Vinci Partners Investments Ltd.

Good afternoon and welcome to DaVinci Partners fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listen-only mode. Later, we'll conduct a question and answer section and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Ana Castro, Investor Relations Manager. Please go ahead, Ana.

Thank you and good afternoon, everyone. Joining today are Alessandro Horta, Chief Executive Officer, Bruno Zaremba, Private Equity Chairman and Head of Investor Relations, and Sergio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and our financial statements for the quarter, which are available on our website at ir.vincipartners.com. I'd like to remind you that today's call may include far-looking statements which are uncertain and outside of the firm's control and may differ from actual results materially. We do not undertake any duty to update these statements. For discussion of some of the risks that could affect results, please see the risk factors section of R20F. We will also refer to certain non-GAAP measures, and you'll find reconciliations in the release. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any venture partners fund. With that, I'll turn the call over to Alessandro.

Thank you, Ana. Good afternoon, and thank you all for joining our call. We are very pleased to join you all today as we announce results for the fourth quarter and full year of 2022. Vinci posted adjusted distributable earnings of 55.8 million reais in the quarter, For the full year of 2022, adjusted distributable earnings totaled R$ 247.7 million, or R$ 4.47 per common share, an increase of 9% in our cash earnings per share when compared for the full year of 2021. Our business model has once again proven its resilience while navigating through more turbulent and uncertain markets. Zinchi was able to generate substantial amounts of cash flow backed by predictable FRI with an added contribution from our liquid investment portfolio. As a result, the company will be able to maintain a meaningful dividend distribution to its shareholders. We announced a quarterly dividend of 17 cents on the dollar per common share in the fourth quarter, totaling 71 cents in the full year, representing a compelling dividend yield while we undergo a fundraising cycle that can drive significant growth for the following years. Vinch ended the fourth quarter with 63 billion reais in assets under management, up 10% year over year, driven by fundraising across private market funds and the acquisition of SPS in the second half of the year. In 2022, we started a fundraising cycle for private market products, raising close to R$6 billion in new capital subscriptions over the year, which, alongside the acquisition of Vinci SPS, represented roughly R$8 billion in new long-term AUM for Vinci. This cycle of fundraising will drive long-term growth and is expected to allow us to push margins higher as these funds carry a higher fee rate than the current blended average fee for VINCH. And on top of that, long-term lockups that directly contribute to our fee-related earnings stability and predictability. This quarter, we activated R$1 billion in commitments from BNDES as we anticipated in our last earning call, being R$500 million for VICC, our climate change fund in infrastructure, and another R$500 million for Vinci Credit Infra, our infrastructure debentures fund in credit, which had already an anchor commitment signing from a local institutional player in the first half of 2022. These investments reinforce Vinci's position as the one-stop shop and partner of choice for institutional investors in Brazil, as relevant institutional players continue to increase their exposure to alternatives. We believe that should be an important trend going forward, given that institutional players are still extremely under-allocated to alternatives locally. Moving on to our REITs, despite facing a challenging fundraising environment following a sharp interest rate tightening cycle in Brazil, we were able to raise approximately R$ 800 million across two existing products while also launching two additional products, increasing diversification and allowing us to better tackle market opportunities and leverage our fundraising capabilities. We will continue to rely on our highly experienced team to be creative in a tougher environment while we position ourselves for a new window of opportunities in REITs. If you look at the trend between 2019 and 2020, we raised roughly R$3 billion across only four REITs at the time. We have now seven leads across our real estate and credit segments, a vast diversification that can be an important contributor to our AUM growth when we encounter more favorable market conditions for primary capital raises. This year, we faced several market challenges not only in Brazil, but worldwide, with central banks around the world pursuing a tightening cycle in interest rates. In Brazil, we have the benefit of being ahead of the global curve with room for easing rates over the next few quarters. However, we still face volatile public markets and a harsh environment for fundraising throughout the year, on top of market-to-market effects that also impacted our AUM numbers. Nonetheless, we have been experiencing a favorable market for capital deployment across the platform. This has led to an exciting pipeline of opportunities to continue to deploy capital as we enter 2023 in several of our investment strategies. In private equity, our new vintage within our flagship strategy, VCP4, announced this quarter its first investment, a controlling stake in ArcLock, a leading hardware as a service company in Brazil. In our Private Equity Impact Strategy , we are seeing an exciting pipeline of investment opportunity and its fourth vintage is already 50% invested. VRI4's exceptional investment pace aligned with its strong performance may anticipate its fifth vintage from originally in 2024 to the back half of 2023. Another vertical with compelling room to deploy capital is Vinci SPS and we are thrilled with the outcome of this transaction so far. SPS vintages continue to deliver strong performance and the third vintage has already called one-third of its capital commitments in little over than one year from its inception. We expect to start fundraising its fourth vintage between the end of 2023 and the beginning of 2024. Finally, Vinci Credit Infra is now in a position to start deploying capital and accruing fees as this product only charges management fee on invested capital. Credit spreads have increased recently in light of tighter credit conditions, allowing the fund to build a good quality portfolio of superior risk-adjusted returns. Let me now turn to our view regarding our business outlook in our platform's development. Since our IPO, we have been focused on steering our firm to develop its capabilities