Q4 2021 Vinci Partners Investments Ltd Earnings Call
[music].
Good day, and thank you for standing by welcome to the Vinci Partners' fourth quarter and full year 2021 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 one on your telephone please be as high.
Today's conference May be recorded if you require any further assistance. Please press Star then zero I would now like to hand, the conference over to Ana Castro Investor Relations manager. Please go ahead.
Thank you and good afternoon, everyone. Joining today are Alexandre to Wassa, Chief Executive officer, but when does that am but private equity chairman.
Head of Investor Relations, and surpasses 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, that's being to partner <unk> Dot com.
I'd like to remind you that today's call may include forward 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 a discussion of some of the risks that could affect results. Please see the risk factors section of our 20-F.
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 will turn the call over to understand.
Thank you Adam.
Good afternoon, and thank you all for joining our call.
We are extremely pleased to join you all today as we announced results for our first year as a listed company.
Distributable earnings totally $68 5 million in the fourth quarter or $1 22, reais per common share.
<unk> of 86% year over year. Additionally, <unk> announced a quarterly dividend of 20 cents on the dollar per common share.
We continued to deliver strong results across all our segments beckoned by management and advisory fees.
Fee related earnings in the fourth quarter totally 54, Melo here is a 43% increase year over year.
We expanded our FRE margin by 155 basis points. This year and the 2021, we've done 52% FRE margin versus 50% in 2020.
We are pleased with this margin expansion as we had to absorb additional costs. This year as we became a public company.
We ended 2021 50.
57, <unk>, 15% above year end 2020, driven by almost 8 billion <unk> fund raising coming primarily from our IP NFS and private market strategies.
Vinci has been gaining significant market share we've seen the Brazilian alternatives markets since 2018.
AUM has been expanding at a 31% CAGR since while the alternative Brazilian market has been growing at a 19% annual compound rate.
This relative performance became even stronger in 2021.
This year, we just fundraising represents 60% growth over 2020 year end AUM.
Comparison, Brazilian overall fund raising expanded by only 4% highly impacted by the recent rise in interest rates and the volatility in public markets.
Even in this scenario our platform was able to raise capital organically and grow faster than the market without the contribution of our flagship private market fund in the prior cycle from 2018 to 2020, we have the benefit of raising our latest flagship private equity vintage we've had the <unk>.
Significant impact on AUM and also benefit from a tailwind of a more accommodative monetary policy.
The second half of 2021 was defined by the beginning of a sharp monetary tightening cycle. When we saw interest rates rise from three 5% to the current 10, 75% in just eight months.
AUM has proven to be extremely resilient through the second half of the year as we did not suffer from significant outflows and on top of that raised additional AUM.
With the combination of just shop monetary tightening and the fiscal surplus Brazil achieved in 2021. The country was one the first globally to remove these stimulus associated with the Covid pandemic.
Have you already done these adjustments, we now face a future we've seen normalized parameters and see the market's already reflecting disposition favorably as we began the year with a strong appreciation of the real and solid performance from local equity markets.
Corroborating the platforms performance <unk> raised approximately $1 5 billion reais in the second half of the year in our liquid strategies ni BNS, while the Brazilian markets over 330.
33 billion Reais in outflows in these asset classes.
Our resilience regarding outflows comes mostly from the fact that our liquid strategies and Ips funds built upon an institutional investor base with very limited exposure to retail investors through distributors and open platforms.
In public equity and hedge funds, the AUM only 10% distributor to retail investors through distribution agreements with banks and platforms.
The rest of the AUM is well distributed across local and international institutional investors and high net worth individuals.
The same goes for IP, Nf <unk>, 15% of the AUM is in retail food distributors, which most of it allocated in pension funds and asset class, we faced stickier investor base.
First off I'd BNS AUM using separate mandates from institutional investors with long term vision on their locations.
And of course.
AUM in private market strategies is called pulls it off long term products from five to 20 years of Lockups and perpetual capital vehicles.
I believe fourth quarter results are testimony to the power of our platform validating what our business model can deliver even in the most challenging and volatile Marquis scenarios.
