Q1 2022 Patria Investments Ltd Earnings Call
Yes.
Good day, and thank you for standing by and welcome to the Patriot first quarter 2022 earnings Conference call.
Participants are in a listen only mode.
Just speak a presentation that will be a question and answer session.
That's a question during the session unit press one on your telephone.
Do you require any further assistance. Please press star zero I would now like to hand, the conference over to Speaker today, Josh would head of shareholder relations. Please go ahead.
Thank you.
Morning, everyone and welcome to <unk> first quarter 2022 earnings call.
Joining today are Chief Executive Officer, Alex side, and our Chief Financial Officer, Mark Rhodes about them.
Earlier. This morning, we issued a press release and earnings presentation detailing our results for the first quarter, which you can find posted on our Investor Relations website at IR Dot Patria dot com or on form 6K filed with the Securities and Exchange Commission.
Any forward looking statements made on this call are uncertain do not guarantee future performance and undue reliance should not be placed on them.
<unk> assumes no obligation and does not intend to update any such forward looking statements.
Such statements are based on current management expectations and involve inherent risks, including those discussed in the risk factors section of our latest form 20-F annual report filed in April .
Also note that no statements on this call constitute an offer to sell or solicitation of an offer to purchase an interest in any patriot bonds.
As a foreign private issuer Patria reports financial results using international financial reporting standards or Ifr S. As opposed to U S. GAAP. Additionally.
Additionally, we will report and refer to certain non-GAAP industry measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with Ifr S. Reconciliations of these measures to the most comparable measures calculated in accordance with IRS are included in our earnings presentation on.
Headline metrics actually had generated fee related earnings of $32 million and distributable earnings of $35 million or 24 per share for <unk> 22, we declared a quarterly dividend of <unk> 20 per share payable on June 16th to shareholders of record as of June 2nd with that I'll now turn the call over to our chief Exec.
<unk> Officer Alexander.
Thank you Josh good morning, everyone and we hope you are all well.
<unk> started 22 very strongly.
Delivering excellent first quarter financial results.
<unk>.
Calls to our platform.
We are on track for our 2022.
As far as any guidance.
With first quarter fee related earnings of $32 million, which are up 85% compared to the first quarter of 2021.
Distributable earnings of nearly 24 cents per share are up 90%.
Compared to the prior year quarter.
And that's our dividends to shareholders of <unk> 20 per share is up 90% as well.
Our platform is growing.
With totally you wind up 96%.
Approximately 27 $5 billion.
And fee, earning.
AUM.
136% totaling approximately $19 billion.
Driven by both organic growth and our M&A activity.
Just in the first quarter total AUM is up 16%.
And fee, earning AUM up 6%.
Which is all organic with more near that already included in the beginning Bob.
We're now seeing significant <unk>.
Inflows from fund raising.
With $1 5 billion raised in the first quarter.
Across our diverse range of products.
Putting us in a good position to raise more than $4 billion organically this year.
Including our first closing of more than $800 million for our seventh generation private equity funds.
One year ahead of expectations at the time of our IPO.
That capital is available for us to deploy immediately.
And that fund raising process will continue as we move through 2022.
In early 2023.
As we normally peak our flagship funds open for fund raising 12 to 18 months after the first closing.
We also listed our spec.
Latin American opportunity acquisition Corp.
$230 million effort.
Which gives our private equity business, a versatile pool of capital to pursue attractive investments that may not fit our flagship fund profile.
Our funds continue to perform very well.
Reflected in our net accrued performance fee balance of $503 million.
Which is up 45% just from last quarter.
<unk> doubled from one year ago.
All of this points illustrate the fatuous growth trajectory is on track and the strength of our business model allows us to maintain this momentum.
While major geopolitical events.
Gnomic policy developments have undoubtedly changed the world around us in the past few months.
Patrick continues to March forward.
And we believe our business continues to be well positioned for success in this environment.
Indeed, the current global landscape clearly make some favorable differentiation between patraeus target geography.
In America, and the rest of the world.
Latin American economies are typically net exporters of commodities.
High demand today.
Just speaks of increasing trade surpluses and stronger foreign investment inflows.
Also GOP.
<unk> political risk for the region has been historically very low.
Uncorrelated with more problematic areas.
Furthermore, there were never experiments with zero interest rates or massive quantitative easing program.
Total rooms in the region.
Which resulted in current lower leverage in public and private sectors compared with advanced patients or even other emerging markets.
Lastly.
Most Latin American economies have lower fiscal deficits.
Domestic interest rates and exchange rates that are still undervalued piece of these other geographies, which is quite suitable mix to face Dublin clients.
This is not simply for to us that the S&P Goldman Sachs <unk>.
The price index was up 34% in U S dollars year to date.
Through the end of April .
And the MSCI stock market Index for Latin America had also risen by 9%.
In the same period, the broader global MSCI index was down by 13, 5%.
Currencies fixed income and other assets were showing similar performances.
This uncorrelated Latin American performance is by no means an anomaly on.
On the contrary it has happened time and again.
Against this backdrop economically.
And investment returns in Latin America.
Outpace most of the rest of the world.
Now turning back to Patriot.
We saw strong progress across all of our major asset class verticals in the first quarter.
Both value creation and strong currency appreciation benefited the current portfolio in the quarter.
We are in the early stages of our fund raising cycle.
<unk> our platform for the next several years.
In private equity, we had more than $1 billion of AUM inflows.
Driven by the first closing of more than $800 million in our next vintage flagship funds.
As well as the spec lifting which raised an additional $230 million.
While the spike will not earn management fees by cough once.
<unk> contributes significantly to our earnings in the future to the sponsor promotes but Patrick earns in the form of shares and the resulting business combination.
The private equity portfolio continues to generate outstanding performance with fund five and six generating 32%.
27% of net <unk> in the U S dollar respectively.
Five now has accrued more than $300 million in net performance fees.
We also closed the first trench of our previously announced transaction with <unk>.
Which anchors our new growth equity strategy.
And we have kicked off our process with jointly raised our new growth equity fund.
In infrastructure the current funds continued to deliver performance.
And some great stories in the portfolio.
Infrastructure Fund III is now generating a two times multiple.
13% net IRR in U S dollars.
And how quickly ramp up its net accrued performance fees from less than $10 million one year ago to.
$110 million a day.
Infrastructure fund for as much earlier in its lifecycle, but it is generating a one seven times multiple and 30.
87% of net.
Installers.
<unk> looks to finish committing the fund's capital this year.
Our investment team continues to evaluate a pipeline of actionable projects totaling more than 25 billion.
Which by the way is more than 10 times the size of our current funds.
Most of the AUM in credit and public equities relates to our moneta product and we are off to a great start because we continue to integrate and pursue cross selling synergies.
Credit AUM is up 7% in the quarter driven by both new inflows and solid performance.
It was a challenging quarter for credit markets globally, we increasingly hawkish U S Federal reserve driving the Yieldco upwards.
And the situation in Ukraine contributing to wider credit spreads.
Despite this backdrop one of the flagship credit strategies beat their benchmarks during the period.
For example.
Our Latam high yield strategy.
Performed the benchmark by more than 320 basis points in this first quarter.
And by more than 150 basis points over the last 12 months.
As noted earlier, the Latin American region benefits from having well capitalized corporate issuance.
Many of them commodity producers, which resonates well with clients in this higher interest rate environment.
Public equities AUM increased 18% in the quarter.
Driven mostly by strong portfolio performance as.
As we saw the best quarter for Latin American Equity's since 1991.
