch-up fees. Our management fee rate averaged 94 basis points over the last trailing four quarters. As we review at our December 9, 2024 investor day, We are steadily 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 to trend towards 90 basis points over the coming quarters, but with the potential to vary depending on the mix. Moving on, operating expenses. which include personnel and G&A expenses, total approximately $34.4 million in the quarter, flat versus second quarter 25 and prior year. We remain focused on controlling expenses and capturing operating efficiency, even as we continue to reinvest in the business. Looking ahead, we believe the third quarter personnel and G&A expenses combined are a good baseline for the next quarter. Putting it all together, PATRA delivered fee-related earnings of $49.5 million in the quarter, up 22% versus the prior year, and 7% sequentially. With an FRI margin that rose more than 500 basis points versus the third quarter, 24, and 170 basis points sequentially to 58.5%. We remind everyone that the fourth quarter is often our strongest quarter in terms of FRA margin, driven by the recognition of most of our high margin incentive fees from our credit and public equity platforms. We continue to expect the full year margin to fall within the range of our 58 to 60% guidance. As Alex mentioned, As we enter the last quarter of the year and our visibility into the remainder of the 2025 improves, we expect fee-related earnings for the full year to be slightly above the entry level of our FIRE target range of $200 to $225 million. Additionally, as Alex also noted, we expect to generate $225 to $245 million of FIRE in and we remain on track to deliver our 2027 FRA target of $260 to $290 million, with an FRA margin objective of 58 to 60%. As a reminder, about 10% of our 2027 FRA target reflects future potential M&A. Although we did not generate any performance-related earnings in the third quarter, Subsequent to the quarter end, we had multiple monetization events in our infrastructure fund three, which we expect will generate approximately $15 million of performance-related earnings in the fourth quarter, with the potential to move higher if we have additional monetizations over the remaining two months of the year. We continue to expect infrastructure three, which performed for the recent monetization had approximately $45 million of net accrued performance fees at the quarter end to be the main source of PRE through 2026. Next, our net financial and other expenses in the third quarter of 2025 total a negative of $1 million versus a negative of $4 million in the second quarter of 2025. This sequential improvement mainly reflects a greater contribution from TRIA, our energy trading platform, of $1.7 million in the quarter compared to $0.7 million in the second quarter of 2025. Additionally, lower average debt over the course of the third quarter also contributed to the lower financial expense. As of the end of the third quarter, Net debt totaled approximately $108 million, and our net debt-to-FRE ratio of 0.6 times was well below our long-term guidance of one time. As we manage our cash flow and capital structure over the balance of the year, we expect our debt levels to remain relatively unchanged, as we do not have any relevant money payment for this year. Our current deferred M&A related cash payments through 2028 would be approximately $95 million, excluding potential earners. In addition, we entered to a total return swap, or TRS, with a financial institution during the third quarter, which under the terms of the swap, purchased 1.5 million shares on our behalf. We expect to settle the cost of the TRS by mid-2026 and transfer the shares to Patria, which we plan to retire. Our effective tax rate in the third quarter of 3.3% mainly reflects credits related to our UK operation. We expect our tax rate over the coming years to hover around 10% annually, but will vary quarter by quarter depending on the evolving mix of our business, although we expect 2025 to be below 10%. In the third quarter of 2025, we generated $46.9 million of distributor earnings, up 34% versus third quarter of 2024, and a DE per share of $0.30, up 31% year-over-year and 22% sequentially. mainly reflecting higher FRE helped by lower net financial and other income expense, lower tax, and on a sequential basis, lower share count. As I mentioned during our last earnings call, the board of directors voted to renew and increase our share repurchase program, and we have the authorization to repurchase up to 3 million shares. In the third quarter, PATRA entered a total return swap with a financial institution which, under the terms of the swap, purchased 1.5 million shares on our behalf. Considering the nature of the TRS, we finished the quarter at 158 million shares and continue to expect the share count to average between 158 and 160 million from 2025 to 2027, inclusive of additional share repurchase, which will be focused on offsetting stock-based compensation. Finally, as announced during our December 9th, 2024 investor day, the Board had approved an annual dividend of $0.60 per share for 2025. With that, we declare a dividend of $0.15 per share for the third quarter. Also, it is important to note that the Board has now approved a total annual dividend of $0.65 per share for 2026. Overall, we are very pleased with our third quarter 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 the various targets we share with you, and we are excited regarding the growth opportunities that lie ahead of us. Thank you, everyone, for dialing in, and we are now ready to answer your questions.

