Q4 2022 Patria Investments Ltd Earnings Call

Speaker 1: You.

Speaker 2: The conference will begin shortly. To raise and lower your hand during Q&A you can dial star 11.

Speaker 3: year 2022 earnings conference call. At this time, all participants are in a listen only mode. After the speech presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated method advising your hand is raised. To withdraw your question, please press star 11 again.

Speaker 3: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Josh Wood, head of shareholder relations. Please go ahead.

Speaker 4: Thank you. Good morning, everyone, and welcome to Patrick's fourth quarter in full year 2022 earnings call. Joining today are our Chief Executive Officer, Alex Syed, our Chief Financial Officer, Anna Russo, and our Chief Corporate Development Officer, Marco DePolitano.

Speaker 4: This morning we issued a press release and earnings presentation detailing our results for the fourth quarter in four-year 2022, which you can find posted on our Investor Relations website at ir.patria.com or on Form 6K file with the Securities and Exchange Commission. Any forward-looking statements made on this call are uncertain, do not guarantee future performance, and undue reliance.

Speaker 4: Also note that no statements on this call constitute an offer to sell or solicitation of an offer to purchase an interest in any patchary of funds.

Speaker 4: As a foreign private issue, Patery reports financial results using international financial reporting standards, or IFRS, as opposed to US gap. Additionally, we will report and refer to certain non-GAP industry measures, which should not be considered an isolation from or as a substitute for measures prepared in accordance with IFRS.

Speaker 4: Reconciliation of these measures to the most comparable IFRS measures are included in our Arinks presentations.

Speaker 4: On headline metrics, Patrick had generated fee related earnings of $35.3 million and distributable earnings of $53.3 million or $36.4 per share for Q22. We declared a quarterly dividend of $30.8 per share payable on March 22nd to share a bonus of record as of March.

Speaker 4: year. With that, I'll now turn the call over to Alex.

Speaker 5: Thank you Josh and good morning to everyone joining today as we close out our second year as a public company.

Speaker 5: Bachelor-generated strong results in the fourth quarter of 2022.

Speaker 5: And again, demonstrate our ability to deliver on our third-ings guidance from the beginning of the year.

Speaker 5: In 2022, this required performing amide a backdrop of uncertainty.

Speaker 5: and transition across the globe.

Speaker 5: and conditions that cause many companies to fall short or are just expectations.

Speaker 5: We continue to execute on our growth plans.

Speaker 5: and strategically position the firm to achieve our ambitions in the coming years.

Speaker 5: We generated $147 million of distributable earnings for...

Speaker 5: $1 for share in 2022.

Speaker 5: The resulting 85 cents in dividends per share would give a shareholder who bought the stock at the beginning of the year a 5.2% annual yield.

Speaker 5: accumulated earnings of $130 million.

Speaker 5: We delivered on our annual growth target of 50%.

Speaker 5: highlighting the residency and predictability of this burning stream even in a challenging environment.

Speaker 5: We demonstrated real progress.

Speaker 5: and the divestment of our mature drawdown fund portfolios.

Speaker 5: Our third generation infrastructure fund.

Speaker 5: reach the threshold to crystallize performance seats.

Speaker 5: Realizing 19 million dollars net.

Speaker 5: Thank you for.

Speaker 5: following the exit transactions of our data, our data center platform, and interviews.

Speaker 5: one of our toll roads in Brazil.

Speaker 5: was a challenging year across our industry on the fundraising front.

Speaker 5: We raised $3.1 billion.

Speaker 5: and including acquisitions totaled $4.5 billion in overall inflows.

Speaker 5: While timelines have lengthened in areas like private exit.

Speaker 5: We are also seeing strength in areas like infrastructure.

Speaker 5: where we now see a larger first closing for the next flagship fund in early 2023.

Speaker 5: versus a smaller one at the end of 2022.

Speaker 5: We clearly shared our aim to grow the platforms through M&A.

Speaker 5: and following our major transaction with Moneda in late 2021.

Speaker 5: We have continued that effort in 2022.

Speaker 5: through our transactions with Kamaru P in growth equity.

Speaker 5: VBI in real estate.

Speaker 5: and more recently IGAA in the venture capital space.

Speaker 5: We have also made great progress in our corporate areas.

Speaker 5: making systems and process improvements.

Speaker 5: Citing...

Speaker 5: and creating a scalable framework that makes us a better public company.

Speaker 5: and also facilitate smooth eminion integration as we continue to grow.