The combination of higher commodity prices.
Depreciated currencies and.
And companies with capital expenditures discipline are producing record free cash flow, which is being distributed to respective shareholders.
Looking at the some of these parts.
See SKT and investment platform that is delivering outstanding performance for investors across a diversified range of products and asset classes.
With opportunities to expand asset classes and prove our local distribution capabilities and continue our journey to become a truly comprehensive provider alltel.
<unk> is investing in the region.
With that I'll now turn it over to Mark for more details on the results and then come back with some final thoughts on the year ahead Michael.
Thank you Alex and good morning, everyone. As Alex noted we are off to a great start in 2022, and our results clearly tailed authority.
Fee related earnings of $32 million.
First Q 'twenty two are up 85% compared to first Q 'twenty, one and up about 30% compared to last quarter when adjusting to the incentive fees revenue that is seasonal in the fourth quarter.
The FRE margin.
88% here in Q1 is a little higher than 2022 guidance, but assuming some incentive fees hitting the top line in Q4, we still expect the full year margin to be in the low to mid 50 range.
Management fee revenue.
The $4 million is that 74% compared to first Q 'twenty one.
And also up about 30% compared to last quarter.
Reflecting both the full impact of ammonia as well as incremental feet on the $750 million, we deployed in our drawdown funds in the second half of 2021.
We are an incentive fee on certain more made upfront as well.
Our pipeline, which are measured and realized each year relative to performance against the benchmark.
And most of which are realized in the fourth quarter.
As of March 31, we have accrued approximately $4 $2 million and incentive fees at current performance levels.
On the cost side personnel expenses of $15 1 million are up 46% from first Q 'twenty one and.
And up 36%.
From <unk> 'twenty one.
Mostly reflecting the addition of Moneda team.
To put in context.
And FRE compensation ratio, we expect personal expenses in 2022 to ultimately be around 30% of net revenue.
Looking below FRE, we generated $4 8 million in net financial income in first Q 'twenty, two driven by both realized and unrealized gains.
Mostly attributable to the balance sheet investment in our infrastructure core fund launched last year.
On corporate taxes, our effective rate for Q1 was approximately 5% on pretax distributable earnings.
As we noted in the past.
We expect this rate to gradually rise to around 10% over the course of 'twenty, two and 'twenty three.
Our net accrued performance fees again rose to a new record high of $503 million up significantly from 348 million last quarter.
Driven by both positive valuation impact and the improvement in the local currency rates during the quarter.
The accrual now equates to more than $3 40 per share and is becoming more diversified each quarter as firms like infrastructure fund III and private equity from six continue to progress alongside private equity fund five.
We believe our current valuation is getting very little credit for these embedded value to be monetized in the future period.
AUM of 27.6 building is that 96% compared to one year ago, driven not just by the addition of <unk>, but also by $1 $5 billion fundraising inflow and more than $3 6 billion of valuation and currency gain.
The AUR is up 16% just in the first quarter with both the resurgence of fund raising activity and the positive move in the FX rate.
Fee earnings AUM of $19 billion is 136% compared to one year ago with about 30% of that increase in organic and driven by our strong deployment pace in 2021.
Fee, earning AUM was up 6% compared to December 31.
Our flagship fund.
The net deployment from the second half of 2021, and we saw some nice appreciation in our credit and public equity profit.
As we look the remainder of the year you heard our message that FRE guidance is on track.
A 50% increase from the 86 million generated in 2021 equates to just under $130 million for 2022.
For perspective annualize in just the Q1, <unk> result of $32 million would imply year over year FRE growth of 48%.
That does not yet account.
For any FRE growth throughout the year as we deploy capital more does it account for any incentive fee, which would be crystallized in Q4.
We don't guide on performance related earnings because it's simply too difficult to predict exit timing, but one thing is clear our portfolio continues to generate gain for our investors and accrue a larger inventory of performance fees where shareholders.
Private equity and infrastructure fund III are more mature and beginning their divestment cycle.
And these funds have multiple paths.
To return capital and satisfy the waterfall trash hold necessary to begin realizing the accruals.
The timing and pace of divestment activity will determine when we reach that point and.
And we will have to see how that progresses during the year.
To conclude I'm very pleased with our results for the quarter and our trajectory toward another great year I will now turn it back to Alan for closing thoughts.
Thank you Marco.
As Patrizio will build on our reputation of stressed as long term investors and likewise, we have a long term vision and mindset for what Patrick can become in the future.
Along the way we believe there is tremendous value for shareholders as we scale and expand the platform and grow our earnings.
Capacity.
We're also excited about the timing in Latin America, as we think the region stands out as a particularly attractive investment destination for global investors give.
Given the emerging challenges elsewhere in the world.
Our top priority is always in investment performance.
Because that is the core of what we do.
And it drives every other element of our business.
With that as a consequence, we have a few key areas of focus this year.
Number one is <unk>.
R E execution.
We are in year, two as a public company and.
And our management team is highly focused on delivering our guidance.
And as demonstrated by our first quarter results.
We are well on track.
Number two is fund raising for our growing suite of products.
Our team is hard at work, creating the remainder of our newest flagship private equity fund.
Soon to be followed by flagship infrastructure.
Which would effectively reload our dry powder for.
For several years to come.
Number three.
As divestment progress.
Our professionals are.
Our searching for great deployment opportunities as always.
But also particularly focused on divestment opportunities and more mature funds like private equity five.
And already for a relatively young fund like infrastructure III.
Divestment progress of course returns capital to our Lps.
Which helps fund raising efforts and also brings us closer to monetizing the substantial accrued performance fees in those funds.
And finally number four <unk> platform expansion through M&A.
Our team continues to evaluate and pursue a number of interesting targets, which could be a great fit for the <unk> platform.
And enhanced product offering geographic expertise and local distribution capability.
We will be focused not just on increasing the size of our platform <unk>.
Joining with partners, we can expand our collective investing expertise and the ability to generate alpha for our clients.
We hope and expect to have more specific news to share on that front soon.
As we execute on these fronts, we will continue to deliver significant value to our shareholders.
<unk> finished the year with an even larger platform position to deliver significantly higher distributable earnings in the coming years through both.
Related to earnings and performance fees.
Thank you all for joining yesterday.
And we are now happy to take questions.
As a reminder to ask a question unit to press Star one on your telephone.
To withdraw your question just for instance, okay.
Once again questions for questions.
Our first question will come from Marcello Telles from credit Suisse.
Davidson.
Hi, good morning, everyone and congratulations on the on the very strong results.
I have two questions.
First one regarding your fund raising activity I mean, congrats first closing on our next generation fee funds.
And my question with that regard is how do you see.
That play out going forward is this amount.
Yes.
Better.
Are in line with your expectations has the.
Volatile environments.
Affected in any way, let's say the timing of your fund raising or maybe not.
It also commutation.
Nearly $450 million.
In fund raising of Moneda.
And if you could dig a little bit deeper in understanding how much of that was related to potential.
Synergies with.
With posture or if this was really more related to.
Investors.
Before like higher yielding vessels as you comment a little bit in our initial remarks, so it'd be great to understand that and and the other the other question with regards your.
Divestments going forward.
We've seen.
A big increase.
In M&A.
Transactions.
In Brazil.
In this environment.
I think that.
It facilitates.
Our ability to to.
To divest.
22 can expect something I know you don't give formal guidance.
For that but how should we think about your divestment schedule.
It is higher M&A environment. Thank you.