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Please stand by while we compile the Q&A roster. Our first question comes from Rodrigo Ferreira at Bank of America.

Good morning, Alex and Anna. I hope everyone is doing well, and thank you for taking my question. You've raised $6 billion years to date and are on track to exceed the $6.6 billion full-year target. Given the strong momentum, how are you thinking about the pacing of capital deployment, especially with the $3.2 billion in pending fee-earning AUM? Thank you.

Thanks for the question. Thanks for participating in the call.

No, really, we've been very excited with the 6.6 raise up to the third quarter of 25. As I mentioned during the call, last 12 months we did raise 6.9. That's why we feel comfortable at 6, sorry, until the end of the third quarter. guidance of 6.6, last 12 months 6.9 billion dollars. So that's why we feel comfortable that we are probably going to beat the 6.6 billion dollar new guidance. We have over 3 billion dollars of pending, that I think over the next 12 to 18 months we should deploy that. We do have a very active pipeline Mostly in infrastructure, most of this fee-pending, fee earnings, fee-pending AUM, Rodrigo, comes from our infrastructure efforts. As we did raise in 2025, finished raising our flagship vintage fund five for infrastructure of approximately $2.9 billion. So most of that capital will come from investing our infrastructure fund. new vintage, vintage number five, in addition to the co-investment vehicles that are paying fees, together with the infrastructure closed-end fund five. Also, we did raise capital that's pending for us to invest, which is in the DPMS, and also the DPMS mostly is our secondary strategy. We envision to invest along the next 12 to 18 months as well. So most of this fee-pending AUM, fee-ordering AUM should be invested over the next 12 to 18 months. I hope I answered your question.

Thank you. No, that was great. And then for my follow-up, can you give us an update on how you are thinking about inorganic growth at this moment? I know we have the $14 billion investor day guidance. But at this moment, what asset classes or geographies are you most interested in?