This quarter Seth is a clear example of what level of results shareholders can expect from Vinci when we have different sides of the business performing at the same time.
We had solid results coming from our core business Beckett by management fees combine it with upside from advisory and performance fees.
Advisory fees continue to be a pleasant surprise in the fourth quarter contributing with <unk> net revenues and over 60 million reais in the full year.
The team has executed on in part mandates in 2021 and on top of that we started to advice early stage growth companies in their funding rounds, which which broadens our addressable market.
Our advisor business had a banner year, although difficult to replicate in the short term, we believe that growth.
Asian and mandates in new verticals will allow us to continue to develop the business organically in the future.
We also had some positive impact coming from performance fees in our private market funds.
This quarter the funds CPE for Trust me some infrastructure successfully divested from less a power transmission concessionaire and returning capital to investor with considerable upside, resulting in pro forma fees and investment income revenues in this quarter as we.
We are investors in the funds from company's balance sheet.
Our stake in the Infra fund was made years before the IPO I believe this is an important indication of the future earnings power.
<unk> investment income as we are committing capital raised in the IPO in Q, our private markets fund launches and when these funds to start to divest from assets. We should also benefit from them in our GP investment income line.
To give more perspective on performance fees, we started to disclose this quarter and will continue to do so going forward. The total amount of accrued performance revenues coming from our private market funds. So that investors have a better sense and not able to monitor our performance fee pool.
<unk>.
Bruno will touch more on that later in detail and how the funds are performing.
To finalize my remarks, I would like to go over a few highlights of our first year since the IPO and our growth opportunities going forward.
2000, and 301 was a transformational year for <unk> partners.
Management and advisory fees expanded by 43% year over year.
FRE totally $222 5 million highs in the full year, almost 50% year over year growth.
After tax distributable earnings reached $232 2 million reais in the full year and 82% year over year expansion.
In 2201, we did not have any flagship products coming to market, but we did have were several smaller strategies launch it which is something extremely valuable to us as we grow our segments into synergistic strategies deepening our penetration.
In the alternative space.
Early in 2021, we had the final closing for our impact private equity fund VII for which is already 42% deployed it could come back to market with a new vintage faster then we ex dissipated.
We launched the FPL envious, a real estate any infer Q, new private equity style funds, our real estate team is acute and IPO of their fifth listed REIT.
If you focused on the urban commercial property sector.
By the end of the year, we had a first closing for our newest strategy in Ips <unk> strategic partners, our VSP focused on private markets allocation, which is a huge opportunity for us in the long term, we expect more capital to flow into VSP through the first half.
Half of 2022.
Our listed funds also came back to market with three successful follow on offerings in the IGT <unk> <unk>. These were completed with a combination of traditional primary capital raising early in the year and novel pain kind transaction in the second half.
Also the market presented increased volatility.
Our ESG initiatives have been gaining recognition in all fronts.
<unk> the first Brazilian asset manager to receive the woman onboard seal as we have a gender balanced presence within the independent part our board of directors.
She also establish efficient ESG committee chaired by our independent director <unk> <unk> to <unk>.
<unk> financial institutions in Brazil.
Our impact funds, yes for one the private equity ESG fund of the year Award from Environmental Finance. We also became officially a carbon neutral company naturalizing RG AG emissions in scopes, one and two for the year of 2020.
Finally to close on the 2021 recap, we launched our first ever marketing campaign built on the pillar reputation as the best investment the campaign, we force our main values and our most valuable asset our reputation in the Brazilian alternative asset space.
<unk>.
Our goal is to reaffirm vinci as the top of mind brand productivity investments in Brazil.
The content has been launched in all major advertising outlets and we have been gaining some very encouraging feedback. The campaign has been responsible for increasing five times, our webpage user flow with over 26 million digital impressions and reach its so far more than two.
5 million people over to TV and newspaper ads.
Our objective is to strengthen our leadership position and continue to drive market share gains as we have over the past few years.
Addition, we see a direct link to retail and pension products, both medium and long term growth areas of extreme interest to us.
Continue on growth opportunities, we have three flagship products that we will start fund raising 2022.