Okay, Hi, Marcello Hawaii. This is Alex <unk> speaking.
For joining us this morning.
Are you.
Nice to talk to you over the phone again and hope to see you in person soon.
Again so.
Going back to your first question on fund raising for private equity seven.
As far as timing and expectation.
I think we're right right, there, where we want to be.
Very aligned with previous Fundraisings.
For private equity six five et cetera going back in time.
We normally have a first close which is.
Approximately 25% to 35%.
Of what we announced a few one off fund rates.
In this case, we have on the cover of our prospectus three.
$3 5 billion with an upside case of over for the close.
In our industry here they call it a hard cap.
But little over four.
So no 800 and something million dollars over the $3 5 billion.
The math that the industry does a PPI.
So our first goes we're right on track.
We do normally.
Yes.
Past fundraising processes.
<unk>.
The fund.
The fund raising mode.
<unk> to 18 months after the first close so.
We have all the way to <unk>.
Saturday here, but technically speaking all the way through October of next year, which is 18 months from March to fund raise for private equity sponsor.
And.
We were seeing.
A good market to fund raise and I think it changed over the over the end of last year to the beginning of this year to the better.
For Latin America, as a whole I would say in <unk>, we are the leading alternative housing Latin America.
If you go back I think Marcello.
18 months 24 months.
The region was down.
On treating COVID-19 and we had low vaccination programs in the region.
Some of the leaders in the region were.
The question by the market as they were going to be fiscally disciplined et cetera.
<unk> turned that movie that video there for 24 months and you get back to today I think most of these macro questions have been answered positively for the region as you know.
And in addition, we will already see commodity cycle upswing.
As of the second half of 2021.
Which helped the region of course, because no. Most countries are in networks borders of commodity getting to the Ukraine, Lord that nobody of course wanted to have this war ongoing but it did benefit the region.
Because of the low geopolitical risks and the commodity prices also.
Continuing to strengthen.
So on the macro side I think the situation turned to our side.
And in addition, when you.
When you double double click there as far as partially is concerned.
Have a great funds prior private equity funds with over 30% net dollars and so a lot of re ups all of our current LP from this first close we're going to have another close in the second quarter.
This year.
Keep on going.
What is the.
Some of the backslash on fundraising which is.
Good reason, but it's the backslash.
The industry has been performing extremely well you probably know the private markets in 2000 22021 had record <unk>.
BPI has.
A hole.
In general.
So investors are extremely happy with the asset class.
No all of the.
Alternative assets in this big private market asset classes.
Most of the asset classes within private markets performed extremely well.
Over the last two years.
What happened and it's a good problem to have but it's a problem investors know then.
In their portfolios are over allocated to private markets because it's public markets don't actually go up will come one come down and private markets go up substantially as it did over 21 and 2020.
Location of the percentage of the portfolio allocated to private markets increased and sometimes it actually went over what theoretically.
Had approved by the respective boards pension funds sovereign fund et cetera.
So most of our.
Clients are having to go back to the board saw investment committees and approve a higher allocation to private markets.
It's a good problem to have but again.
It is the whole process takes a little longer et cetera.
B, we have no risk based and of course higher competition because the hold no a lot of other funds also performed very well in 2020 in 2021, so even though the performance of our funds.
The highest ever to be honest when five or six other funds also performed well in other parts of the world.
What's going on.
When we come into 2022.
And the geopolitical risks that happened because of the Ukraine War.
The actions that geopolitical risk increase because of the new nuclear and won several Investor then went back to look at Latin America.
<unk> base to invest because everything that I just said so.
Think again.
I started with the conclusion here.
On track with our fundraising pace.
Yes.
What we wanted to raise in our first goals was what we did raise.
800 out of $3 5 billion, which is on the cover of our perspective is exactly the textbook fundraising case.
Happy and we are already having a second close in the second quarter.
And then gave you a double click I think there's two forces going on here in Latin America in general has been.
On on the move to attract.
Pension fund investors.
But at the same time the industry performed extremely well over the last two years, which is a good problem to have but we have.
Tougher competition in the fund region.
So these are the forces going on here then you asked about the momentum.
Our note.
Suddenly some synergies with moneda have not actually kicked in yet or did in a general sense now having patria ammonia that together.
Vessels are very very happy with that combination, but we haven't seen a lot of the long.
Long term institutional investors already convert because we didn't have a lot of time as we did actually.
Combined the businesses in late last year.
There was not enough time to then.
Officially technically legally been able to go on the road together on the already have.
Positive inflows in the first quarter. So we're going to see this kick in as we move into 2022.
So I was very impressed to be honest with the amount of money that <unk> raised in the first quarter and it has to do with performance.
Of course, it has to do with their relationships and they have great relationships with very great.
Sizable institutional clients all over the world and of course, <unk> as well, but performance I think attracted a loss.
The.
The inflows.
I mentioned during my speech here that no.
Equity funds performed extremely well in the quarter and.
Credit funds, which was not an easy market performed extremely well noise I mentioned.
300, something basis points over the benchmark in the first quarter and.
800 something basis.
Over a longer period of time before credit funds that substantial.
Alpha.
On the divestment side.
We're definitely turned the knob to divestments and on a macro sense. What did we do last year, we were pressing the pedal on investments because we had.
Ebitdas that were hurt because of Covid.
So we also have lower multiples because of the whole situation that I. Just described it as kind of a question Mark over Latin America debt got it raised over the latter part of 'twenty, one beginning of 'twenty two.
And we also have the weaker currencies in the region.
So we turned them off to investments and we had our record year for investments as you know as we've come into 2022, we turned the knob on the focus to divestments Tonight.
Because again.
Do you see things that I just mentioned tons.
In favor of divestments, we have stronger local currency so.
The dollar denominated funds do show better returns.
Half the Colgate kind of uncertainty is kind of out of the table because of the very successful vaccination program as the economies are growing again.
Fiscal discipline from the leaders in the region.
The main dealers in the region et cetera.
Favoring the reach and as you said very active M&A activity in 2022.
So we are using that.
General situation that favors divestments to actually then.
So several of our companies in the private equity and infrastructure portfolio.
So we're very happy with where we are.
We have to be honest silver 15 company that we actually have a sale process going on and a portfolio of 35.
10 of those are very recent investments.
Like 15 out of 25 companies that we are actively pursuing the divestments, which is.
<unk> was two thirds of the portfolio.
Those are the situations that I described and that you alluded to as well given the active M&A F 15, the region most of that.
This upcoming.
It's coming from.
<unk> global investors are willing to invest in the region.
So we did sell earlier this year for example in the private equity portfolio, we build a new living elders.
Elderly leading company for the largest company in the world to see.
It's a French company that is listed in the cloud as the stock exchange.
And so we've seen we have no.
Infrastructure assets being sought after by global strategic players.
<unk>.
Over 90% of the interest that we received for our portfolio companies the ones that I've mentioned.
In the process of being sold we see interest from global strategic investors that are willing to invest in the region.
I Hope my long answer to your question, but I hope I've addressed all of your points.
No you did address thank you so much on.
Theyre very detailed answers and congratulations on the result.
Again, great started the year.
Thank you.
Thank you. Our next question will come from the line Peter.
From Goldman Sachs you may begin.
Hi, Good morning, Alex <unk> from Goldman.
For the call off congratulations solid results for the year.
My question is on the deployment. So just wanted to see how you think about.
The ability to deploy capital.
In the current market environment, you highlighted yet to deploy around 2 billion over the last 12 months.