Yeah, well, we have guided that we would try not to do any acquisitions in 2025. We will try then to restart with our acquisition efforts end of 2025-2026. Of course, it's easier said than done. I joke that sometimes the mergers and acquisitions M&A is misery and anguish, right? You never know when you're going to sign the deal. But jokes aside, I think we managed to do that. Now we're finishing 25. We wanted to have a full four quarters, six quarters of no M&A. As we mentioned, the last 12 months, the last four quarters, all the numbers that we just posted are pure organic fundraising, organic growth, organic related numbers. And we wanted to have that pause to show us and of course investors and stakeholders that our strategy was working, that the acquisitions that we did were being integrated. You saw that we are now very, very disciplined on the cost level of, you can see it in the third quarter results and you're gonna see it in the full year results. So this was important as a checkpoint that we paused, we integrated, we fundraised for these new asset classes that we acquired, we controlled costs, et cetera. As we move into 26 and 27, we would like to turn on then the inorganic expansion, which is important for us to complement our menu offering, to also complement our geography footprint And what we see going on right now is most of the activity is in the real estate and credit arenas. So these two asset classes are the ones that are with negotiations in a more advanced phase. Coming then in third place, our infrastructure related also strategies. So, of course, it has to do as well, I think, with these strategies that have been performing the best in fundraising and the best in interest level from our clients. On a geography side, I think we will, as we mentioned all the way back, I think our GPMS global private market solutions that we did buy as a car valve from the asset manager, Aberdeen, was a mostly European-focused business. Two-thirds of the business is European-focused. And we would like to expand our U.S. side of this business to become more of a global solutions provider for private equity, primary, secondary and co-invest. So U.S. would be a geography that we are looking into. I think the acquisition that we're going to do there is not going to be very substantial. That's why it's forced in the list of relevance. I go back to the infrastructure and real estate, credit and real estate, and then comes infrastructure, then comes GPMS on relevant signs. Geography, U.S., mostly GPMS, and Mexico, mostly real estate and credit. So in order of importance, again, just repeating here to be redundant, I'm sorry, credit, real estate, then comes infrastructure, then comes GPMS, geography, US and Mexico as new geographies, and we continue to enhance our presence, of course, in the geographies that we already exist, mainly in Brazil. We are... trying to spearhead and be a protagonist of this consolidation of the industry. We see several asset managers in our industry pushing that agenda from the mega ones to the large ones. And now as a $50 billion asset manager, I think we joined the club of the other $50 billion asset managers. So I think we have the mega ones managing close to a trillion. Then there's a second group of around 20 that manage globally between 100 and 300 billion. And then we come in this third group, which is number 31 now globally, 3031. Of course, so this second group of $50 billion asset managers, all of us actually pushing this consolidation agenda. Interesting that these $50 billion managers, they have a geographic also origin. Some of them have Asian origins. Another has a Middle Eastern origin. We have two Europeans. We have a couple of Americans. And us, I think the only Latin that does exactly what we do, pursuing this consolidation agenda in their respective regions of origin, first and foremost, in our case, Latin America, of course. And then, of course, trying also to expand globally with one or two asset classes or strategies. In our case, GPMS was the chosen one. So I hope I answered your question.

That was perfect. Thank you.

Our next question comes from Tito Labarta at Goldman Sachs.

Hi. Good morning, Alex and Anna. Thank you for the call and taking my question. A couple questions. Just on the FRE guidance for this year, you mentioned you'd like to be slightly above the lower end. the range just looking at the trends right now if fre is similar in 4q you'd be around 188 million should we assume that the difference to get you to above that 200 million would mostly come from the incentive fees that you most typically get in 4q or would there be any other potential upside that we could see in 4q other than the incentive fees and then have a second question