Speaker 5: We close the year with our first tax investor day event in December .

Speaker 5: where we gave a comprehensive showcase of our platform and people.

Speaker 5: as well as an update of our multi-year outlook.

Speaker 5: Mainly our targets include

Speaker 5: reaching $50 billion of AUM and $35 billion of fee earnings AUM by the end of 2025.

Speaker 5: driven by a 20 billion of total new capital formation from 2022 through 2025.

Speaker 5: Grow with few related earnings to 200 to 225 million by 2025.

Speaker 5: And with significant realization of performance fees from our mature drawdown funds.

Speaker 5: We believe we can roughly double our equivalent distributable earnings for share.

Speaker 5: over the next few years compared to the prior three years.

Speaker 5: Our accomplishment in 2022 provide a great start.

Speaker 5: And now we must continue to build momentum in 2023.

Speaker 5: As noted at our investor day, we anticipate few related burnings growing to 150 million in 2023.

Speaker 5: This year should also see the book.

Speaker 5: of fundraising for our flagship drawdown funds.

Speaker 5: as we continue to flood rays for private acting

Speaker 5: and look to raise a substantial portion of the next infrastructure development plan.

Speaker 5: We also expect meaningful contributions from new drawdown fund products like our infrastructure credit and growth equity funds.

Speaker 5: and a host of perpetual products with continuous fundraising.

Speaker 5: Overall, we are aiming towards 5 to 6 billion of organic inflows this year.

Speaker 5: Not including the potential inflows from M&A activity.

Speaker 5: as we track towards the longer term capital formation target.

Speaker 5: Let me now spend a moment on the macro front.

Speaker 5: and then give some color across the platform.

Speaker 5: Latin America navigated well through the distress in global financial markets last year.

Speaker 5: On top of better terms of trade, higher domestic interest rates

Speaker 5: No risk of death to scenes.

Speaker 5: and reduced geopolitical risk.

Speaker 5: New long-term trends such as near-shoring or friendly-shoring by US and European firms.

Speaker 5: led to a larger met capital inflows to the region last year. In Brazil, it happened through traditional ways.

Speaker 5: A large trade surplus of $62 billion.

Speaker 5: and robust foreign direct investment.

Speaker 5: of 90 billion dollars.

Speaker 5: were approximately 4.8% of the Brazilian GDP.

Speaker 5: In Mexico, the region's second largest economy.

Speaker 5: It also took place through unconventional channels.

Speaker 5: Mexicans working abroad send a record $58 billion or approximately 4.1% of the Mexican GDP.

Speaker 5: Mexicans working abroad, that they record $58 billion or approximately 4.1% of the Mexican GDP to their homeland.

Speaker 5: Latin American exchange rates generally strengthened in 2022.

Speaker 5: While most of global currencies depreciated against the US stock.

Speaker 5: and equities generally outperform peers in emerging markets and

Speaker 5: advanced economies alike. The local dynamics have been a bit more complex in our region.

Speaker 5: The larger Latin American nation selected said to left administrations in their latest election cycles. And why can't the U.S. these days?

Speaker 5: These governments have ambitious ESG agendas.

Speaker 5: that call for additional public spending.

Speaker 5: Because there is a commitment to preserve fiscal discipline.

Speaker 5: The only feasible way to deliver on the promises is to increase the tax burden.

Speaker 5: which

Speaker 5: along with a more biting environmental regulation.

Speaker 5: should have adverse impacts on certain industries.

Speaker 5: But then, the fundamental framework of solid institutions

Speaker 5: In the present central banks.

Speaker 5: and legislation that is friendly to private investments stands out in the region.

Speaker 5: It also helps.

Speaker 5: that the elected legislatures

Speaker 5: are more conservative.

Speaker 5: maintaining a crucial check and balance to excesses of state activism by the executive branches.

Speaker 5: Assuming that the worst of the adjustment of economic policies in advanced economies is behind us.

Speaker 5: The external output bolts well.

Speaker 5: or Latin America in 2023.

Speaker 5: Even expecting noise from government's domestic actions.

Speaker 5: and thus some headwinds for economic growth this year.

Speaker 5: The combined scenarios should gradually become net positive.

Speaker 5: and lead to larger capital flows to the region.

Speaker 5: Operating in failing environments.

Speaker 5: Basia has an edge in the region because of our ability to attract.

