Vinci Compass Investments Ltd.

Good afternoon and welcome to DaVinci Partners fourth quarter and full year 2023 earnings conference call. At this time, all participants are in list and only mode. Later, we will conduct the 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 Sérgio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and our financial statements for the quarter and full year, which are available on our website at ir.vinciopartners.com. I'd like to remind you that today's call may include forelooking 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 factor section of R20F. We will also refer to certain non-GAAP measures and new fine 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 partner's fund. On results, venture generated fee-related earnings of R$57.3 million, or R$1.07 per share, and adjusted distributable earnings of R$63.6 million, or R$1.18 per share, for the fourth quarter of 2023. For full year numbers, Vinci posted fee-related earnings of 208.4 million reais and adjusted distributable earnings of 245.8 million reais. We declare a quarterly dividend of 20 cents on the dollar per common share, payable on March 7 to shareholders as of February 22. 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 today as we announce results for the fourth quarter and full year 2023. This year has truly etched its mark in the history of our company. We hosted our first investor day as a public company at Nasdaq headquarters. It was a fantastic opportunity to share with shareholders and investors our targets and goals for Vinci's future. Another milestone for us was the partnership with Ares, a market leader in the alternative asset manager space worldwide. We believe this is just the beginning of a successful partnership and I will provide some additional details in just a moment. In my opening remarks, I would like to cover some important topics before Bruno and Sergio go over the specifics. To start, I would like to be assertive with the following message. Vinci delivered strong results facing another year with a challenging environment worldwide. we are reaping the benefit of a well-developed platform with several business lines built to succeed across market cycles. We posted another quarter of solid growth with FRE and DE increasing respectively 14% and 17% year-over-year on a per share basis. We ended the year with 69 billion of AUM with more than 4 billion reais in capital subscriptions for our private markets funds throughout the year. Fundraising remains on a growth trend going forward. 2023 started at a slower pace and we experienced a significant pickup towards the second half of the year with several strategies gaining traction. Our shopping mall REIT, VISC, raised more than one billion reais in a three month span. A stellar fund raise to reopen primary issues for public REITs in the Brazilian stock market. As I've highlighted over the past earning calls, this should be an important growth driver for Vinci when facing favorable conditions. we have seven funds that can proceed with new issues. In infrastructure, we officially closed the mandate to manage the Sustainable Regional Development Fund, or FDIERS, with initial AUM of approximately 1 billion reais. This was truly great news from our infrastructure segment, and Bruno will go over that in more detail in a moment. Overall, we had important commitments for VICC and VCP4 throughout the second half of the year, while also benefiting from market appreciation across the board. Momento is great as we enter 2024. Now, I'd like to share our main areas of focus for this year. First, we are acutely focused on developing VRS and we are starting to experience traction. Last week, VRS was officially presented to the general public with an article in a major newspaper in Brazil, featuring a detailed description of our product and the market opportunity ahead of us. The product is now fully accessible to the public through dedicated apps and website and prepared to accept allocations from all investors through our new launched platform called Miu. Now, let me delve into a more comprehensive description of our vision for VRS. Over the past year, we launched it. the product to our high net worth investor base and our team concentrated their efforts into beta testing and tracing what would be our next steps as we started fundraising. During that period, we encountered several unsatisfied investors with products that are not suitable for the long-term goals and the overall inefficiency of the incumbent banks. With that in mind, we start 2024 tackling a few fronts. First, we will expand our capabilities to raise money with high net worth investors. Alongside their need to find a better fit for their retirement goals, there is also legislation approval to tax closed-end funds. which can boost this growth by redirecting part of these resources for pension products due to its tax and state planning benefits. Second, we are aiming for corporate plans. The corporate market is a fraction of the individual market, but often it is the first contact that investors have with pension plans. Moreover, doing our research, we came across several instances that indicated the experience for corporate plans is even worse than the overall industry because the incumbent providers do not invest in this segment at all. And third, we'll seek distribution partnerships with platforms and fintechs to enhance our penetration within retail investors. We are continuously exploring additional options and we ensure investors stay informed as we develop them. Our second area of focus for this year is developing our private markets fundraising pipeline. As we previously announced it in our investor day in October, we updated our private markets fundraising target to 15 billion reais until the end of 2024. As