Private equity infrastructure and credit strategies.
These three products represent 10 billion Reais in target fund raising a substantial opportunity for FRE growth going forward.
<unk> will go into more detail about this funds and fund raising status in a few moments.
Another big upside for us comes from our cash position.
We have approximately $1 2 billion.
Liquid funds portfolio and until call it by a private market funds or cash or locations are exposed mostly to fixed income bonds.
With the recent rise in interest rates, our revenues coming from financial income can be a major drive to distributable earnings.
Lastly, we hit upon a highly underpenetrated altra divested market in Brazil.
Here at <unk>, we are constantly launching new funds as distinct strategies.
This comes in addition to our already robust established platform would you continue to raise capital provide the organic and continuous growth as we move into 2022, we have a pool of exciting opportunities across the firm and we are extremely well positioned to take advantage of them.
Company grow stronger every day and we have ambitious plans for solid growth ahead of us.
I would like to thank you again all of you for attending our call and for your support with that I will turn it over to Bruno to go over our financial results.
Thank you Alessandro and good afternoon, everyone Star.
Starting on slide 10, we go over AUM roll forwards for the quarter and the full year prior.
Private market funds accounted for $2 5 billion Reais in new capital subscriptions in the full year with highlights for follow on offerings in our listed vehicles the allowance of new strategies, such as the SDL and views the IPO of view and the final closing for var for.
We also returned 225 million reais to investors as we divested from assets with highlights to the sale of less in the seat in front that I assume you saw in the fourth quarter.
Turning to our liquid funds in the fourth quarter, we had 393 million reais and outflows coming from our liquid strategies and DNS funds, representing less than 1% decrease in AUM quarter over quarter.
Fermi, our resiliency when compare to the strong outflows witnesses.
Elsewhere in liquid strategies within Brazil.
In the full year net inflows represented $5 3 billion Reais with highlights to our notable fund raising night VNS exclusive mandates and strong inflows into our hedge funds in liquid funds in the credit segment.
<unk> appreciation was flat in 2021, following a strong depreciation during the second semester and liquid strategies. After a strong correction in the local market as Dave will explain this index dropped by 17% in the period.
Moving on to Slide 11, we are starting 2022.
Very strong cycle for fund raising in private markets funds, which we'd like to cover in more detail in this call.
Just some information his remarks in the fundraising cycle between 2018 and 2020, our AUM growth was positively impacted by the fund raising for BCP III.
In 2021, we do not have any flagship fund coming to market. So our AUM growth was driven by organic fund raising from existing products and the launch of spinoff synergistic strategy private to markets together with new Ips exclusive mandates.
This will not be the case for the next 12 to 18 months.
This year, we will start our fundraising efforts for three important funds for which we have a total fundraising target of 10 billion Reais.
These funds can represent significant upside to our FRE number over the next two years as they carry higher fees than our current average management fee rates.
Our flagship strategy in private equity is coming back with its fourth vintage visit before.
We're currently in road show for our first close in the first half of 2022.
We're confident of a successful first close in visit before backed by re ups from existing Lps from BCP III and also GP commitments from <unk> balance sheet.
Our third vintage has presented great results marked at a 57% gross IRR in Reais and 37% in dollars as off the third quarter of 2021.
<unk> III is currently 85% committed and we are in advanced contract negotiations to sign the seventh and less transaction of the fund in coming days.
Next leveraging on our historically exceptional track record empower where allowance and used strategy and infrastructure and impact climate funds with a corner location in our renewable energy assets.
For this product we expect first closing in the second half of 2022.
We're very excited about this new strategy as there has been a strong global push towards energy transition and clean energy strategies.
Brazil has significant weather and geological characteristics that makes us extremely well suited to be a strong contributor to this transition.
Also our credit team is coming out with a new fund to invest in incentivize infrastructure debentures with a first close expected for the second half of 2022.
This fund has an approved anchor institutional investor that will see the fund leveraging our fundraising on top of our GP commitments.
We also have opportunities across our existing strategies, such as our listed products.
We have five listed Reits, which are fully deployed and eligible to come back to market with follow on offerings.