Speaker 5: Britz Punts Tok Pomo Girl konnten

Speaker 5: and the diversity of our platform.

Speaker 5: We now have more than 30 products across 5 asset classes.

Speaker 5: accessing a full spectrum of distribution channels.

Speaker 5: allowing us to be more opportunistic in our approach to both investing and raising capital.

Speaker 5: Now looking across our asset classes.

Speaker 5: in private acting.

Speaker 5: Our portfolio continues to perform well.

Speaker 5: with the most recent vintage flagship fronts 5 and 6.

Speaker 5: Generating net IIRs of 21%

Speaker 5: and 15% respectively in US dollars.

Speaker 5: The portfolio remains very active in 2022.

Speaker 5: Completely

Speaker 5: 29 M&A transactions.

Speaker 5: with 30% year-over-year organic EP growth.

Speaker 5: and 67% if you include the impact of acquisition.

Speaker 5: The Dithesma cycle for our mature funds remain a major priority in 2023.

Speaker 5: and we have made some positives.

Speaker 5: steps towards liquidity in several portfolio companies.

Speaker 5: Our next vintage flagship firm has been in the market doing a difficult 2022.

Speaker 5: Rating more than a billion dollars which we have already started to invest.

Speaker 5: We are optimistic about gaining traction.

Speaker 5: as the Canada rules over to 2023.

Speaker 5: and expect to continue on the fundraising trail until the end of the year.

Speaker 5: This vertical has diversified into growth equity through Kamaru-Ping.

Speaker 5: with our first fund together in the market now.

Speaker 5: and being seated with four outstanding portfolio companies.

Speaker 5: And as we recently announced, our acquisition of IGA.

Speaker 5: That very talented team will begin raising their fourth petrified.

Speaker 5: The reality team will begin raising their fourth betrotha and our first together.

Speaker 5: during 2023.

Speaker 5: in infrastructure.

Speaker 5: The big story here was digested.

Speaker 5: As we announce exits for Audata, our data center platform, and interviews one of our O-Roads in Brazil in Q4.

Speaker 5: which will generate proceeds of more than 1.4 billion dollars to fund investors.

Speaker 5: Both of these investments were made from Infrastructure Fund 3.

Speaker 5: And as we announced previously,

Speaker 5: The recent exit activity moved this fund through the performance serialization threshold.

Speaker 5: Allow us to recognize $19 million of net realized performance fees in Q4.

Speaker 5: Let's recontinue the superform well.

Speaker 5: with a net IIR of 13% in US dollars.

Speaker 5: and a less performance fee accuro of $129 million.

Speaker 5: which importantly, we can now continue to monetize with each subsequent exit event.

Speaker 5: By best with activity like this one.

Speaker 5: Also gives a boost to our fundraising process for the next generation fund.

Speaker 5: which is approaching a first clothing in the next few months.

Speaker 5: Our most recent fourth vintage fund is also showing great early performance with a net IIR of 17% in US dollars.

Speaker 5: and we continue to pursue expansion.

Speaker 5: of our infrastructure core offering.

Speaker 5: where we now have both the listed and unlisted vehicle focus in Brazil.

Speaker 5: Our credit strategies had a strong 2022 performance.

Speaker 5: relatively to their respective benchmarks.

Speaker 5: With last time corporate high-yield outperforming by 260 basis points.

Speaker 5: and LATAM, corporate local currency.

Speaker 5: in Latin corporate local currency by more than a hundred basis points.

Speaker 5: Most notably, our local currency credit strategies.

Speaker 5: had positive returns in US dollars. In a year that saw the Bloomberg Global aggregate index down more than 16%

Speaker 5: It was a very challenging year for FunFlow.

Speaker 5: with the shift to higher policy raised around the globe. But we see macro headwind diminishing as we move further into 2023 and historically higher levels present an attractive opportunity to invest in Latin American credit.

Speaker 5: Our open and professional products are well positioned to capture increased client demand.

Speaker 5: And we also expect to see inflows from new drawdown fund products.

Speaker 5: And we also expect to see inflows from new drawdown fund products like our infrastructure credit fund.

Speaker 5: which has already secured backing from two institutional anchor investors.

Speaker 5: In public equities, investment performance was solid in 2022.

Speaker 5: And notably impressive in the Chilean small cap strategy, where the Pionero Front outperform its benchmark by nearly 12% for the year.

Speaker 5: despite great performance.

Speaker 5: Some of the same forces impacted credit funds also drove Q4 outflows from Chilean investors in our public equities project.