Quarter was only $55 million and mostly in others and that in private equity and infrastructure.
Where do you see opportunities to deploy capital any particular industry just given the current market environment.
You think about that outlook.
Well. Thank you nice talking to you again and thanks for participating in our call.
We still keep the the $2 billion kind of guideline for investments this year as I think we mentioned earlier.
It's.
Several I think very interesting opportunities.
As we move along on the private equity side.
Aggregate business in health care of the two verticals that we.
We see a lot of things.
We would love to invest.
In addition.
Logistics improved.
So these are the four sectors in this kind of order.
Agribusiness as you know have been has been booming in the region in Brazil, specifically because of the strength of the agribusiness in that country.
Healthcare foods.
In logistics start in all sectors that are.
Also performing well.
You probably know that the economies in the region half.
Then actually beating some of the expectations.
As you probably know even Brazil, but I think the general consensus was.
<unk> was going to retract this year I think most of the economies that are on it.
In the region, and specifically, Brazil are changing their expectations to a growth scenario, 1% to 2% growth and we can see that I think.
Our companies performed very well, most specifically private equity companies that has more to do.
With.
The performance of the economy, the infrastructure assets most of them have contracted already revenue rates when you when you're participating in a knock vanity auction and whatever.
Some of the private equity side no. We finished the first four months of the year.
Revenues of all the companies if you add all of the companies.
Or a little bit above budget, and we have and we had a very aggressive budget given that we were.
Foreseen and expecting.
A return from concrete.
The levels.
So we are happy to see that of course, some companies performing better or the companies performing not nuts.
Aligned with budget, but I think we're like we are.
Like plus 7% to minus three 4% for budget, so no variances, but not a lot of that is not like one companies plus 50% of the other companies minus 50% plus seven minus <unk>, 4% from budgets.
And we're very happy to see that number.
For the month four months of 2022.
On the infrastructure side, I think energy continues to be a great focus of ours as logistics as well from the infrastructure side for example.
The toll roads et cetera.
No I'm very keen to continue to invest we have.
A great year in that sense with no great toll roads. The auctions in 2022 23 that are our team as we are.
Focusing on that sector to continue to invest so the $2 billion kind of guidance continues to be our.
Eternal.
Base.
And Youll, probably see a pickup in the second quarter and going forward.
Thank you.
And just to complement Tito this is Marco good morning.
Sure.
The way, we allocate our deployment implies that we've reserved to get to them get into execution. So theres been a lot of execution of underlying M&A activity going on in the quarter that doesn't really show up on the bridge.
The M&A teams have been very very active on the execution of the investment thesis is that Alex alluded to.
Great. Thank you Alexandra and macro that's helpful. Yeah, I guess I was kind of answers my.
Follow up I think it was anything else specific in <unk> that you get into quite microwave suggests that you're kind of active in M&A that you mentioned or was there anything else in the quarter.
You didn't allow you to deploy that cash.
Okay.
No. It was there was no real big reason to be honest I think it was just <unk>.
Renegotiations going on I think that's.
When.
Our expectations of value versus sellers.
There was but there was no specific reason to be honest I think it was normal process that sometimes.
It just jumps from one quarter to the other but but I don't see any no.
Decreasing and the momentum.
The investment base.
Great. Thank you Alex.
And once again Thats star one for a question Star one.
Our next question comes from the line of Robert Lee from <unk>. Your line is open.
Great. Thanks, Good morning, Thanks for taking my questions.
I apologize if you went over this earlier I got to the call a little late but could you update us on where you are within profile since pretty much deployed and reserved on.
And for <unk>.
For I believe.
And then also any update on your new growth equity strategy that you are launching.
Receptivity, there and expectations there.
Yes of course this is Alex again.
Excluding coal.
Of course I think.
On April five.
<unk>.
They're very much in line with them.
Our new schedules.
Kind of a head wind.
One year ahead of our schedule that we have.
Define that during our IPO process. So we're going to start fund raising next year, we were expecting to start fundraising in 'twenty four 'twenty five.
<unk>.
What we.
We are building this momentum and interestingly, we're already having a lot of.
Lp's asking us on when the next Super fund is going to come on to market.
There's not a lot that are actually very few opportunities or opportunities for investors to expose themselves to the real assets for the infrastructure sector in Latin America, and we are definitely the number one in that sense, So happy to see it and no reserve a reverse inquiry.
<unk> four <unk> five on the way that we will now building the whole case here.
We are also actively divesting several of our.
Infrastructure assets.
As we mentioned during the call.
And that actually builds momentum too.
Drive money back to investors increase our DPI indicator.
Returns of the funds are looking great.
So we are we have all of this now planning phases several processes going on in order to maximize.
The whole.
Probability.
<unk> is a very strong infrastructure.
Next year, so if everything goes as planned which is no returns of continuous.
<unk> to be strong as they are as you saw in the first quarter for infrastructure number two we continue to.
To deploy money in very interesting auctions.
And then the other infrastructure assets that I think we're very convinced that we will and number three we managed to sell the assets that are already on sitting on sale can just going to be good news on the infrastructure side on the divestment front. This year. So all of that builds no momentum too and we are receiving already reverse inquiries on all.
Fundraising process went into supply so as we go into market in 2023, we have for all of the Kpis. So that in the right place investments divestments DPI.
And returns all looking good.
For a great process.
And I'm very confident on fund raising point for five and I think we are.
Really building great momentum there and again.
Sure.
We are one of the.
Few options and the best options for investors to get exposed to the very active.
The division and concessions sector in general and Latin America.
As a private equity growth is concerned.
Our.
Fundraising process here on data looked like we're going to have a fundraising this quarter.
First close for the fund also looking very strong.
As you know we plan to raise the $200 million, which is the number that we actually did.
Announced that was.
Already aligned with the come out of the partners.
The way that I see it today.
No.
Very good chance.
So we're going to reach the number of beat the number.
I can take the first close within this quarter.
In line with our expectations and the expectations of our Lps and I'll come out of the partners.
We already kind of invest in the fund as we speak so that also pushes.
On fund raising on the good side because investors.
We're actually managing to see some of the assets.
Already in the funds.
Already have three assets in the fund and we already know signing.
<unk> will use.
For another couple of assets in that also.
On private equity growth not on not for not for private equity buyouts or infrastructure development that doesn't work that way but.
For.
Fund raising for private equity growth already having some assets.
The firm helps the fund raising process. So we already have the assets and the funding and actually going to have another too as we fund rates.
In the next quarter so.
I am confident there as well of course 200 million given the size of things within Patria.
It's important on this on the strategic side and because of the performance fees that actually discipline generally.
Not doesn't move much of a needle on the management fees on the 200 million.
But I think the whole process of having <unk>.
<unk> targets that part of the lifecycle of the company in the early part of the lifecycle of the company and the potential performance fees that such funds do realize.
Very important to us thank you.
Great that was it thanks for taking my question.
I'll answer your question.
Thank you and I'm not showing any further questions in the queue.
Ill it back over to Alex <unk> for any closing remarks.
Yes.
No. Thank you very much everyone and thanks, Rob also for your question Bill.
From K VW, Thanks, a lot.
For all of your participation and questions I think we are of course.
More than available after the call to keep on taking our questions hope to see you guys in person very soon.
Hope all of you are well your families are well.
And thanks, Josh Mark with well for the call.
If Georgia market doesn't have anything else to add here I think we are.
That said Josh.
So thank you very much guys have a good day.
<unk>.
Thank you everyone. Thank you have a good day.
This concludes today's conference call.