These funds continue to work on paying kind transactions as markets for clean primaries are still challenging however.
However, as previously noted Brazilian markets have been strong in 2022 and conditions could open up for traditional primary issuances later in the year.
We have two new listed funds planned to go to market as well both co managed by our real estate and credit teams that's of each.
We are in the process of putting out a new REIT focused on the agribusiness sector for which the teams already have signed that joint venture with <unk>, an investment company focused on the agribusiness sector.
The second leasing initiative is visa credit securities our Vcs.
This credit funds, we invest in real estate mortgage backed securities.
This is a very exciting move for our credit strategy to have a perpetual capital funds in the BS III.
That was very successful for our real estate and <unk> for teams before.
We have a new fund in our Ips segment, a fund of funds focused on private market allocations called Vinci strategic partners or VSP.
<unk> is our first dedicated effort in the allocation service segment and thoroughly focused on private markets funds. This use in extremely underpenetrated market in Brazil and for that reason, we believe he can call constitute a big opportunity for us in the long term.
At last stimuli.
Ips business.
We're very excited about our pension plan strategy.
This is a great market that is still very very early stages, and we believe we have the opportunity to really capitalize on it.
For US this segment is retail and high net worth driven representing retirement solutions for individuals and families.
Today, most long term pension products in the country have very limited exposure to private market strategies being mostly exposed to federal bonds equities and hedge funds.
We're seeing strong migration EMR developed market stars alternatives for this type of capital allocation and we anticipate the same change happening in Brazil.
Moving on to Slide 14, we go over accrued performance fees in our private markets funds.
Performance fee receivable increased to 102 million reais in the fourth quarter at 37% increase year over year, primarily driven by depreciation in <unk> III that currently totals 83, five <unk> and performance fees are 82% of total fees.
During the fourth quarter Vitra realized nearly 11 million reais in performance coming from infrastructure yourself.
V Chip partners recognize the performance revenue according to Ias RF 15.
Our realized performance fees are recognized only when it is highly probable that the revenue will not be reversed in the income statements.
The funds CP infiltration was selling infrastructure had $19 4 million reais as of the end of the fourth quarter of 2021.
Booked as unrealized performance fees in the company's balance sheets.
We will continue to work towards realizing this gain in the next few quarters.
Accrued performance fees shown for private equity funds of $82 5 million Reais as of the end of the fourth quarter of 2021 have not been booked as unrealized performance and the company's balance sheets.
<unk> had eight <unk> at the end of the quarter in performance eligible AUM coming from our private markets funds doing investment periods.
That can further contribute to our accrued performance fees at these funds answering divestment periods.
In Slide 16, we go over our management and advisory revenues in the quarter and for the full year.
Management fees were up 20% year over year, following strong fund raising across private market <unk> DNS segments management fees for the full year totaled 361 million reais up 33% year over year.
Advisory fees accounted for 20 million in the fourth quarter and totaled 67 million reais for the full year up 131% year over year.
In slide 17, we have our operating expenses for the quarter and full year.
<unk> expenses represented 15 9 million reais in the quarter up 13% year over year or 8% when we exclude additional costs related to being a public company.
The fourth quarter was also impacted by 5 million <unk> expenses coming from our branding projects final phase that featured contents of equalization across all major media outlets in Brazil.
In slide 18, we present our fee related earnings.
<unk> was $54 million or <unk> 96 per share representing an increase of 42% year over year.
<unk> continues to be the core indicator of our business with growth in management fees and upside coming from advisory.
In the full year, FRE was $222 5 million reais and increase of 47% year over year.
In the Fr. Your bridge chart, we present, the breakdown of fee related revenues and expenses.
Comparable FRE margin, when we discount public company and the branding project costs would have been 55% nine percentage points higher than FRE margin into the fourth quarter of 2020.
Still we ended the year with 52% that fray margin, representing a substantial expansion of the margins in just one year.
Next in slide 19, you.
<unk> was $2 4 million reais in the quarter and 25 million Reais in the full year down 11% year on year.