and continue to improve our market-leading team with the aim on developing new products, driving strong risk-adjusted performance and ultimately drive growth across the platform. We believe we have been able to hit several of these objectives and we are proud of what we have accomplished since becoming a public company. At the time of the IPO, we had a total of R$ 49 billion in AUM, against our year-end R$ 63 billion figure. This almost 30% expansion was achieved against a backdrop of a historical rise in local interest rates and volatile global markets. Now, our focus will be reaping the benefits of our investments in the platform, focusing on efficiency to deliver growth with strong margins. We are also acutely aware of macro trends and how they could affect our business. Given worldwide challenges with higher level of inflation and interest rates, we are enhancing our costs consciousness and focusing on efficiency this year, looking to drive increased productivity across the platform. While we keep focusing on efficiency and productivity, we are still active in growing our business in both organic and inorganic paths. We are seeing a number of high-quality firms facing headwinds raising capital in a challenging environment, and this should make a way for conversations around partnerships that would allow value generation for all the parties involved. Our strong cash balance also adds flexibility around deal structuring, as was the case with our transaction with SPS in 2022. We have been very active sourcing on the corporate M&A front and are looking into several different opportunities for potential acquisitions, focusing on recurring FRE growth and client-based expansion, which we believe can be an interesting complement to our cash deployment on top of our seed allocation to proprietary private market funds. We believe there is significant room to grow FRE by acquiring smaller private market-oriented managers that are under scale in this tougher macro environment, especially in perpetual capital products, which can be highly synergistic to our current product offerings. To finalize my remarks, let me spend some time providing an update on our efforts into our new retirement service vertical, VRS. In the end of November, we published a press release announcing that Zinchi has been approved by the Brazilian Superintendency for Private Insurance, SUSEP, to operate life insurance and open-ended pension plans in Brazil. SUSEP's approval was an important milestone for VRS as we are now set to launch our product and start fundraising. Before going to the product's characteristics, we would like to cover why we are increasing our investment into the pension plans industry. Currently, we have R$ 3.5 billion within our investment solutions platform, which are products stamped as pension plan products. In these funds, we are the active manager of the product, which is distributed and remains under custody of a partner regulated insurance company. With ERS, we will also have the opportunity to become the custodian of the assets and thus allowing us to access another pool of fees. VRS will provide service in addition to our current pension plan funds, increasing our contact points with clients and our ability to fundraise from this pool of capital. We believe there are three main reasons to access this market. First, it's a sizeable addressable market with more than R$ 1 trillion in AUM and double-digit growth over the last years. While liquid markets have struggled with outflows, the open-ended pension plans posted another year of inflows in 2022. Second, close to 90% of the industry is in the hands of the incumbent banks. This has a direct connection to one of Vinci's growth opportunities, the capital decentralization from incumbent banks. This has been attested by recent pension plans portability numbers as we are seeing a significant number of flows from traditional banks to independent insurers. And third, there is a lack of independent alternative players offering open-ended pension plans. Current in Brazil, this number is a low single-digit number of relevant players. The market has several barriers of entries caused by expertise and structuring requirements. SUSAPI has a number of requirements that only sizable and consolidated players can address, which places VINCI in a unique position to capture a relevant portion of the industry. Aligned with the vast market opportunity, VRS has been set up to assure strong competitive advantages that positions our product offering with a differentiated approach from that of our competition. We have developed a tailor-made asset allocation algorithm based on many factors, including individual's retirement goals, risk appetite, objectives, etc. And it is customized for a full lifecycle and backed by solid risk tolerance metrics. Moreover, VRS will provide an annual review to clients as priorities and targets may evolve through our investors' lifetimes. To enhance the offering for our customers, we have developed a one-of-a-kind technological experience supported by a user-friendly digital platform and a tech advisor mechanism to assist our clients. Our goal is to have the best solution in the industry, which will ultimately simplify the most complex process for pension beneficiaries. The product suitability is based on a customized experience that will have two positive outcomes for users. First, it will shrink the gap between customers' expectations and results as our asset allocation approach diminishes the impact of short-term volatility focusing on long-term returns. And second, a tailor-made investment portfolio will automatically increase efficiency, as we will allocate capital through different types of funds, depending on market conditions and investors' preferences. It should also be a driver to reduce clients' costs, and we will offer low-cost passive funds as part of the product's matrix. We start fundraising efforts, leveraging our proprietary high-net-worth individual investor base, expanding over the next quarter to select corporate pension plans, a segment with over R$100 billion of addressable market, which has, in addition to the large current capital pool, a tremendous growth opportunity. We will keep updating investors on our quarterly calls as the business evolves and new milestones are achieved. To finalize my remarks, I would like to stress the following. It's in challenging environments that we set ourselves apart from the competition. Our highly diversified platform both in product offering and client base, provide us the stability to continue to deliver solid results in a still challenging capital raising market. We are excited about our potential long-term growth and continue to position the platform to capture this opportunity. With that, I'll turn it over to Bruno to go over our financial results.