Thanks, Cito. Nice talking to you, and thanks for participating in our call. I think that both, I think mainly the numbers that you just went through there I think make sense. We expect around $10,000 to $12,000 coming from incentive fees, and that's a relevant portion of the FIE, FIE contributor for the fourth quarter of 2025. In addition, but not at this level of relevance in absolute dollar terms, we have more FIE coming from management fees because these management fees being driven by the fundraising that we just described during our earnings call and answering Rodrigo's question. All of that fundraising is already translating into more management fees, and that management fees, it's the same team basically that we had in the third quarter. So that actually then flows down to fee-related earnings. But in absolute value importance, you are correct. I think the $10, $12 million coming from incentives is number one. a contributor for us to then surpass the $200 million of FRA, which is the entry level of our guidance. Coming second, the contribution from the fundraising that is translating into fee earnings, fee-related earnings in the fourth quarter, that we have more fee earnings AUM in the fourth quarter than we had in the third, more in the third than we had in the second, and so on and so forth, because we are managing to fundraise more than what we expected. I'll give you one example here just to know, so using your question here to throw in another interesting subject that I would like to cover. We didn't cover this in the call because we got that news late last night. Our data center platform. So I'm using your question here also to make this release of information here, Chito, but it has to do with your question. As of yesterday, the Brazilian government did approve a very interesting regulatory framework that basically enables exporting data from these incentivized areas in Brazil in a incentivized tax framework. Basically, you don't pay taxes as a data center exports data. So the data that is processed in these data centers in Brazil have this very interesting tax advantage. And also if you import the machinery, equipment to build the data center, you also don't pay any import tariffs. Brazil is kind of mimicking what other regions in the world did, like in Malaysia, Singapore, et cetera, to attract these massive data center-related investments. And so I think the Brazilian government is in the forefront, in the vanguard of this regulatory framework by approving this legislation as of yesterday. Of course, an additional advantage of actually building these data centers in Brazil is the vast availability of renewable energy and also the low consumption of water and recycling water that we have in our specific data center design. Of course, you know about the renewable energy in Brazil, and in our project per se that that actually will leverage on this regulatory framework approved by the Brazilian government as of yesterday. And of course, we have been working with the Brazilian government very intensively over the last quarters. We already have an off-taker, a relevant off-taker to build a 200-mega data center that consumes around 300-mega of energy. We already have the energy provider, in this case, Casa dos Ventos, hundred percent renewable and we also have several of the licenses uh mainly and most importantly to connect our data center uh to the substations that actually are connected then to the submarine cables the real state that we actually have already identified and already options uh is very close to the submarine cables that connect the brazilian coastline uh with the major regions of the world and that that submarine cables help on here in reducing the latency of actually processing that data in the data centers in Brazil. And we're putting up two billion dollars to construct the infrastructure. The off-taker is putting up approximately eight billion, so it's a ten billion dollar project. We can three-fold, four-fold, five-fold that because it's a 200 mega. There is no potential for us to increase that with the same off-taker. which the off-taker has the interest actually to more than double. We also have the interest to continue investing in that project, and we can actually work with other off-takers as well. If you see that we do manage approximately on fee-paying AUM, going back to Rodrigo's questions and your question on FREs and revenues, for our infrastructure vertical, we are managing around four, four and a half billion dollars of fee earnings AUM. We can basically double that with a fee-paying SMAs dedicated to these data center platforms. So extremely interesting. We also did the same kind of SMA joint venture framework to invest in toll roads in Brazil. also through our infrastructure vertical also answering Rodrigo's question that will take on then of course the AUM raised for our infrastructure vintage number five and invest and then turning that into fee earnings AUM and revenues we won a couple of toll roads through this JV that we call Reuni or union unified that has not only infrastructure from five but has other very very important large uh institutional investors of ours mainly sovereign funds investing in that platform uh we again want to concessions through that platform and we we see that we can continue going on that that can become you know it's a billion dollar commitment but it can become you know three four five fold that as we look into the future So we see these platforms now in Toros, which is already up and running and already won two concessions in data centers where we have this project that I just described and the company there is called Omnia. And we see other potential platforms that now infrastructure-related platforms throughout Latin America where we can actually then co-invest with our infrastructure fund or just have a JV kind of framework, an SMA kind of framework to invest significant amount of money in infrastructure-related projects in Latin America. And all of that actually transforms then, because all of them are fee-paying cheats, all of that transforms into fee earnings AUM that actually then fuels our revenues and our numbers going forward. So as we look into 26 and 27, we feel comfortable that we'll continue with that good pace of fundraising and good pace of FRE increase that we went through during the call today. Thank you. Sorry to take a long answer to your question on using the data center, but I think that was important.

Yeah, no, very helpful. Thank you, Alex, for all that color. And then just one other quick question on your performance fees. I mean, I think you mentioned infrastructure three, sort of the main likely place where you can maybe realize some performance fees in the near term. In the past, we've seen 4Q. You typically are able to realize them. Just any color you can give on your ability to realize some of these performance fees in the short term.