You may now disconnect everyone have a great day.
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Good day, and thank you for standing by and welcome to the Apache of first quarter 2022 earnings Conference call.
All participants are in a listen only mode. After the speaker presentation, there will be a question answer session.
To ask a question during the session unit press one on your telephone.
If you require any further assistance please press star zero.
Like to hand, the conference over to Speaker today, Josh would head of shareholder relations. Please go ahead.
Thank you good morning, everyone and welcome to <unk> first quarter 2022 earnings call.
Joining today are our chief Executive Officer, Alex side, but our Chief Financial Officer, Mark <unk>.
Earlier. This morning, we issued a press release and earnings presentation detailing our results for the first quarter, which you can find posted on our Investor Relations website at IR Dot Patria dot com or on form 6K filed with the Securities and Exchange Commission.
Any forward looking statements made on this call are uncertain do not guarantee future performance and undue reliance should not be placed on them.
<unk> assumes no obligation and does not intend to update any such forward looking statements.
Such statements are based on current management expectations and involve inherent risks, including those discussed in the risk factors section of our latest form 20-F annual report filed in April .
Also note that no statements on this call constitute an offer to sell or solicitation of an offer to purchase an interest in any Patriot bank.
As a foreign private issuer actuary reports financial results using international financial reporting standards or <unk> as opposed to U S. GAAP. Additionally, we will reporting refer to certain non-GAAP industry measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with <unk>.
Reconciliations of these measures to the most comparable measures calculated in accordance with IRS are included in our earnings presentation.
Headline metrics actually are generated fee related earnings of $32 million.
And distributable earnings of $35 million or 24 per share for <unk> 'twenty two.
We declared a quarterly dividend of <unk> 20 per share payable on June 16th to shareholders of record as of June 2nd with that I'll now turn the call over to our Chief Executive Officer, Alex <unk>.
Thank you Josh good morning, everyone and we hope you are all well.
<unk> started 22 very strongly.
Delivering excellent first quarter financial results and significant new inflows to our platform.
We are on track for our 2022.
Our revenue guidance.
With first quarter fee related earnings of $32 million, which are up 85% compared to the first quarter of 2021.
Distributable earnings of nearly 24 cents per share are up 90%.
The prior year quarter.
And thus our dividends to shareholders of <unk> 20 per share is up 90% as well.
Our platform is growing.
With totally you wind up 96% totaling.
The opening of approximately 27 $5 billion.
And fee, earning AUM of 136% totaling approximately $19 billion.
Driven by both organic growth and our M&A activity.
Just in the first quarter total AUM is up 16%.
And fee, earning AUM up 6%.
Which is all organic with more near that already included in the beginning about.
We're now seeing significant AUM inflows from fund raising.
With $1 5 billion raised in the first quarter.
Across a diverse range of products.
Putting us in a good position to raise more than $4 billion organically this year.
Including our first closing of more than $800 million for our seventh generation private equity funds.
One year ahead of expectations at the time of our IPO.
That capital is available for us to deploy immediately.
And that fund raising process will continue as we move through 2022.
And in early 2023.
As we normally keep our flagship funds opened for fund raising 12 to 18 months after the first closing.
We also listed our first spec.
Latin American opportunity acquisition Corp.
$230 million of effort.
Which gives our private equity business, a versatile pool of capital to pursue attractive investments that may not fit our flagship fund profile.
Our funds continue to perform very well.
Reflected in our net accrued performance fee balance of $503 million.
Which is up 45% just from last quarter.
It has doubled from one year ago.
All of this points illustrate that Patras growth trajectory is on track and the strength of our business model allows us to maintain this momentum.
While major geopolitical events and economic policy developments have undoubtedly changed the world around us in the past few months.
Patrick continues to March forward and.
And we believe our business continues to be well positioned for success in this environment.
Indeed, the current global landscape clearly makes a favorable differentiation between patraeus target geography lab.
Latin America, and the rest of the world.
Latin American economies are typically net exporters of commodities.
A high demand today.
Which speaks of increasing trade surpluses and stronger foreign investment inflows.
Also <unk>.
<unk> political risk for the region has been historically very low.
Uncorrelated with more problematic areas.
Furthermore, there were never experiments with zero interest rates or massive quantitative easing programs in the region.
Which resulted in current lower leverage in public and private sectors compared with advanced patients or even other emerging markets.
Lastly.
Most Latin American economies have lower fiscal deficit.
Higher domestic interest rates and exchange rates that are still undervalued piece of these other geographies, which is quite suitable mix to face turbulent sites.
This is not simply for to us that the S&P Goldman Sachs.
Moderately priced index was up 34% in U S dollars year to date.
At the end of April .
MSCI stock market Index for Latin America had also risen by 9%.
In the same period, the broader global MSCI index was down by 13, 5%.
Currencies fixed income and other assets were showing similar performances.
This uncorrelated Latin American performance is by no means an anomaly.
On the contrary it has happened time and again.
Against this backdrop of economic activity and investment returns in Latin America.
Outpace most of the rest of the world.
Now I'll turn it back to Patriot.
We saw strong progress across all of our major asset class vehicles in the first quarter.
Both value creation and strong currency appreciation benefited the current portfolio in the quarter.
And we are in the early stages of our fund raising cycle that the reload our platform for the next several years.
In private equity, we had more than $1 billion of AUM inflows.
Driven by the first closing of more than $800 million in our next vintage flagship funds.
As well as the spec listing which raised an additional $230 million.
While the spec will not earn management fees iconic ones.
Can contribute significantly to our earnings in the future to the sponsor promotes but Patrick earns in the form of shares and the resulting business combination.
The private equity portfolio continues to generate outstanding performance with fund five and six generating 32%.
27% net <unk> in U S dollar respectively.
One five now has accrued more than $300 million in net performance fees.
We also closed the first trench of our previously announced transaction with <unk>.
Anchors, our new growth equity strategies.
And we have kicked off our process with jointly raised our new growth equity fund.
In infrastructure the current funds continue to deliver performance.
And some great stories in the portfolio.
Infrastructure Fund three is now generating a two times multiple.
13% net IRR in U S dollars.
It has quickly ramped up its net accrued performance fees from less than $10 million, one year ago to $110 million a day.
Infrastructure fund for as much earlier in its lifecycle, but it is generating a one seven times multiple and 37% net.
Installers.
Team looks to finished committing the fund's capital this year.
Our investment team continues to evaluate a pipeline of actionable projects totaling more than 25 billion.
Which by the way is more than 10 times the size of our current funds.
Most of the AUM in credit and public equities relates to our many other products and we are off to a great start because we continue to integrate and pursue cross selling synergies.
Credit AUM is up 7% in the quarter driven by both new inflows and solid performance.
It was a challenging quarter for credit markets globally with the increasingly hawkish U S Federal reserve driving the yield curve upwards.
And the situation in Ukraine contributing to wider credit spreads.
Despite this backdrop one of the flagship credit strategies beat their benchmarks during the period.
For example.
Our Latam high yield strategy.
Outperformed the benchmark by more than 320 basis points of this first quarter.
And by more than 150 basis points over the last 12 months.
As noted earlier, the Latin American region benefits from having well capitalized corporate issuance.
Many of them commodity producers.
Which resonates well with clients in this higher interest rate environment.
Public equity AUM increased 18% in the quarter.
Driven mostly by strong portfolio performance.
As we saw the best quarter for Latin American Equity's since 1991.
The combination of higher commodity prices.
Depreciated currencies and.