Thank you, Alessandro, and good afternoon, everyone. Starting on slide 11, we will cover AUM trends for the fourth quarter and full year 2022. Vinci ended the quarter with 63.1 billion reais in AUM, up 10% year-over-year. This year we posted strong growth in our credit strategy, growing its AUM by 72% when compared to the end of 2021. The growth in credits was driven by the launch of Vinci Credit Infra. Our new strategy focused on infrastructure debentures with a long-term oriented structure. The fund has shown great demand from institutional investors who committed 1.3 billion reais to the new strategy so far. We will continue to fundraise for this product throughout 2023. Another highlight this year was the further development of the partnership between our credit and real estate teams, launching two new perpetual REITs, one exposed to the agribusiness sector, a leading sector of the Brazilian economy, and the other focused on MBS instruments. These two new funds were able to raise capital in a tough market environment and broaden our product offering in listed perpetual vehicles. Combining these two new REITs with creative, paying-kind operations in our offices and shopping mall REITs, VIN and VISC, we raised approximately R$800 million in perpetual capital through 2022. In infrastructure, our Climate Change Fund, the ICC, signed its first commitments, including an anchor investment from BNDES for R$500 million. the icc is expected to hold a first close in the first quarter of 2023 and continue to fundraise throughout the year the fund will start to earn fees beginning at the first close and following capital raises should accrue retroactively management fees another important contributor to our aom growth in 2022 was the acquisition of sps capital adding long-term capital and a new vertical to our platform At the end of the year, long-term capital comprised over 50% of AUM, resulting in a more predictable revenue stream for management fees. We will keep actively pursuing opportunities to add long-term capital to our AUM, be it organic or inorganic. Moving on to slide 13, we go over accrued performance fees in our private market funds. Performance fee receivable increased to 1%. R$167.5 million in the fourth quarter, an 8% increase quarter-over-quarter. The VCP strategy currently accounts for roughly 90% of accrued performance fees, representing an appealing upside for future performance fees. At the end of the quarter, Vinci had R$11 billion in performance-eligible AUM coming from private market funds, still an investment period that can further contribute to our accrued performance fees as these funds enter their divestment periods. Turning to slide 14, we will cover our fee-related revenues. Revenues from management and advisory fees totaled R$104 million in the quarter. Management fees accounted for roughly R$100 million in the quarter, up 9% year-over-year. This increase was a result of the fundraising experience across our private market strategies over the year and the impact of Vinci SPS following the acquisition close in the third quarter of 2022. We should see a continuing positive trend coming in the next few quarters with new capital raises in our closed-end products in private markets aligned with capital deployment in Vinci SPS and Vinci Credit Infra. Both have significant dry powder to allocate this year. Total fee-related revenues were R$ 393.5 million for the full year, down 8% year-over-year due to a reduction in advisory fees in the year. As for management fees, they were up by 3% when compared to the full year of 2021. In slide 15, we present our operating expenses for the quarter and full year. Total expenses accounted for R$56.3 million in the quarter, down 4% year-over-year. In the full year, total expenses were R$208.5 million, down 5% year-over-year. Excluding bonus compensation, fixed and variable expenses for the full year increased 7% year-over-year, following inflationary pressures on fixed costs and our investments in VRS. As mentioned by Alessandro, challenging market environments require even more attention to our overall efficiency. With that said, while expenses remain well behaved in 2022, we will enhance our cost consciousness, focusing on protecting margins and accelerating operating leverage once our revenues re-accelerate. We believe we have opportunities to be more productive across the firm while maintaining a superior service to our LPs. Moving on to slide 16, we will go over our field-related earnings for the quarter. FRE totaled R$51.3 million, or R$0.93 per share in the quarter, down 5% year-over-year due to a stellar fourth quarter 2021 for our advisory vertical. Bear in mind that our core business remains with healthy trends and growing. Advisory fees will carry a significant amount of seasonality, as we highlighted a few times in previous earning calls. In addition, higher interest rates also play a role in M&A and capital market activities, as transactions usually grow in periods of looser monetary policy. This characteristic is currently being offset by stronger returns in our cash balance. Coming back to the core asset management business, if we consider only the FRA from