Thank you. Yeah, after the... the end of the third quarter, so into October of 2025, we did have some realization events that we highlighted during the call, pushing, increasing our performance-related earnings by $15 million. We had a small number up to the end of the third quarter of a million, so that actually adds to the 15, so we're now looking to $16 million of performance-related fees for this year-to-date end of October. As we look into November and December, we're very active on realizations, so potentially we're going to have more realizations from our Infrastructure Fund 3 in this last 60 days of the year. However, as you know, I don't want to be repetitive on my joke here, but mergers and acquisitions also means misery and anguish in some cases. So you're there signing the deal. If something happens, the deal then slides to be signed early 2026. It's a big part of the game. So that's why we like to give more of a broader kind of... on timing as far as realization of performance fees are concerned. So into 2026 and, of course, 2027, we still see the $120 million to $140 million, out of which we already did deliver around $45 million. And so we still have some that might happen at the end of this year, but we see that the very good pace and the quality of the investors also very, very high quality as we are being able to attract strategic foreign investors that are coming into the region. The French toll road operator, I think their first incursion into Brazil was by one of our toll roads. We also had Indigo, which is another French parking lot operator that brought into our parking lot a company called Parque Bain and so on and so forth. So, you know, and sovereign, very, very high quality sovereign funds also buying into our assets. So very, very interesting in quality of investors and bringing money into Brazil to be able to buy our assets and you see that the whole theory here is actually turning into reality as it has for the last 25 years in infrastructure. We have development funds and then once the asset is developed, we sell to strategic investors. That can be sovereign funds that take a role of strategic investors and can be also pure strategic investors. We see that as well coming along now closer to 2025 now on Chito, not 26. Some of our private equity-related strategies also with a high probability of generating performance fees. In this case specifically, we see our growth funds and our venture funds being able to generate interesting performance fees later in the three-year plan period, which is into 2027. So we're probably going to see Infrastructure Fund 3 realizing most of its performance fees during 2026. And as we look into 2027, we see some PE-related, private equity-related funds in the good moments to realize investments as some of these investments are already mature and we start actually looking into realizations and building into that performance. For example, we recently sold two assets from our growth fund. One is an online psychology sessions driven business that we actually sold and merged into another company. And then we sold our online education business as well. And as you sell these businesses, They build in to then return principal and hurdle, and after that, they start generating fees. So as I see the realizations from these funds already happening, I mentioned two examples. This year, 2025, I see other deals that we're working on that we're probably going to realize from these funds in 26. building in to deliver back capital to investors and then performance fees in 2027. So I have a lot more of a 24 to 36 months advanced look because I see the realizations building up and getting close to the principal and hurdle. And then we have the whole catch up as we have right now for infrastructure front read. So more PE related strategies, for 2027, more infrastructure related strategies for 2025 and 2026. I hope I answered your question.

Thank you. Very helpful. Thank you, Alex, and congrats on the strong quarter.

Our next question comes from Ricardo Ushbagel at PTG Pactual.

Hi, everyone, and thank you for the opportunity of making questions. Can you please provide an update on how the cross-sell of the GPMS products to Patras LP should evolve over the next few years? The vertical is now growing around like 8% year-over-year, the AUM. So it will be interesting also to hear what we can expect in terms of potential acceleration over the next, I don't know, three years without considering M&A on this vertical. Thank you.

Yeah, Ricardo, thanks for participating and thanks for your question.