of the fourth quarter, we already have 8 billion reais raised, and we work to reach the target with several initiatives. First, new closings to our existing flagships that are ongoing fundraising, such as the CP4 in private equity, the ICC in infrastructure, and VINC credit infra in credit. Second, new vintages of existing strategy which we plan to raise this year, such as SPS 4 in a special situation, VRI 5 in our impact and return strategy, and VFDL 2 in real estate. And third, the follow-on offerings for our listed REITs. As I mentioned earlier, this scale alone raised more than 1 billion in a three-month span. We think this could be an important contributor with a more constructive environment and mainly with lower nominal interest rates expected as the Brazilian Central Bank continues on its easing cycle. Lastly, we work to leverage our partnership with Ares. One of the aspects that we found the most appealing in our partnership with Ares was the possibility to have several interactions with their management and commercial teams to seek best practice enhancements, potential co-investment opportunities to work on asset origination and product development. All of this on top of distribution efforts to raise additional capital to our funds and to distribute Ares products in Brazil. So far, we had dozens of interactions between management teams across all our private market strategies, IPNS, corporate advisor, commercial teams, and VRS. We have been mapping for each of the strategies what are the opportunities to allocate capital and where we can find synergies on the investment side and on the fundraising side. In the short term, will tackle fundraising efforts for VCP4 and the ICC, which are the main flagships we are working on fundraising at the moment, and collaborate with ARIS to leverage cross LP relationships. We see substantial upside for fundraising across other strategies, and one of those would be SPS. We are very excited for SPS4 and see some interesting upside to our new vintage with the ARIS team as our partners. We will keep you posted as we advance on those fronts throughout the year. Before diving deeper into market framework for 2024, I would like to highlight the pivotal role of our data and macroeconomic research teams. In the second half of 2023, we experienced in Brazil a temporary impact on real interest rates following the challenging macroeconomic environment in the U.S. and a bump in medium to long-term real rates for treasury bonds. This period was marked by market speculation about the Brazilian central bank's stance on the forthcoming easing cycle. Our in-house macroeconomic research team highlighted the transient nature of these fluctuations, which allowed our investment strategies to take advantage of the market dislocation. We believe having a top-tier strategy team is a key foundation to a successful asset management firm. As I conclude my remarks, I wish to share our insights on market expectations and their implications to Vinci. Last year, the discussion in global markets revolved around rising interest rates, but now we find ourselves in an environment where expectations are for an impeding easing cycle globally. The debate has evolved to timing and intensity of these declining rates and the tone of monetary policy. This move will likely positively impact financial markets around the world. It's not worthy that Brazil is ahead of the global curve in the easy cycle and has already implemented five rate cuts with rates decreasing from 13.75% to 11.25%. It's worth mentioning that Brazil trade surplus is poised to increase even further in the years ahead. the additional gains will likely come from a significant upward trend in oil production and exports. This structural change will drive a substantial positive impact on exchange rates and therefore inflation, helping to restrain it and paving the way for deeper interest rate cuts. This will potentially be an important driver to a long-term easing cycle, which could become more aggressive than currently anticipated by the market, leading to further GDP growth. This outlook is excellent for assets, both private and public, and substantially positive to drive meaningful relocation in alternative asset classes, as we saw in the 2016-2021 cycle. When we combine these elements with a commitment to comply with the Brazilian fiscal framework, we see enormous potential for the economic landscape, which would mean a constructive environment across all strategies. As overnight rates revert to single digits, the landscape for investors is shifting, prompting a quest for diversification to fulfill their financial objectives. Another important positive note worth mentioning is that last week, a new measure has been approved restricting new issues of tax-free CDs backed by agriculture and real estate assets, which had been absorbing a significant amount of flows. In recent years, the Brazilian asset management industry has suffered with substantial outflows with a considerable part migrating to tax-free CD products issued by local banks. The new measure aims to restrict the type of tax-free CDs that can be issued and also increase minimal liquidity requirements for these instruments. Market expectations anticipate the cancellations of 30% of new issuances. This opens opportunities to expand allocations to riskier investments, attracting flows back to the asset management industry. Throughout the years, we have diligently constructed a robust platform featuring a complete array of alternative products tailored to meet the needs of our clients. We are confident that as the transition away from fixed income unfolds, Vinci is strategically positioned to capture substantial market share. With that, I will turn it over to Bruno to go over our fundraising efforts and pipelines.