We had a weaker performance in our liquid strategies due to the severe volatility in public markets in the second half of the year as most of our liquid funds charge performance with the high watermark on the other hand, we had a substantial amount of our performance season of the year coming from internationally exclusive mandates in Ips.
You are not private markets funds, we had about 11 million reais in realized performance fees coming from organizations and CPE footprint you Michelle.
This performance was already booked as all realized in the company's balance sheet, resulting in a near term impact MTR, but a positive impact on distributable earnings.
Shifting to slide 20, we go over our realized GP versant in financial income for the quarter in four years.
We had $21 5 million Reais he realized income this quarter coming from the gains in our liquid funds portfolio <unk> prepared theory private markets funds totaled.
Total realized income accounted for $42 6 million in the full year.
Realized <unk> investment income totaled 12 million reais in the quarter coming primarily from the capital return in the infra funds in which the company had <unk> and also a point investment position.
Realized financial income coming from our liquid funds portfolio totaled 29 malaria is in the full year.
We expect financial income to benefit from the recent increase in interest rates as most of our cash a locations are exposed to fixed income products.
Turning to slide 21 after tax distributable earnings were $68 5 million reais in the quarter or one real and 22 cents per share up 86% year over year.
This exceptional result was boosted by growth in management and advisory fees.
With a positive impact on performance fees <unk> <unk> investment income from the origination of infiltration itself.
After tax distributable earnings totaled 232 million Reais or <unk> 11 per share in the full year up 82% year over year.
Finally in slide 22, we show our cash and investment balance.
We finished the fourth quarter with one 5 billion reais in cash and investments or $26 43, <unk> per share approximately $5 per share in cash position.
So far the company has committed 390 <unk> into private markets funds with a little over half of that capital has already been called by the funds.
For a more detailed slides 35 of this presentation.
And with that I'll turn it over to SaaS to go through our segments.
Thank you Bruno.
Turning to our segment highlights as you can see in slide 24, our platform is highly diversified and that is the main contributor to the resilience of our business.
48% of our FY 2021 came from our private market strategies.
Followed by <unk>.
19%, Ips, we have 17% and financial adviser contributing with 16%.
The same level of diversification as reflected in our segment distributable earnings.
Moving on to each of the segments, starting with our private market strategies only delighted 25.
FY <unk> in the fourth quarter was up 22% year over year following strong fund raising in 2020 one.
Totally AUM.
15% year over year, with new strategies within real estate and infrastructure.
Hello offerings and rights and the IGT and the final closing of our.
Impact fund VII for.
Our eats we're resilient face a challenging market in the second half of the year, our shopping mall REIT VC.
Closing, our Bayou new share swap transaction in the REIT market.
Changing from the codes for the acquisition of four shopping malls.
Yes, shoring our capability so delivered solid growth.
Challenging market scenario.
Our infrastructure segment launched its new audience, who is your strategy Z years, raising $384 million in capital commitments throughout 2021.
As announcement recently, its first investment a partnership with Argos with Brazil to invest in the public concession offset the ice block III deploying 90% of the capital raised.
We believe this is a sector with extensive opportunities with the current public concessions agenda in Brazil.
Our closed.
Mark funds.
To deliver outstanding returns vis vis <unk> III is currently marked at a.
57 gross IRR.
Yes.
And 37% gross IRR in dollars.
Thank you MS film in infrastructure is a market, that's a grass III off 72% and 54% in dollars.
As you address that early in the call CPE footprint zone, and it's co investment posted realization was in the quarter if they stay off list.
This had an important impact on our realized performance fees and realized the GP investment income.
Moving on to slide 26 liquidity strategies FRE for the full year was up 39% year over year.
Driven mostly by the end of the revenue sharing agreement with <unk> in the beginning of two earnings for anyone.
<unk> also impacted positively our average management fee rate by 22 basis points.
AUM and fee, earning AUM.
19% year over year.
Greece, driven primarily by significant depreciation in the second half of the year.
As we mentioned earlier in the call we did not suffer from significant outflows as markets start to get to.
All of that.
They won't outflow, we had within our public equity softening wealth mandate in the first half of the year.