our asset management segment, excluding FRA for advisory and our investments in VRS, which did not exist in 2021, we posted an FRA increase of 22% year-over-year, an acceleration in the fourth quarter when compared to the rest of 2022. As we have been communicating, we expected growth to accelerate in the back half of 2022 as private market fundraisings gained traction and Vinci SPS had a full quarter impact in our FRA. In regard to the full year 2022, given the advisory segment had an outstanding performance throughout 2021, the year-on-year comparison also carries the defect on top of the VRS investments which were not present in the prior year. As previously mentioned last quarter, we should continue to see growth for our core business FRE over the next quarters due to some key factors. First, we will continue to fundraise for private market funds throughout the year. These funds carry higher fee rates than the average fee rate of the platform, and in some cases, such as VICC and VCP4, we have retroactive fees to start of the fund. Second, we have funds that charge higher fees over invested capital, such as Vinci SPS funds and Vinci Credit Infra. As they increase their capital allocation during the year, we should see an increment in fees. Both still have significant amount of dry powder to deploy. Third, as already covered by Alessandro, we are starting to raise capital for VRS and should see revenues coming from this segment in the next few quarters. This new AUM should begin to offset the run rate cost for the segments. We are now also working with the possibility of potentially anticipating the launch of VIR5 and Vinci SPS4 to the back half of 2023, depending on how capital allocation opportunities develop for current vintage funds. And finally, potential additional M&A opportunities and a big focus company-wide on productivity and efficiency could also present further FRI expansion drivers. The combination of these factors creates a solid base for FRI growth in 2023, irrespective of a significant improvement in market conditions. Moving on to margins, FRI margin was 49% in the quarter, up one percentage point when compared to the same period last year. For the full year, FRI margin was also 49%. When we adjust the margin to disregard our investment in VRS, FRI margin would have been 50% for the full year compared with 52% for the prior year. shifting to slide 18 we go over our realized gp investment and financial income vichy had 17.7 million reais in realized gp and financial income this quarter down 18 percent year-over-year due to realizations in vpn info transmission that occurred in the fourth quarter of 2021 As we anticipated last quarter, we had a stronger than usual performance in our financial results due to local markets' positive traction over the third quarter. In the fourth quarter, we faced a more challenging market environment, with future interest rates widening considerably, which impacted our liquid portfolio. This resulted in a more modest financial result in the quarter when we compare results with the third quarter. As highlighted in the past, these movements are cyclical, and we should see returns of at least 80% of CDI rate in the long-term return for our liquid portfolio, which has been the average return since our IPO. As of the fourth quarter, Vinci reached a total GDP commitment of 1.1 billion reais across private markets and closed-end products, with close to one-third of these commitments already being called. The reminder will be called over time as funds deploy capital. We will continue to leverage our cash balance to raise new products across private markets. Nonetheless, as Alessandro mentioned, we are closely monitoring opportunistic M&A transactions to accelerate FRA growth, adding value to our shareholders. Our strong free cash flow also played an important role delivering substantial value to our shareholders through share repurchases. Since the announcement of our first buyback plan in the second quarter of 2021, we have concluded the repurchase of 1.8 million shares. We are announcing today an additional buyback program of R$ 60 million, which reflects the Board's confidence in the company's prospects and long-term growth by deploying cash from our cash earnings in a way that will benefit our shareholders. Turning to slide 19, we will go through our adjusted distributable earnings. Adjusted distributable earnings totaled R$55.8 million, or R$1.01, down 19% on a year-over-year basis, driven by realizations in FIP infotransmission, which occurred in the last quarter of 2021. Adjusted DE totaled R$247.7 million, or R$4.47 in the full year, up 9% on a per share basis when compared to the last year. Adjusted DE margin was 40% in the full year, an increase of 2.7 percentage points compared to last year. We expect to continue to add shareholder value by expanding Distributable Earnings results over time as a combination of organic growth through fundraisings across our platform and inorganic AOM expansion through acquisitions, such as the transaction with SPS Capital, drive our FRE and ultimately our bottom line. And with that, I'll turn it over to Sergio to go through our segments.