Speaker 5: While these redemptions were related to the general reduction of allocation by domestic institutions to local funds,

Speaker 5: We believe investment performance will ultimately

Speaker 5: Be the driver of flows as we look forward in 2023.

Speaker 5: Finally, in real estate. VDI, our platform in Brazil.

Speaker 5: generated more than $20 million of inflows in Q4.

Speaker 5: including the launch of a new

Speaker 5: including the launch of a new, unlisted real estate credit product.

Speaker 5: demonstrating their capacity to innovate and offer investment opportunities across the capital stock.

Speaker 5: Real state continues to be an area where we have an attractive opportunity to expand.

Speaker 5: both organically and inorganically.

Speaker 5: All Ignore

Speaker 5: We feel like the platform is well positioned to capture opportunity in...

Speaker 5: each of these vehicles and we look to solidify our place as the gateway for alternatives in Latin America.

Speaker 5: Let me now turn the floor to Marco and Anna to cover the results in more detail and I'll come back for some closing thoughts.

Speaker 5: Let me now turn the floor to Marco and Erna to cover the results in more detail and I'll come back for some closing thoughts. Marco. Marco.

Speaker 5: Thank you, Alex. As planned, we have transitioned the CFO role to Anna Russo, effective as of the beginning of this year. We will accordingly cover the 2022 results and then turn over to Anna for commentary as we look forward.

Speaker 5: Rest assured, you will continue to hear from me as I will remain highly involved with our shareholders' relations effort from the executive level.

Speaker 5: We generated $35.3 million of fee-related earnings in 4 quarter 22, up 20% compared to 4 quarter 21 and $130 million for the full year 2022.

Speaker 5: Up 51% from 2021 and reaching the guidance with reiterated throughout the course of the year.

Speaker 5: Total fee revenues of $227.1 million were up 55% in 2022 compared to the prior year.

Speaker 5: Supported by 52% growth in management fee revenue, as well as higher transaction and other fee revenues.

Speaker 5: Of the 52% management fee growth, approximately 38% was generated by the addition of Muneza and VBI to our platform.

Speaker 6: with a reminder resulting from the organic growth driven primarily by deployment in our Drawdao fund.

Speaker 6: Operating expenses increased 61% year-over-year, reasoned primarily by the addition of Moneza and VDI, as well as increased costs related to public company fashion.

Speaker 6: Our FRE margin remains in the 56-58% range for each quarter in 2022.

Speaker 6: For every margin remains in the 56-58% range for each quarter in 2022, slightly higher than our expectation.

Speaker 6: demonstrating our ability to maintain consistent margin levels following a major acquisition. We generated $19 million of performance related earnings.

Speaker 6: in 4 quarter 22 and full year 2022 from the first realization of performance beast in our infrastructure for three.

Speaker 6: While this compares to 58 million in 2021,

Speaker 6: It's worth noting the different circumstances.

Speaker 6: Our 2021 PRE came from the final exit and realization in our private equity fund tree.

Speaker 6: Meaning no additional performance is coming from that side.

Speaker 6: In 2022, however, we are seeing just the beginning of the performance-y-stribe from the infrastructure of the fund-3. A fund would steal 129 million in net accrued performance fees as of the year end.

Speaker 6: Now that we are through the phase of returning capital and hurdles, we would expect subsequent exit events for this fund to generate real-life performance fees for shareholders.

Speaker 6: Distributable earnings were $53.3 million dollars or 36 cents per share for 4 quarter 22 four quarterChristopher

Speaker 6: Up from 27.7 million or 19 cents per share in 4 quarter 21.

Speaker 6: For the full year 2022, this trip global earning of $147 million.

Speaker 6: equate to $1 per share, closely in line with the $1.02 per share we delivered last year.

Speaker 6: So, overall, the year-over-year dynamics for DER are higher FRE in line with our guidance, offset by the lower performance fees and additional shares related to our transaction with Moneda.

Speaker 6: As Alex noted, the 2022 total dividend of 85 cents per share delivers a yield of more than 5% to an investor who bought our stock at the beginning of the year.

Speaker 6: For an investor in our IPO, the 2021 and 2022 dissidents combined delivered a cumulative two-year yield of more than 10%.

Speaker 6: We believe a very nice income stream to compensate the headwind we've seen on valuation in our sector and across the equity market.

Speaker 6: Turning to AUM.