I think it's a, when we did the acquisition, we saw a couple of phases into raising money from all of our client base. I think phase one was to gain the confidence from the current clients, right? I think we as a Latin origin company buy a business in the UK, Of course, we did the diligence before that and we saw that and we heard from the clients we did, of course, interviews with these clients, blinded and non-blinded interviews with the main clients of this business, Ricardo, and a lot of thumbs up. They really liked the team and they were saying, of course, depending on on the buyer, we would actually, of course, support that new buyer. So phase one was actually getting back to these clients post-closing, which we did, which was, as you know, we took over the business in April of 2024, so a year and something ago. And that actually went very well. You can see the kind of how the clients actually respond to that. in a concrete manner. They don't redeem and they invest more, right? They invest more with you because they're happy and they don't redeem because they're happy. And that's what happened. I think over the last 12 to 14 months or 15 months, everything worked well. We saw clients actually re-upping. We saw it for our special secondaries opportunities in fund number five, which is a blind structured fund. We saw, you know, SMAs continue to be beefed up with new money and renewed and so on and so forth. Then I think we started with, I think, secondaries opportunities, number five, fundraising to attract new clients, new clients from our base and clients that were not in our base of clients. And we've been able to be successful, and we are. very well on plan to be able to have secondary opportunities from FIVE to reach its target, and I think it's going to exceed its target. We were targeting around $500 million for that, and I think we already see kind of that number. So it's not very common these days. for a blind structure fund to hit the targets, and I think we're gonna surpass it. I think we're gonna surpass it in 10 to 20% of that number, which is rare. It's not very common for private equity-related strategies, in this case it's a secondary strategy, hit the number that it announces in its front cover page of the prospectus. And it's even more rare for actually funds to overcome that number. And we're going to do it. I think we're going to overcome that number in 10% to 20%, as just mentioned. So that was the second phase. And the real test, as I say, is clients actually giving you more money. And that's what they did for secondaries first. opportunities from number five. And not only from our own base, but we have clients that were not even our clients, which is because we had a new product to offer. And so we are happy. So we are in phase number two. We're living phase number two. Of course, phase number three, we're going to launch more products from this from the GPMS structure. We have ahead of us so many new strategies that we're thinking about, a blind fund structure, a pure co-investment fund that we're thinking about starting to launch early next year. So we have the SMAs that invest in private equity primaries, secondaries, and co-invest. Then several years ago, The Aberdeen team actually did spin off the secondary strategy and started raising blind structured funds. One, two, three, and now we're raising fund five, as I mentioned a couple of minutes ago. When we take a look at their co-investments track record that they did over 100 co-investments through the SMAs, amazing track record. 16% to 20% net IIRs. So we are then pulling that off. We're, of course, working to show the investors the fantastic track record that the team actually delivered with that specific strategy and then actually raised a closed-end fund. So it's going to be our co-investment fund number one. And we see some traction, and we're taking that to the road early next year. So that's phase number three, to have a new product with the same investors and new investors. And so we're pretty happy that that's working on well, and I can mention several other products also in our pipeline that actually derives from the GPFS strategy. We can have a credit fund that actually works in the same kind of mid-market level We can have actually a GP state fund, like dials of the world or whatever. So many new products and exciting new things that we can do over the next year. As I mentioned, a blind fund structure or investment fund as an example. On the Latin American side, we continue to raise a very important absolute value from Latin American investors into our GPMS products, less so because we are now bringing them now into our strategy, but to other global asset managers that we do represent in the region, Carlyle being one, as you guys know, and we have been very successful with that strategy in 2025, raising significant amount of money with Latin American institution investors mainly, into Carlyle-related funds, working with Alpinvest, which is the solutions provider for Carlyle, helping us actually develop solutions for our institutional clients in LATAM. We're also looking to represent eventually other global alternative asset managers who sell for our Latin clients. So happy with that as well. So no, I can't complain. I think we were well accepted by the GPMS clients. And again, as I mentioned, the best way for our clients to say that they are happy with you is to put more money in a new fund or a new strategy and not redeem. And that's what's been happening. And I think we're going to have great news to report during 2026 in these funds. Hope I answered your question for you.

That's clear. Thank you. And for my follow-up question on capital returns, it would be interesting if you could provide more color on the total return swap mechanism you mentioned in the call and also give more details on the rationale for the 0.65 per share dividend that you also announced for next year.