Thank you, Bruno. Turning to our segment highlights, as you can see in slide 22, our platform remains highly diversified, which we believe to be the main contributor to the resilience of our business. Disregarding the investments made in the VRS segment, 56% of our FIE over the full year 2022 came from our private market strategies. followed by IPNS with 21%, liquid strategies with 19%, and financial advisory contributing with 4%. The same level of diversification is reflected in our segmented distributable earnings. Moving on to each of the segments, starting with our private market strategies on slide 23. FIE totaled R$33.7 million in the quarter, up 25% year-over-year, driven by the strong fundraising over the year and the incorporation of Vinci SPS. The biggest achievement across private markets this quarter was the signing of BNDES investment in Vinci Credit Infra and the ICC. totaling R$ 1 billion in capital commitments. Both investments were activated in the fourth quarter, but will start to have a positive impact in management fee revenues in 2023. As predicted in previous quarter, we started to experience an increase in private market's average management fee rate. We should see continuous tailwinds to average management fee rates as we advance on fundraising and capital deployment over the next two quarters. Segmental Distributable Earnings were R$134.3 million in the full year, an increase of 5% year-over-year, boosted by FRE growth. Total AUM was 28.7 billion reais for the end of the quarter, up 30% year-over-year, driven by strong fundraising across all private market strategies and the acquisition of Vinch SPS. Adding to the previously mentioned contribution from BNDES, we also had contributions throughout the year in our fourth vintage for our flagship private equity strategy, VCP4. Lastly, although facing an environment with high nominal interest rates, our REITs were resilient and raised close to R$ 800 million over the year. The success behind the capital raise was due to two factors. First, the partnership between our credit and real estate groups, launching REITs with exposure to private credit transactions, which are more appealing in this environment. Second, paying kind transactions for REITs, we can raise AUM without having to access necessarily the primary markets. which has proven to be a valuable asset in tougher market scenarios. Moving on to slide 24, we go over results for liquid strategies. Field-related earnings in the quarter of R$ 8.8 million up 20% year-over-year. FIE over the year to date totaled R$ 38.3 million, down 10% when compared to last year. is a consequence of intra-quarter depreciation of AUM that impacted management fee revenues throughout the year and limited redemptions experienced in the beginning of 2022. Total AUM was R$10.2 billion at the end of the quarter, with AUM being resilient compared to the Brazilian industry for liquid strategies. With public markets improving in Brazil, we should see a pickup in liquid strategies from an inflow standpoint. Meanwhile, we will still rely on our stick investor base to continue to provide stability to our earnings. Moving on to our IP&S business, on slide 25, FIE totaled R$9.7 million in the quarter, up 14% on a year-over-year basis. Segment DE totaled R$10.3 million in the quarter, up 9% year-over-year. Over the year, Segment DE was R$43 million, down 19% due to the strong year for international exclusive mandates contributing to performance revenues in 2021. Turning to slide 26, we cover our results for financial advisories. FOE for financial advisory was R$ 8.2 million over the full year 2022, representing a decrease of 77% compared to last year. This was a result of a record 2021 for the advisory business. As previously discussed in several quarters, revenues for financial advisory carry a certain level of seasonality and, although uncertain to predict, they should resume post-impactful results when markets improve and deal activity re-accelerates. Finally, moving on to slide 27, we go over results for the retirement service segments. Fee-related earnings for the quarter was negative R$1.5 million and over the year represented a negative R$6 million. As Alessandro mentioned earlier, we should launch the product this quarter. Therefore, we should start to see revenue contribution at some point this year, starting to offset our setup cost for the vertical. We are very optimistic and excited with the prospect of VAS and will keep updating our investors as the business develops through the year. That's it for today's presentation. Once again, we'd like to thank you for joining our call. With that, I'd like to open the call for questions. Operator?

