Vinci Compass Investments Ltd.

Good afternoon and welcome to Da Vinci Partners' second quarter 2024 earnings conference call. At this time, all participants are in a 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 Orta, 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, 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 outside of the form'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 our 20F. We will also refer to certain non-GAAP measures and refine 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 Vinci Partners Fund. On results, Vinci generated fee-related earnings of R$ 61.9 million, or R$ 1.16 per share, and adjusted distributable earnings of R$ 58.4 million, or R$ 1.10 per share, for the second quarter of 2024. We declare a quarterly dividend of 17 cents on the dollar per common share payable on September 5th to shareholders of record as of August 21. With that, I'll turn the call over to Alessandro.

Thank you, Anna. Good afternoon. And thank you all for joining our call. We are very pleased to join in today as we announce results for the second quarter 2024. Let me start by saying that we posted once again a double-digit growth in fee-related earnings on a year-over-year basis. This quarter was even more significant, close to a 25% increase on a per share basis. This remarkable growth is largely attributed to our exceptional fundraising performance in private market strategies over the past quarters, which continues to deliver across several fronts. We accomplished these results despite the challenging environment for raising capital outside traditional fixed income investments in Brazil. Delving into our fundraising efforts, we are excited to share notable progress this quarter for our private markets products. Despite the global asset management industry facing significant challenges in raising capital for private equity, closed-end funds, we successfully secured nearly 500 million reais in new capital subscription for VCP4 from both local and international institutional investors. By the end of the second quarter, VCP4 has reached the same size as VCP3 in Brazilian reais, achieved during one of the most challenging fundraising conditions for the private equity asset class worldwide in the past decade. This significant milestone highlights Vinci's resilience in navigating through a tough market. We are extremely pleased with these results, which not only affirm the effectiveness of our proprietary distribution channels and the solid relationships we have cultivated with our LPs over the years, but also are a testimony of the solid performance from our private equity strategy since inception. We are very excited for the promising deployment opportunities that Fund 4 will enable us to pursue. Moreover, Fund 4 stands out as the largest vintage in the strategy in the terms of local commitments by a considerable margin. This highlights what we have been stating since our IPO. The Brazilian market remains highly under-penetrated for private markets investments with a gradual shift in mindset moving in our favor. We are seeing this trend unfold for several of our private markets asset classes and a backdrop of high interest rates, both locally and globally. As market conditions become more favorable, we anticipate this shift accelerating. Vinci is well positioned to capitalize on this transition toward alternative investments. The success of our recent capital raise for Fund 4 in private equity underscores our position as a leading force in Brazil's growing alternatives market. And, as was the case with VCP4, we will continue to work with our local investors to understand what their needs are and how to provide the best solution to address those needs. Moving on, I am pleased to announce a significant milestone for our private credit segment. In July, we secured our first commitment from an international institutional investor for this segment in the Vinci Credit Infra Fund. While this commitment will reflect in our AUM figures only in the third quarter, we wanted to share this exciting development with our shareholders now. While local investor interest in alternative products continue to grow, we are also advancing our international distribution efforts at a promising pace. When we began raising capital from international investors, our offshore distribution team was part of the private equity business and VCP was the only fund with international peace. Today, we have successfully attracted international investors to invest with us across private equity, real estate, infrastructure, public equities, and now private credit. Our ongoing investment in building a robust platform with strong enduring relationship is clearly paying off. And with Compass in our corner, the potential flow from Latin America capital providers will enhance our local strategies even further. Additionally, to further strengthen our private credit segment, we announced the closing of the acquisition of Mav Capital, adding approximately 550 million reais in assets under management with long-term lock-ups. MAV's expertise in the agribusiness sector will be instrumental in establishing a leading position in this area, which could have significant impact over the medium to long-term. The agribusiness sector in Brazil remains underserved by the investment industry despite its substantial contribution to the country's GDP, making it a promising opportunity for growth. Moving on to our recent announced transaction with Compass, we are targeting a closing date somewhere between late third quarter to early in the fourth quarter. The integration process is progressing smoothly. As we mentioned in our last earnings call, we engaged a global consulting firm to support us throughout this transition, and we are making excellent strides. At this time, the project has been concluded with 21 workstreams being simultaneously run across companies to assure a smooth day one and maximize the capturing of the synergies mapped during the project. This was a truly company-wide effort with the teams at both Vinci and Compass working in an integrated way ahead of the closing date to map and brainstorm potential synergy gains from the merger. Compass is having a very good year with assets under management reaching near 220 billion reais in the second quarter, an increase of almost 12 billion reais since the end of 2023, driven by strong fundraising across the APNS business. The IPNS strategy dedicated to liquid products has had a strong year so far into 2024, raising approximately R$6 billion, reflecting Compass' strong market position and continued flows into the segment. Additionally, the strategy within IPNS focused on alternatives has also seen good inflows with fundraising exceeding R$2.5 billion year-to-date. In the credit strategy vertical, Compass has experienced substantial traction with its Brazilian fund, attracting significant investor interest over the recent months. In addition, Vinci has also started to leverage Compass' strong distribution network in Latam, with roadshows already taking place with our private markets investment teams and their commercial teams. In addition, we will host events in Chile and Mexico during the third quarter to present all investment strategy currently available within the Vinci platform to potential Latin American clients. As mentioned, this pre-closing period has been very productive and we are not wasting time. We have been tackling low-hanging fruits aggressively and expect additional opportunities once this transaction closes. We are very excited about our prospects with the merger and we'll continue to work with Compass to leverage growth within both platforms across Latin America countries as we work on the integration in the next several months. To conclude my remarks, I'd like to take a moment to discuss the macroeconomic environment. Last week, the Fed hinted at the possibility of cutting interest rates in their September meeting. The Fed will start cutting rates at a moment where the economy is still positive. Growth for next year is expected to be 1.8% and unemployment is still at 4.2%, below the natural rate of unemployment of 4.6%. The American economy will likely slow down, but not necessarily recessionary levels. In Brazil, the interest rate curve is still currently pricing in potential rate hikes. However, with the Fed lowering rates, we might see a reduction or even delimitation of these anticipated hikes from Brazil's interest rate curve. This is an important subject to consider as the adjustment in expectations for Brazilian rates could help stabilize market performance, which would translate in a better environment for inflows in our liquids and REITs businesses. In closing, I would like to convey the following message. Vinci continues to deliver growth supported by its highly diversified platform and robust distribution capabilities. In the short to medium term, we expect to drive further growth through our private market strategies with multiple fundraising initiatives underway across the platform. Additionally, we anticipate gaining momentum in our liquids and IPNS segments as the global macroeconomic environment becomes more favorable over the coming quarters. We also remain very active on the M&A front, diligently looking into opportunities to enhance our product offerings in Brazil and now across Latin America. The Compass merger added another possible dimension to us, which is the inorganic expansion of our alternative asset management capabilities across the region. The team has a very clear view on where potential demand for investment solution is and which blank spaces we might fill on a regional basis through partnerships and acquisitions. With this regional effort, we aim to strengthen our position as the gateway to alternative assets in LATAM, to deliver greater value to our investors and shareholders, capitalizing on the evolving landscape to drive both local and regional expansion. With that, I would like to turn the call over to Bruno.