No, thank you. Thank you for those two questions. Well, the TRS is a very interesting way of actually to execute a share buyback program, right? And I'll give you my comments on it. So just take a couple steps back. Late last year, we did, our board approved a $3 million share buyback. I think it was early this year, I'm sorry, late last year we did the board approval of 1.5 million, and then it increased to 3 million shares, share buyback program early this year. When we looked into, as the CEO and the management team together with our CFO, when we looked into alternatives to execute this share buyback program, the 3 million share buyback program, We saw and concluded that the TRS, Total Return Swap, I think was one of the most interesting ones. First of all, I think for confidentiality reasons, for conflict reasons, you do outsource the execution of the share buyback to a third party, in this case to a financial institution. So you give the financial institution a plan, an order, and you set up a plan. Are you gonna buy X amount of shares during this period? And we are completely out of the execution. So as far as conflict is concerned, as far as any type of execution risks are concerned, the company is completely exempt from that. So this is, I think, a very pure way of doing something which the financial institution has a predetermined plan and will execute the plan with no interference whatsoever from the company. So number one, no confidentiality. Number two, no managing very well compliance conflicts of interest. Then it comes to the financial, I think, advantages of it. As you do buy the shares, we have, of course, a cost. It's like a loan from a bank, but we don't have to. We don't have the obligation to actually pay that loan in a year from now, for example, because you could actually have the option to ask the financial institutions to sell down the shares and repay that loan. Of course, if the shares are now traded at a lower value, we're gonna have to pay the difference. But that's another, because it's an asset backed. The financial institutions does have that asset in this case, the shares, and it can sell those shares back into the market. And during the process of buying these shares, the dividends of these shares are flown back to the company, to Patria. So the net cost is the interest rate that they charge, the financial institution charges, minus the dividends. So therefore, a year from now, of course, the cost of actually us having to finance this loan is lower than a pure loan. So it's pretty interesting. If we had then, of course, bought the shares and actually canceled those shares, the shares wouldn't have any dividends. But no, we actually then, the shares is held by the financial institutions, the dividends paid to the shares are netted from the interest expense. So I think the first two reasons are, you know, the majority of the reason why we decided for it, confidentiality, execution, the low risks of execution, et cetera, and financially very interesting. So that's why we went through a total research swap and we did buy, we did, the financial institution did buy 1.5 million shares during the third quarter and that's why we now have 158 million share counts as of the end of September 2025. On the 65 cents per share, I think we wanted to keep on transferring part of our growth in revenues, in fee-related earnings, in distributive earnings to the shareholders. And we looked into lower interest rates in the U.S., which have now tragedy bills running at 375% per year. And we do the math of actually, you know, raising our dividends by approximately 10%. 10% would be 66, but now 65. And we rounded the number to 65. And if you do the math, if you want to get a dividend use similar to what the U.S. Treasury is paying in the short term, we should then actually not only transfer more dividends, more money to our shareholders, but also plus a share buyback program, right? But also give the stock a support level that should push the stock up to around $17, $17. point three dollars which is the sixty five cents is three point seven five percent of seventeen point three dollars so also supports a a growth in the in our stock price uh if uh no as i as i talk to to shareholders they they kind of tell me that they have this framework in mind they look at the the low the short-term, sorry, interest rates paid by the U.S. government. They look at our dividend yield plus the growth that we are delivering. So it's a dividend yield that actually mimics the short-term U.S. Treasury yield plus the growth of 15% per annum to 20% per annum. So that's the combination plus the share buyback program that we just announced. So that combination should then give our share price not only support, but should actually help it increase as we move forward. So that's the rationale, Ricardo. I hope I answered your question here.

Thank you.

Thank you. Very clear.

This concludes the question and answer session. I would now like to turn it back to Alex Saig, Patriot CEO.

Thank you, Jacinta. Well, thank you very much, all of the participants. I was extremely happy to be able to answer so many interesting questions. I'm very happy that all of you participated. Again, we had a solid third quarter, looking to a very solid, very positive 2025. and even more so into 2026, 2027. Feel comfortable that we're going to deliver our Pax Day, December 2024, announced Pax Day numbers guidelines. So thanks again for your patience. Thanks for participating. I hope to see you in person until the end of the year, trying to organize a couple of roadshows and in-person meetings in Sao Paulo, in New York, and London, and hopefully I will see you in one of these three meetings and roadshows. See you soon. Thanks a lot. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.