We'll now start the question and answer section for investors and analysts. If you wish to ask a question, please press the button Raise Hand. If your question is answered, you can exit the queue by clicking on the same button. Wait while we pull four questions. Our first question comes from Ricardo Buck-Piguel from BTG Pactual. Please, Mr. Ricardo, your microphone is open.

Good morning, guys, and congrats on the results. I have a couple of questions here. First, can you please talk about how do you guys see the asset class mix that you have today? If you believe that you are too concentrated in a specific asset class, if you believe you want to develop another area or something like that. And also, can you please talk a little bit about your pipeline in terms of M&As and what types of eventual new segments would you be interested in looking into? And finally, we saw in the results that there was a positive non-recurring impact related to adjustments on contingency and consideration. So can you please provide more color on what these adjustments are? Thank you.

Thank you, Ricardo. That's Alessandro here. I will pick up the first two questions and I'll leave to Bruno to answer the adjustment. In terms of asset classes, we continue to believe that we have already a very important diversification, so we will continue to focus on the asset classes that we have. As we have been stressing during the time that we have been a public company, of course, the movements in terms of AUM, the growth changes from one asset class to another over time, but we believe that we'll grow all of them. As you saw recently, we saw a pickup on activity of fundraising for private markets, being private equity, infrastructure, and private credit. A few quarters ago, we saw more in investment solutions, but that will come and go in that way. But we still believe that we have around a very important diversification in terms of asset classes, and we should concentrate in these asset classes going forward. Second, in terms of M&A pipeline, with the market, the conditions of the market that we have today, as we mentioned before, we are seeing a lot of good quality teams and firms with not so easy environment to fundraise, but we see that as an opportunity for M&A transactions. Right now we have a very big pipeline and we are focusing more in long-term lock-up type of products, being perpetual capital or very long-term. So we are right now focused on M&A activity more on the private market side. And the last question I'll leave to Bruno to answer.

Thanks for the question, Kyle. Good to hear from you. So the no recurring impact that you mentioned that has impacted our net earnings number for the quarter was an adjustment on the obligation that we have that is attached to the SPS transaction. So there's a portion of that transaction which is linked to stock issuances. So we had two components in that deal. We had a cash component at closing in the third quarter of last year. And we have an equity component, which is based on an earn out regarding additional revenue generated by the company. So that earn out was adjusted in the fourth quarter for the change in stock price of Vinci. So that's the impact that we had, the one that you mentioned.

Very clear. Thank you.

Our next question comes from Beatriz Abreu from Goldman Sachs. Please, Mrs. Beatriz, your microphone is open.

Hi, everyone. Can you hear me well?

Yes. Yes, Beatriz, go ahead.