And companies with capital expenditures disciplined are producing record free cash flow, which is being distributed to respective shareholders.
Looking at the some of these parts.
See SKT and investment platform that is delivering outstanding performance for investors across a diversified range of products and asset classes.
With opportunities to expand asset classes and prove our local distribution capabilities and continue our journey to become a truly comprehensive provider of alternatives investing in the region.
With that I'll now turn it over to Mark for more details on the results and then come back with some final thoughts on the year ahead.
Michael.
Thank you Alex and good morning, everyone as Alex noted we're off to a great start in 2022, and our results clearly tell the story.
Fee related earnings of 32 million.
First Q 'twenty two are up 85% compared to first Q 'twenty, one and up about 30% compared to last quarter when adjusting to the incentive fees revenue that is seasonal in the fourth quarter.
The FRE margin of 58% here in Q1 is a little higher than 2022 guidance, but assuming some incentive fees hitting the top line in Q4, we still expect the full year margin to be in the low to mid 50 range.
Management fee revenue of $54 $6 million is that 74% compared to first Q 'twenty one and.
And also up about 30% compared to last quarter.
<unk>, both the full impact of more labor as well as incremental feet on the $750 million, we deployed in our drawdown in the second half of 2021.
We earn incentive fees on certain moneda.
As well.
Our pipeline, which are measured and realized each year relative to performance against the benchmark.
And most of which are realized in the fourth quarter.
As of March 31, we have accrued approximately $4 $2 million and incentive fees at current performance levels.
On the Hawkeye personal expenses of $15 1 million are up.
46% from first Q 'twenty one.
36%.
From <unk> 'twenty one.
Mostly reflecting the addition of Moneda team.
To put in context.
In FRE compensation ratio, we expect personal expenses in 2022 to ultimately be around 30% of net revenue.
Looking below FRE, we generated $4 8 million.
Net financial income in first Q 'twenty, two driven by both realized and unrealized gains.
Mostly attributable to the balance sheet investment in our infrastructure core fund launched last year.
On corporate taxes, our effective rate for Q1 was approximately 5% on pretax distributable earnings.
As we noted in the past.
We expect this rate to gradually rise to around 10% over the course of 'twenty, two and 'twenty three.
Our net accrued performance fees again rose to a new record high of $503 million up significantly from $348 million Walker.
Driven by both positive valuation impact and the improvement in the local currency rate during the quarter.
The accrual now equates to more than $3 40 per share and is becoming more diversified each quarter as firms like infrastructure fund III and private equity from six continue to progress alongside private equity fund five.
We believe our current valuation is getting very little credit for these embedded value to be monetize in the future period.
AUM of 27.6 building is that 96% compared to one year ago, driven not just by the addition of Malaysia, but also by one $5 billion fund raising inflows and more than $3 6 billion of valuation and currency gain.
The AUM is up 16% just in the first quarter with both the resurgence of fund raising activity and the positive move in the FX rate.
Fee earnings AUM of $19 billion is 136% compared to one year ago with about 30% of that increase in organic and driven by our strong deployment pace in 2021.
Fee, earning AUM was up 6% compared to December 31, as our flagship fund added the net deployment from the second half of 2021, and we saw some nice appreciation in our credit and public equities.
Yeah.
As we look the remainder of the year, you've cleared over a message that FRE guidance is on track.
A 50% increase from the 86 million generated in 2021 equate to just under $130 million for 2022.
For perspective annualize in just the Q1, <unk> result of $32 million would imply year over year FRE growth of 48%.
That does not yet account.
For any FRE growth throughout the year.
We deploy capital more does it account for any incentive fee, which would be crystallized in Q4.
We don't guide on performance related earnings because it's simply too difficult to predict exit timing, but one thing is clear.
Our portfolio continues to generate gains for our investors and accrue a larger inventory of performance fees or our shareholders.
Private equity and.
An infrastructure fund III are more mature and beginning their divestment cycle.
And they spent have multiple paths.
To return capital and satisfy the waterfall trackable necessary to begin realizing the accruals.
The timing and pace of buyback activity all determining when we reach that point and.
And we will have to see how that progresses during the year.
To conclude I'm very pleased with our results for the quarter and our trajectory toward a model great year I will now turn it back to Alan for closing thoughts.
Thank you Marco.
As Patrizio will build on our reputation of stressed as long term investors and likewise, we have a long term vision and mindset for what Patrick can become in the future.
Along the way we believe there is tremendous value for shareholders as we scale and expand the platform and grow our earnings.
Capacity.
We're also excited about the timing in Latin America, as we think the region stands out as a particularly attractive investment destination for global investors give.
Given the emerging challenges elsewhere in the world.
Our top priority is always investment performance.
Because that is the core of what we do.
And it drives every other element of our business.
With that as a consequence, we have a few key areas of focus this year.
Number one is <unk>.
Our execution.
We are in year, two as a public company and our management team is highly focused on delivering our guidance.
And as demonstrated by our first quarter results.
We are well on track.
Number two is fund raising for our growing suite of products.
Our team is hard at work, creating the remainder of our newest flagship private equity fund.
Soon to be followed by flagship infrastructure.
Which were effectively reload our dry powder.
For several years to come.
Number three.
The divestment progress.
Our professionals.
Our searching for great deployment opportunities.
Luis.
But also particularly focused on divestment opportunities and more mature funds like private equity five.
And already for a relatively young fund like infrastructure III.
Divestment progress of course returns capital to our Lps.
Which helps fund raising efforts and also brings us closer to monetizing our substantial accrued performance fees in those slots.
And finally number four <unk> platform expansion through M&A.
Our team continues to evaluate and pursue a number of interesting targets, which could be a great fit for the <unk> platform.
And enhanced product offering geographic expertise and local distribution capability.
We will be focused not just on increasing the size of our platform.
But joining with partners, who can expand our collective investing expertise and the ability to generate alpha for our clients.
We hope and expect to have more specific news to share on that front soon.
As we execute on these fronts, we will continue to deliver significant value to our shareholders.
And finished the year with an even larger platform position to deliver significantly higher distributable earnings in the coming years through both fee related earnings and performance fees.
Thank you all for joining yesterday.
And we are now happy to take questions.
As a reminder to ask a question unit to press Star one on your telephone.
To withdraw your question just for us to key.
Once again questions for questions.
Our first question comes from Marcello Telles from credit Suisse.
Yeah.
Hi, good morning, everyone and congratulations on the on the very strong results.
I have two questions.
First one regarding your fund raising activity <unk> had.
Plus first closing on our next generation fee funds.
And my question with that regard is how do you see.
That play out going forward is this amount.
Yes.
Better that are in line with your expectations has the.
Volatile environment.
No effect in any way the timing of their fund raising or maybe not and it also commutation.
Nearly $450 million.
In fund raising of Moneda.
And if you could dig a little bit deeper in understanding how much of that was related to potential.
Seniors is with.
Yes.
Or if this was really more related to.
Investors.
Before like higher yielding vessels as you comment a little bit in our initial remarks, so it'd be great to understand that and the other the other question with regards your.
Bypass spreads going forward.
We've seen.
A big increase.
In M&A.
Transactions.
In Brazil and Latam.
This environment do you think that.
It facilitates.
Your ability to do that.
Divest.
In 'twenty two can expect something I know you don't give formal guidance for.
But harsh.
Should we think about your divestments category.
It is higher M&A environment. Thank you.
Okay, Hi, Marcello Hawaii. This is Alex <unk> speaking.
For joining us this morning.