$1 1 billion Reais, which was the realization of gains made from that core allocation fruit from these investors into any trainee as we've discussed in the call at this time.
The original mandate is this still under Vince management and does not base management fees.
So we did not have an impact on our management fee revenues by the contrary fees are up 41% year over year.
Moving on to our Ips business on slide 27.
<unk> was $38 million <unk> in the full year.
Notable increase of 85% year over year.
Following outstanding fund raising over the last 12 months across our separate Monday strategy.
Much like our liquid strategies.
Local market volatility negatively impacted our <unk> results in the fourth quarter is still in the full year totaled $15 2 million.
<unk>.
Six 3% year over year, driven by great performance in our international exclusive mandates.
Yeah.
Segment <unk>.
Was up 78 with sampling the full year.
Located in the strong trends, we had in our IP in that vertical recently, we are confident that the BNS is well positioned to repeat its success into any training tool.
Finally in slide 28 financial Advisory reported another excellent quarter, ending the year with outstanding results.
FY <unk> in the fourth quarter was up 372% year over year.
The full year FY <unk>.
$36 2 million is an increase of 138% on a year over year basis.
That's it for today's presentation once again, we'd like to thank you for joining our call with that I would like to open the call for questions operator.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
And our first question comes from the line of Tito <unk> with Goldman Sachs. Your line is open. Please go ahead.
Hi, Good evening. Thank you for the call and taking my question a couple of questions.
First on the advisory fees continued to be very healthy as you mentioned.
Curious, how you would think about the advisory fee.
For this year, if you can sustain that level of that should normalize.
What we saw in 2020.
And then second question on the public equities.
Yes.
It's still been a bit and the pressure there I didn't think about.
We go.
Public equity, particularly in the current market environment.
Okay Tito thank.
Thank you very much for your question that sell it through.
Just starting with your first question about the advisor fees.
We think to be conservative this year with very difficult to replicate the same levels of advisor fees at least it's something that will not expect but for sure. We change at the level of this business at Vinci.
The banner year as I've said before.
In 2021 for this type of mandates and especially M&A advisory.
We have been.
Engage it in a lot of more important in higher fee based.
Mandates.
Also at the same time.
We have been able to reach.
More a larger number of clients. So we expect this.
Line of business to normalize in terms of lab level of revenues higher.
Tone, but this years, specifically 2021 was a very special year. So we do not expect the same level for 2002 any too but for sure we are.
Our raising the bar here.
For the revenues coming from our advisory.
<unk>.
Talking about now about the public equities.
You saw we had of course.
Despite of the market are very good.
Performance in terms of keeping.
The mining side Vinci specially because the majority of the money and our public equity funds.
In separate managed accounts comes from institutional investors.
We are not seeing right now skew their money coming back from retail.
We have very very fine activity from institutional investors, so far we're not seeing redemptions.
But what we have seen it.
A growing interest coming from internationally investors for public equities.
Does not translate in our case steel for a very strong inflow, but for the first time and this is not just for public App, which this is happening for some private.
Markets.
Business here at <unk>.
<unk> I don't know at least in the last three years, we did not see so many interest.
The country coming for <unk> right now if that will translate in unimportant inflow in our not just public cap, which as I said, we have the question about public equity mandates, but also in the private market side, if that will translate in inflows is too early to say, but.
For the first time in the last three years, we have seen much more interest coming from the national clients I can give you.
One specific point on that we just need I think last week a call.
Macroeconomic scenario in Brazil, how you see the elections going forward with.
Some current clients and also prospects and we had more than 100 clients. Joining this call. This for US is something that grew from the last one on their own 30 on average for more than 100. So this for us as a sign of growing interest in Brazil coming from <unk>.
Additionally, investors.
Great. Thank you Alessandro that's helpful. Maybe just one follow up on the Ips, which continued to grow very strongly.
Yes.
Lower FRE margins, just kind of that kind of growth continues.
Do you expect to see some pressure on your operating margin this year or any outlook you can give on margin.
Margin should evolve.
Now we expect this growth to continue but the margin would stay the same in the business.
We are seeing still even with this volatility in the mark in the last two quarters now, it's a little bit better.