Hi, everyone. Good evening. Thanks for taking my question. I guess the first question would be, I noticed that there was an IPNS outflow in the quarter. If you could maybe talk a little bit about that, give us some color around what that was and your expectations for the segment going forward. If you expect any more outflows this quarter or in the next few quarters. And a second question would be around VRS. So you did mention you expect to launch this quarter, first quarter of 23. Do you have any expectations as of now in terms of when you expect to break even in that segment? And also what kind of management fee levels are you expecting from VRS? Thank you.

Okay Beatriz, thanks for the questions. This is Bruno. So I'm going to answer the first question and Alessandro is going to tackle the second one. So in regards to IPNS, the outflow was concentrated in one commingled fund that we have in that segment. And the reason was basically the same reason why we had a little bit lower return in our assets, in our liquid portfolio in the third quarter, sorry, in the fourth quarter. which was the widening of interest rates. So this fund is a fund that has usually positioning in short duration bonds. It's a quasi fixed income fund that is looking to shorten or increase the duration of the portfolio depending on the views on the markets. But usually it carries very short-term duration bonds. And with the widening in interest rates that we saw in the fourth quarter, the fund ran a couple of months or two or three months below the nominal CDI rate. And that led to some redemptions. I think we had the same effect in the third quarter, but due to a different reason, which was a couple of prints, monthly prints of deflation that we had that also hurt the short-term duration real interest rate bonds. So this fund was hit, let's say, a couple of quarters for different reasons in terms of performance. We saw some redemptions in the fourth quarter that were very focused on this fund. Now in the first quarter, we're already running above CDI in this fund. So the first couple of months, the performance is above 100% of CDI. So we expect that effect to now to become immaterial. And also regarding IPNS, we do expect to have some new mandates to come online eventually in the next few months, and those should also have a positive impact. We have one, a few mandates that are going to be, those funds are going to be transferred to us in the next few months, so that should probably have a positive impact in IPNS inflows in the next couple of quarters. We expect that to happen. And then I'll ask Alessandro to cover the second question.

Hi Beatriz, thank you for your question. Regarding VRS, as we said, we are very near the launch of the product, but we start especially through our high net worth kind of clients and also later with selected corporate. Having said that, that means that we'll start with more wholesale type of clients instead of going more with massive clients. So the idea to start slowly to test all the systems, to use the technology, to make everything ready to have more and more transactions in our platform. Having said that, our idea in terms of breakeven will be in 2024. Maybe in the beginning of 2024, we will start, in our view, already running a breakeven for VRS as a unit standalone.

Perfect. And just a follow-up on that, if I may, just in terms of management fee level, if you guys are thinking something closer to an IPNS or something closer to liquid strategies, given the client-based things.

That's a very good question. That will depend on the type of the mandate, because inside VRS, we'll have two different sources of income, okay? The management fee itself, and being an insurance company, we'll also have the part of the insurance company that's already charged today in the scheme that we'll have on the funds that are related with pension plans. So we have these two type of revenues. Of course, one will be related to the insurance company itself and another one more like an asset management. And that will depend on the type of the mandate. We'll have a lot of flexibility to build a kind of more like traditional portfolio that will carry, as you said, something more similar to IPNS, but we could have technically something more towards alternatives that will carry higher fees. And we use our own products and external products and also as maybe ETF to compose the overall portfolio of a client so that we have different components of these. If you allocate more like liquid stuff with a more like an asset allocation, point of view will go for more like IPNS but if you go more in the direction and the client wants on the alternatives you have a higher fees related to that.

Perfect, that's very clear, thank you.

Our next question comes from William Barenjord from Itaú BBA. Please Mr. William, your microphone is open.

Thank you for the opportunity and good night. So I have two questions here. The first one is regarding the realization of performance fees for 2023. So can you share with us how do you expect it to evolve earlier this year and then later second half of the year? And the second question here is, Also regarding capital raise, so I would like you to understand how you view which products should be easier or harder to grow and raise capital this year. And then with that, if we should expect the increase in overall AUM being pushed mainly by the long-term part of the business. That's the questions.

