Vinci Compass Investments Ltd.

Good afternoon and welcome to DaVinci Partner Second Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session 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.vinciopartners.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 your final 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 Alisson.

Thank you, Ana. Good afternoon and thank you all for joining our call. We are very pleased to join you today as we announce results for second quarter of 2023. adjusted distributable earnings, totaling R$ 70 million or R$ 1.30 per share, an increase of 18% in our cash earnings per share year-over-year. Vinci announced a quarterly dividend of 20 cents on the dollar per common share. Over the last 12 months, we have distributed 73 cents per share as dividends that, at the current stock price level, represent a dividend yield close to 8%. Our fee-related earnings, totaling 51 million reais in the quarter, or 94 cents per share, represented an increase of 11% year-over-year on a per share basis, driven by the ongoing fundraising across our private market vehicles and a higher contribution from advisor fees this quarter. AUM reached 65 billion reais at the end of the second quarter, up 9% year-over-year. This quarter, we had an important contribution from AUM appreciation following the recovery in local markets, which push it our public equities and REITs strategies to rise by 20% in average. This is one of the few quarters since our IPO that we benefit in a more significant manner from this effect. Since 2021, we have struggled to see a relevant impact from market appreciation as we face challenging local markets and our AUM growth has been anchored mainly in new capital subscriptions and inflows. The strong results posted for AUM, FRE, and Distributable Earnings this quarter are, once again, a clear demonstration of the resilience of our platform. We have been discussing constantly in our calls our current focus in fundraising across our private market strategies and the impact these new capital commitments will have for our management fees. I'm very confident in the prospects for future quarters as we now have additional to the fundraising for private markets favorable tailwinds for other segments, such as our liquid strategies and our public market vehicles. We are now entering a much more constructive scenario for Vinci to start seeing positive inflows into our liquid funds as local markets improve and the opportunity cost of a very high local interest rate lessens. On top of that, our public market vehicles, with the recent appreciation, are trading at prices very close or above NAVs, which put us back in a position to raise capital through primary issuances. This contribution can be very meaningful to our numbers. We have eight perpetual capital AUM funds with sizable NAVs. Once we have surpassed NAV prices, our public market vehicles should go back to be one of the main driving forces for AUM growth, as we have seen from 2018 to 2021, when we grew AUM in this strategy by more than 5 times of R$ 4 billion. This effect was a direct consequence of the market's expectation for the start of the easing cycle for interest rates, which officially began last week as the Brazilian Central Bank announced the first cut in interest rates since 2020 by 50 basis points and sent a clear indication for the easing process ahead of us. For instance, the market expects nominal rates to be at 11.75% by the end of the year and close to 9% by the end of 2024, decreasing nominal rates by roughly 500 basis points in approximately one year and a half. As highlighted before, the last easing cycle took place between 2017 to 2020. Back then, we grill AUM by roughly 30 billion reais, posting expansion across all our business lines. At the same time, Zinchi posted significant FRA margin expansion with close to a 20 percentage points gain in FRA margin. Keep in mind that our platform was not as developed as it is today. We have been actively working these last few years to be ready to take most of the opportunity once we had more favorable markets. I believe Vinci is very well positioned for this new cycle and we could not be more excited with the future ahead. Interest rates are going down and foreign sentiment towards Brazil is going up. Fitch Ratings recently raised Brazil's credit rating, reflecting the improving economic outlook, federal budget control, and record trade balance results. The upgraded rating connotes greater confidence in Brazil's ability to meet its financial obligations and attract investments and bodes well to a medium-term investment grade that could be highly impactful. For instance, we are two knots away from the investment grade. Based on the past cycles, we expect to be awarded with the investment grade by 2025. This would mean a sizable flow from foreigners into Brazil across all strategies. Last time we had an investment grade, international capital held more than 20% of the domestic Brazilian debt. Today, this number is close to 9%. Given that the Brazilian debt is roughly 70% of the GDP, we could see flows of more than 7% of the Brazilian GDP over the years following the recovery of the investment grade. This represents an enormous opportunity to accelerate growth. It is worth mentioning that a significant part of price moves take place before the investment grade stamp is awarded. Also, S&P just put Brazil in positive outlook. To close my remarks, let me provide an update of our fundraising efforts growing forward for our closed-end funds. The ICC, our climate-oriented fund in infrastructure, continues to observe lots of traction with institutional IOPs. We should see new commitments coming throughout the second half of the year, and the fund is on track to reach its target by the first half of 2024. VCP4 just closed in July an important capital raise with XP that will contribute to third quarter numbers. We also should see new commitments from local institutional players in the second half of the year. And then, for the last and potentially more meaningful round of fundraising should come from our international piece, which we are aiming at the end of VCP's fundraise. Raising capital for traditional private equity funds has been a challenge for all of our global peers. We expect to see improvements on this front in the beginning of next year. Meanwhile, we have been experiencing an increase in appetite from local institutional players to alternatives. This reinforces the ongoing shift from Brazilian players towards alternatives. We are seeing this in an environment of historically high interest rates. With the easing cycle, we should see a pickup in this trend. Momentum is great for all of our strategies, and we are excited for the coming quarters. We will continue to work on delivering on all fronts we have discussed today, and we'll keep you posted as we go along. Thank you for the attention and for attending our call today. With that, I'll turn it over to Bruno to go over our financial results.