Are you now.
Nice to talk to you over the phone again and hope to see you in person soon.
Again so.
Going back to your first question on fund raising for private equity seven.
As far as timing and expectation.
I think we're right right, there, where we want to be in a very.
Very aligned with previous Fundraisings.
For private equity six five et cetera going back in time.
We normally have a first close which is.
Approximately 25% to 35%.
Of what we announced a few one off fund rates.
In this case, we have on the cover of our prospectus three.
$3 5 billion with an upside case of over four they closed.
In our industry here they call it a hard cap.
But a little over four.
So no 800 and something million dollars over the $3 5 billion.
The math of the industry does a PPI for our first closed we're right on track.
We do normally.
Yes.
The past fundraising processes.
The fund.
In a fund raising mode 12 to 18 months after the first close.
We have all the way to run.
Saturday here, but technically speaking all the way through October of next year, which is 18 months, what March to fund rates, where private equity sponsor.
Yeah.
We were seeing.
A a good market to fund raise and I think it change.
Over the over the end of last year to the beginning of this year to the better.
For Latin America, as a whole I would say it for battery as we are the leading alternative housing in Latin America.
If you go back I think Marcello.
18 months 24 months.
The region was doing knock on us on treating Covid and we had low vaccination programs in the region and some of the leaders in the region were.
Being questioned by the market if there were going to be fiscally disciplined et cetera.
Ill turn that movie that video there for 24 months.
Get back to today I think most of these macro questions have been answered positively quarter region as you know.
And in addition, we will already see commodity cycle upswing.
As of the second half of 2021, which helped the region of course, because no. Most countries you are net exporters of commodity getting to the Ukraine, Lord that nobody of course wanted to have this war ongoing but it did benefit the region because of the low geopolitical risks than that.
Commodity prices also.
Continuing to strengthen.
So on the macro side I think the situation turned to our side.
And in addition, when you.
When you double double click there as far as pricing is concerned.
No great funds.
Private equity funds with over 30% net dollars and so a lot of re ups on our current Lp's first close we're going to have another close in the second quarter of this year.
And keep ongoing.
What is the.
Hum.
Some of the backslash on fundraising which is.
Good reason, but it's the backslash I think.
The industry has been performing extremely well you probably know the private markets.
2000, 22021 had record <unk>.
DPI as a whole.
In general.
So investors are extremely happy with the asset class.
Putting all of the.
Alternative assets in this big private market asset classes.
Most of the asset classes within private markets performed extremely well.
Over the last two years.
What happened and it's a good problem to have but it's a problem investors now then.
In their portfolios are over allocated to private markets because it's public markets don't actually go up will come on come down and private markets go up substantially as it did over 'twenty one 2020.
Location of the percentage of your portfolio allocated to private markets increased and sometimes it actually went over whats you are radically.
Had approved by the respective boards pension funds sovereign fund et cetera.
So most of our.
Clients are having to go back to their boards and investment committees and approve a high allocation to private markets.
It's a good problem to have but again.
It is knowing the whole process takes a little longer et cetera.
B, we have no risk based and of course higher competition, because the holding a lot of other funds also performed very well in 2020 in 2021, so even though the performance of our funds.
The highest ever to be honest when five or six other funds also performed well in other parts of the world.
So that what was going on when we come into 2022.
Hi.
The geopolitical risks that happened because of the Ukraine War.
Actually the geopolitical has increased because of the yield you create more in several Investor then went back to look at Latin America as a desired place to invest because everything that I just said so.
Again.
I started with the conclusion here.
On track with our fundraising pace as you ask.
What we wanted to raise in our first goals was what we did raise.
800 out of $3 5 billion, which is on the cover of our perspectives as exact as a textbook fundraising case.
Happy and we are already having a second close in the second quarter.
And then gave you a double click I think there's two forces going on here in Latin America in general has been.
On on the move to attract pension.
Pension funding vessels.
But at the same time the industry performed extremely well over the last two years, which is a good problem to have but we have.
Tougher competition in the fundraising side.
So these are the forces going on here and then you asked about the Moneda.
Our.
Fundraising synergies with Moneda have not actually kicked in yet or did in a general sense no Harbin battery on Monday that together.
Very very happy with that combination, but we haven't seen a lot of the long term institutional investors already convert because we didn't have a lot of time as we did actually.
Combined the businesses in late last year.
There was not enough time to then fill.
Actually technically legally been able to go on the road together on already have.
Positive inflows in the first quarter. So we're going to see this kick in as we move into 2022.
So I was very impressed to be honest with the amount of money that money raised in the first quarter and it has to do with performance.
Of course, it has to do without relationships that they have great relationships with very great.
Sizable institutional clients all over the world and of course, <unk> as well, but performance does I think attracted a loss.
The.
The inflows.
I mentioned during my speech here that no.
Equity funds performed extremely well in the quarter and.
Credit funds, which was not an easy market performed extremely well I mentioned.
300, something basis points over the benchmark in the first quarter and eight.
800 something basis.
Over a longer period of time this quarter, our credit funds that substantial.
Alpha.
On the divestment side.
We're definitely turned the knob to divestments and on a macro sense. What did we do last year, we were pressing the pedal on investments because we had.
Ebitdas that were hurt because of Covid.
So we also have lower multiples because of the whole situation that I. Just described is kind of a question Mark over Latin America debt got it raised over.
Latter part of 'twenty, one beginning of 'twenty two.
And we also have the weaker currencies in the region.
So we turn to investments and we had our record year for investments as you know as we've come into 2022, we turned the knob and focus through divestments Tonight.
Because again.
Do you see things that I just mentioned tons.
In favor of divestments, we have stronger local currency so.
The dollar denominated funds do show better returns.
Half the Colgate kind of uncertainty is kind of out of the table because of the very successful vaccination program as the economies are growing again.
Fiscal discipline from the leaders in the region.
The main dealers and region et cetera.
Favoring the region as I said, a very active M&A activity in 2022.
So we are using that.
General situation that favors divestments to actually bad.
So several of our companies and in the private equity and infrastructure portfolio.
So we're very happy with where we are.
We have to be honest over 15 company that we actually have a sale process going on and a portfolio of 35.
10 of those are very recent investments.
Like 15 out of 25 companies that we are actively pursuing the divestments, which is.
<unk> was two thirds of the portfolio.
Those are the situations that I described and that you alluded to as well given the active M&A activity in the region most of that.
This upcoming.
It's coming from strategic global investors that are willing to invest in the region.
So we did sell early this year for example in the private equity portfolio the.
The new living.
Elderly <unk> company for the largest company in the world to see.
It's a French company that is listed in the cloud as a stock exchange.
And so we're seeing we have no.
Infrastructure assets being sought after by global strategic players.
<unk>.
Over 90% of the interest that we received for our portfolio companies. The ones that I've mentioned that are still in process of being sold we see interest from global strategic investors that are willing to invest in the region.
I Hope my long answer to your question, but I hope I've addressed all of your points.
No you did address thank you so much.
Theyre very detailed answers and congratulations.
Again, great started the year.
Thank you.
Thank you. Our next question will come from the line.
From Goldman Sachs you may begin.
Hi, Good morning, Alex and Margaret <unk> from Goldman.
Thanks for the call off congratulations solid phase outs to the year my.
My question is on the deployment. So just wanted to see how you think about.
The ability to deploy capital.
In the current market environment, you highlighted yet to deploy around 2 billion over the last 12 months.
Quarter was only $55 million and mostly in others and that in private equity and infrastructure.