Thank you for the questions, William. This is Bruno. So on the PRE side, we have, I think, made a comment in the past and just reaffirmed that there is an expected realization for 23 in the private side, which is our expected exits. of the remaining asset in FIPI Infra Transmission, which is one of the funds that we have in the Infra side. And that asset is already booked in our income statement, sorry, in our balance sheet, the expectation of that realization. We have that in the slide that shows the future potential performance fees and also in the balance sheet. In this particular asset, we also have AGP investments. So as was the case of the first assets that we realized in 21, the second asset will have an impact in both lines. So we're going to have an impact in PRE and also an impact in realized GP investments. That impact should be around 15 to 20 million combined, the two impacts for our distributable earnings. There is significant demand for the asset. We are finalizing getting the required licenses for the asset to be fully approved by the regulatory body. But we have already received inbounds from strategic players, so we feel confident that having the approval from the regulatory body, we should be able to move the asset quite easily. And that's expected to happen in 2023. In regards to fundraising, We have discussed in the past few quarters the targets for fundraising in 2023 coming from our private market funds. We have all of them in the market today, the ones that we have mentioned. So we have the credit fund, we have the ICC. We have private equity, VCP4. We should have also eventually the anticipation of VRR5 and Vinci SPS. My view today is that between all of these funds, what we're seeing most interest from LPs is in the climate transition funds. That has been a theme, really a very strong theme on a global basis. A lot of investors today, despite the fact that globally we're seeing a little bit of a pullback in demand for private markets, this is an area of the market that we haven't seen that effect at all. So people are really still looking quite strongly into climate transition funds. I think there's still a severe under-allocation. to this thing globally. And Brazil, in our view, has a competitive advantage to answer part of this question. We have very good geological and natural resources in the country. The load factors, if you look at load factors for uh renewable energy in brazil they are very very uh differentiated when you compare to european or even american load factor so we can operate uh renewable energy in brazil uh in a much more efficient way so this has been uh one of the uh one of the funds that we've seen uh more traction the other one that we're very excited about as well is winch sps4 So we're very happy with the partnership with the SPS Capital team. We are seeing a lot of anticipation in regards to Vinch SPS4. We receive inbounds as well from local investors regarding the fund, when the fund will come to market. Everybody wants to talk to us about the fund. So that's another product that we feel that once we have it online and available for investing, we also have potential impact, favorable impact to our AOM. I think for 23, as was the case of the second half of 22, we are going to see a protagonist from private markets, right? That's what we saw in the second half of last year. Given the sheer size of the fundraiser, that we're going to pursue in these funds, I think it's very likely that we're going to continue to see protagonists from private market funds in 2023 as well, as was the case of the last few quarters of 2022. We still have that target of 10 billion. now we are kind of halfway through a little bit less than halfway through but uh kind of getting halfway through and with what we're seeing from the market from a demand standpoint i think we're gonna probably hit that target by the end of uh 23 so that's uh that's what we see on on that side and obviously uh we continue to hold uh um let's say a positive outlook for uh improved fundraising for the liquid names in our portfolio as well. IPNS and equities are areas where we feel that we have an opportunity to raise money if the market conditions improve. And also talking about the REITs, right? I think we talked about that in the call today. The REITs will be a strong engine for us for fundraising eventually. It's a group of products that when we had an open market, we raised in a couple of quarters 1.4 billion in the first half of 21. That was the number that we raised. And we had fewer REITs than we have today. So today we have more products available for fundraising than we did have in 21. So we expect once the market has lower interest rates, hopefully next year or by the end of this year when interest rates start coming down, and we have a more benign environment from an interest rate standpoint, this can be a group of products that can contribute quite meaningfully for the AOM of the firm from a fundraising standpoint and on an ongoing basis. It can be a relevant contributor on an ongoing basis for us.

That is very clear, Bruno. Thanks for the answer.

thank you that's all for today i would like now to turn the call over to mr alessandro for the final remarks please mr alessandro you can proceed so i would like to thank you all for your support and confidence the last two years since we've become a public company

and would like to share our optimism that derives from our very tested resilient model that we expect to continue to grow at the same time providing a very good profitability and dividend yield. So, good night to you and thank you all.

VINTI Partners conference call has now concluded. Thank you for attending today's presentation. You may now disconnect and have a great day.