Being a continuous interest in our P&L.
S business, especially coming from institutional investors. So we expect that this growth to continue steadily.
Because we can always.
I agree with the clients that we will park this money in the mandates and more let's say consumer.
Conservative allocation conservative portfolio like more.
<unk> income and then migrate slowly for an ideal asset location portfolio. So that's why we continue to see this.
Does the interest and the the mandates still being done.
Done here at <unk>, and the money flowing in but in terms of margin.
We continue to see this very stable at the same levels that we saw before.
Just to complement on under Thunder.
We had a nice few years of <unk> expansion.
$18 17, 18 until until now which was associated.
<unk> with the expense.
The expansion that we signed the AUM side of the business.
This year we.
Continue to grow our AUM.
But the mix was a little bit more towards like BNS.
So the our average fee rate has not.
<unk> moved a lot in 2021, although we did get some traction on the FRE margin as well in 'twenty. One we've got an almost 200 basis points of expansion in 'twenty one.
<unk> hundred 22.
We feel that the margin expansion movement will likely be less pronounced probably a little bit more stable for you in 'twenty. Two and then we have the fund raising that we have in private markets.
That going through throughout the year, we expect.
Margins to resume expansion in 'twenty three so that's more or less how we're looking at.
The margin profile going forward.
Okay.
Okay. Thank you.
Bruno I appreciate it.
Thank you and our next question comes from the line of Ricardo.
<unk> with peak PT.
<unk>.
Practical your line is open. Please go ahead.
Yeah.
Hi, everyone and congrats on good results could you. Please call me, how we should expect for the pharmacies.
P&L this year and the reason for the lower tax rate will decline I know that there's a lot of uncertainty.
But any color would be appreciated thank you.
Okay. Thank you Ricardo for your question so in terms of performance.
I mean, obviously, we are we are we depend on how the markets perform right. So we have a lot of our funds that are accruing performance.
Now in the short term that are in the liquid side of the business.
So 2021 wasn't a particularly strong year for that for that side of our performance.
AUM.
A lot of the products have high watermarks. So it depends really on how the local markets perform as they go on the on the positive side, we started the year strong in Brazil, and the liquid side. So we had a lot of your flow.
To the market the exchange rates.
Stronger.
And also the stock market is performing better so I think to that extent if that continues throughout the year.
We will probably have a better picture from the from the liquid side of the business than we had in 2021.
What do we do have as well.
Noted that in the fourth quarter, we had some impact from.
The sale of <unk>.
Part of the of the CPU filtration. So we continue to work on divesting from the rest of that funds.
So we expect to be able to conclude that divestments.
Through the year.
We expect that to be concluded in 'twenty, two and the impact for the rest of the divestment of the funds will be similar to what we had in 'twenty. One so if we're able to sell the rest of the portfolio, we're going to have another impact of more or less the same magnitude.
In the 'twenty two distributable earnings number so.
Nutrient back to PRA, because we already had that are flowing through the balance sheet.
But on the distributable earnings is going to be a positive impact this year and we're hoping to close the rest of the sale.
This year in regards to the tax.
The majority of the explanation behind the low <unk>.
Right.
The financial income so the financial income.
It impacts are.
Our income statement.
Net of taxes, so its not a.
Taxable line.
When you look at the pretax <unk>.
Income.
That's part of the results has already been fixed so that's why the.
The tax rate's, a little bit lower than what we had last year and of course, I mean to the expanded we continue to have realized income and net realized income is flowing through the income statement. The tax rates will continue to have the same profile going forward. So.
So that's the explanation behind it <unk>.
Makes sense. Thank you.
Thank you and I'm showing no further questions at this time I'd like to turn the conference back over to Alexandra for any further remarks.
Thank you very much I would like to again.
Thank you all for the support and the questions and we hope we can deliver another year or a very.
Outstanding results like we did in 2021.
That was our first year as a public company and we are very happy to really could deliver the results that we did in line with what we thought that will be possible. During the time of the IPO. So I'd like to thank you very much and hope to see you are.
Next call.
This concludes today's conference call. Thank you for participating you may now disconnect.
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