Where do you see opportunities to deploy capital any particular industry just given the current market environment.
You think about that outlook.
Well. Thank you nice talking to you again and thanks for participating in our call.
We still keep the.
The $2 billion kind of guideline for investments this year as I think we mentioned earlier.
It's.
There is several I think very interesting opportunities.
As we move along on the private equity side.
<unk> business in health care of the two verticals that we do.
And we see a lot of things.
We would love to invest.
In addition.
Logistics and food.
So these are the four sectors in this kind of order.
Agribusiness as you know have been has been booming in the region in Brazil, specifically because of the strength of the agribusiness in that country.
Healthcare food and logistics Cardinal sectors that are.
Also performing well.
You probably know that the economies in the region half.
Then actually beating some of the expectations.
As you probably know even Brazil, but I think the general consensus was.
<unk> was going to retract this year I think most of the economies that are analyzed in the region and specifically, Brazil are changing their expectations to a growth scenario, 1% to 2% growth and we can see that I think.
Our companies performed very well, most specifically private equity companies that has more to do.
With.
The performance of the economy, the infrastructure assets most of them have contracted already revenue when.
When you when you're participating in a knock man in the auction and what I saw.
The private equity side no. We finished the first four months of the year.
Revenue source of all our companies if you add all of the companies. They are a little bit above budget and we have and we had a very aggressive budget given that we were.
Foreseen and expecting a return from Covid.
The levels.
We are happy to see that of course, some companies performing better where the company is performing.
What's that.
Aligned with budget, but I think we like where we are.
Plus 7% to minus three 4% for budget, so no variances, but not a lot of that is not like one companies plus 50% of the other companies minus 50% plus seven minus <unk>, 4% from budgets.
And we're very happy to see that number.
For the month four months of 2022.
On the infrastructure side, I think energy continues to be a great focus of ours as logistics as well from the infrastructure side for example.
The toll roads et cetera.
No. We're very keen to continue to invest we have a great year in that sense with no great toll roads. The auctions in 2022 23 that are now our team is really.
Focusing on that sector to continue to invest so.
$2 billion kind of guidance continues to be our.
Eternal.
Base.
And you'll probably see a pickup in the second quarter and going forward.
Thank you.
And just to complement Tito this is Marco good morning.
Sure.
The way, we allocate our deployment implies that we've reserved to get to them get into execution. So there has been a lot of execution of underlying M&A activity going on in the quarter that doesn't really show up on the bridge.
But.
The M&A teams have been very very active on the execution of the investment thesis is that Alex alluded to.
Great. Thank you Alexandra and macro that's helpful. Yeah, I guess I was kind of answered it.
My follow up I think it was there anything else specific in <unk> that you get into quite mitral suggests that you're kind of active in M&A that you mentioned or was there anything else in the quarter.
You didn't allow you to deploy.
Okay.
No. It was it was real.
The real Big reason to be honest I think it was just.
Renegotiations going on I think that.
When we.
Our expectations of that yield versus sellers.
There was but there was no specific reason to be honest I think it was normal process that sometimes.
But just jumps from one quarter to the other but I don't see any no.
Decreasing and the momentum.
Of all the investment base.
Great. Thank you Alex.
And once again Thats star one for a question Star one.
Our next question comes from the line of Robert Lee from <unk>. Your line is open.
Great. Thanks, Good morning, Thanks for taking my questions.
I apologize if you went over this earlier I got a call a little late but could you update us on where you are within profile since pretty much deployed and reserved on.
And part of it.
Or I believe.
And then also any update on your new growth equity strategy on <unk>.
We're launching.
Receptivity, there and expectations there.
Yes of course this is Alex again and thanks for.
Leading the call.
I think on.
<unk> bye.
We are very much in line with them.
Our new schedules.
Kind of one.
One year ahead of our schedule that we.
Define that during our IPO process. So we're going to start fund raising next year, we would expect it to start fundraising in 'twenty four 'twenty five.
<unk>.
What we.
We are building this momentum and interestingly, we're already having a lot of.
Lp's asking us on.
When the next Super fund is going to come on to market.
Yes.
Not a lot are actually very few opportunities.
<unk> is for investors to expose themselves to the real assets for the infrastructure sector in Latin America, and we are definitely the number one.
So happy to see it and no reserve reverse inquiries from our Lps for <unk> by the way that we will.
Building the whole case here.
We are also actively divesting.
Several of our.
Infrastructure assets.
As we mentioned during the call.
And that actually builds momentum too.
Drive money back to investors increase our DPI.
The key to the REIT.
Turns of the funds are now looking great.
We have all of this now planning phases.
Several processes going on.
Order to maximize the.
The whole.
Probability.
Operating a very strong infrastructure.
Next year. So if everything goes as planned which is no returns of the fund continues to be strong as they are as you saw in the first quarter for infrastructure number two we continue to.
To deploy money in very interesting auctions.
And the other infrastructure assets that I think we're very convinced that we will and number three we managed to sell the assets that are already on sale of investment will be good news on the infrastructure side on the divestment front. This year. So all of that builds no momentum too and we are receiving already reverse inquiries on all of it.
Andres process willing to supply so as we go into market in 2023, we have all of the Kpis so that in the right place investments divestments DPI.
And that returns all looking good.
We're a great process.
And I'm very confident on fund raising point for five and I think we are.
Really building great momentum there and again.
<unk>.
We are one of the.
Two options and the best options for investors to get exposed to the very active.
Deflation in concessions sector in general and Latin America.
As a private equity growth is concerned.
Our.
Fundraising process here on data look like we're going to have a fundraising this quarter.
First close for the fund also looking very strong.
As you know we plan to raise the $200 million, which is the number that we actually did.
Announced that was.
Already aligned with the commodity partners.
The way that I see it today.
No.
Very good chance.
So we're going to reach the number of beat the number.
I can't I think the first close within this quarter.
In line with our expectations and the expectations of our Lps are now come out with these partners.
We already kind of investing the funds as we speak so that also pushes.
On fund raising on the good side because investors.
We're actually managing to see some of the assets.
Already in the funds.
You already have three assets in the fund and we already signed.
<unk> will use.
For another couple of assets and that also.
On private equity growth not on not for multiple private equity buyout or infrastructure development that doesn't work that way but.
<unk>.
The fund raising for private equity growth already having some assets.
In the front helps the fund raising process. So we already have the assets and the funding and actually going to have another too as we fund rates.
In the next quarter so.
I am confident there as well of course $200 million given the size of things within <unk>.
It's important on this on the strategic side and because of the performance fees that actually this month January .
Not doesn't move much the needle on the management fees on the $200 million.
But I think the whole process of <unk>.
Having a product that targets that part of the lifecycle of the company. The early part of the lifecycle of the company and the potential performance fees that such funds do realize.
Very important to us thank you.
Great that was it thanks for taking my questions.
Alright.
Thank you and im not showing any further questions in the queue.
Call back over to Alex <unk> for any closing remarks.
No. Thank you very much everyone and thanks, Rob also for your questions there.
Sung <unk>, thanks, a lot.
For all of your participation and questions I think we are of course.
More than available after the call to coupon taking our questions hope to see you guys in person very soon.
Hope all of you are well your families are well.
Thanks, Josh and Mark with well for the call.
If Georgia market doesn't have anything else to add here I think we are.
With that said Josh.
So thank you very much guys have a debate <unk>.
Thank you everyone.
Thank you have a good day.
This concludes today's conference call. Thank.
You may now disconnect everyone have a great day.