Speaker 6: Our total A1 of 27.2 billion dollars is the 14% from one year ago, reasoned by the 4.5 billion of organic and inorganic inflows previously mentioned.

Speaker 6: Looking by asset class. Private equity AUM increased 21% on the year, driven by the ongoing fund raising for our next fund.

Speaker 6: Infrastructure increased 15% driven primarily by strong portfolio appreciation and real-state group by nearly one billion through the transaction.

Speaker 6: with the B.I. The earnings they went ended the year at 19.2 billion, up 7% from one year ago, with inflows from draw-down funds, deployment, and M&A partially offset by the redemption pressure in credit and public expertise.

Speaker 6: As well as the end of the contractual fee term in our second infrastructure fund.

Speaker 6: After delivering strong performance in a challenging year, I see a work lab from and business well positioned to deliver on our multi-year goals.

Speaker 6: On that note, let me now turn to Anna for some comments as she takes the CFO range looking into 2023.

Speaker 7: Good morning everyone. I'm thankful for Marco and the team for onboarding me during this transition period. I'm looking forward to engaging with all of you.

Speaker 7: As we bring a successful 22 to a close, we look forward to our task of executing on 2023 and the next few years as we discuss with you at our Investory event.

Speaker 7: Our top line outlook remains very strong, even in the current perspective of the word economy and challenge facing our sector.

Speaker 7: and our footprint and diversification position path for attractive growth.

Speaker 7: As Alex noticed, we are targeting to grow FRE to $150 million in 2023 while maintaining a similar margin to 2022 in the high 50% range.

Speaker 7: Much like 2022, we have a Dispoint Goodfield Revenue Visibility based on where we begin the year and our expected deployment pace.

Speaker 7: We do expect the revenue and therefore the fee related earnings to wrap over the course of the year in contrast to the more steady IFA results we saw over the four quarters of 2022.

Speaker 7: Given factors such as the holiday for the first clause in our new private equity fund, we expect effort in the first quarter of 2023 to be similar to the run rate level we saw in 2022.

Speaker 7: Excluding the impact of incenter fees in the Q4 and then rumping up through the rest of the year.

Speaker 7: As of December 31, our Netacruel Performance fee is 10 at $462 million up 33% from one year ago, and that's after realizing $19 million in the fourth quarter.

Speaker 7: At more than $3 per share, this accrue is predominantly supported by mature portfolios in Private Equity Fund 5 and Infrastructure Fund 3, with more than 80% of the accrue in those two funds.

Speaker 7: These funds are positioned to divestment and we have already seen that in action for infrastructure at the end of the last year.

Speaker 7: We think that performance is a realization of our cycle, not individual ears.

Speaker 7: As we noted at investor date, we would expect to realize 50 to 80 percent of the accrual in those two funds by the end of 2025.

Speaker 7: As we progress in integrating our recent M&A transaction, we are focusing on instanturizing and automating back office process.

Speaker 7: It's running lightning system and ensuring efficiency throughout the organization.

Speaker 7: This will be crucial as we pursue a high rate of growth and we will enable patches to mitigate inflationary pressure, reinvest in the business, and maintain current margins with continue high standards of controlling VAR.

Speaker 7: The future of Fort Patra is bright and I'm thrilled to be part of the journey.

Speaker 7: Let me now turn back to Alice for some closing remarks.

Speaker 7: back to Alice for some closing remarks. Thanks, Anna.

Speaker 5: Altogether, we're very pleased with the firm's performance in 2022.

Speaker 5: while it was a year of headwind in our industry and challenges across the globe.

Speaker 5: We believe the stability of our business model and talent of our people are the key drivers of our resilience and success.

Speaker 5: We have set ambitious goals over the next several years.

Speaker 5: And I'm confident we have the right team and resources in place to deliver on the targets.

Speaker 5: Delivering on 5 to 6 billion of fundraising and 150 million of fee-related earnings this year, will have us well on the path to our 2025 goals.

Speaker 5: and we expect to continue to be active on the M&A front.

Speaker 5: We believe we are uniquely positioned to be the gateway for our differences in Latin America.

Speaker 5: and would success in that endeavor, we can deliver significant value to all of our stakeholders.

Speaker 5: We're now happy to take your questions. Thank you.

Speaker 3: Thank you.

Speaker 3: As a reminder to ask a question you'll need to press star 1-1 on your telephone to withdraw your question. Please press...

Speaker 3: Star 1 1 again. Please wait for your name to be announced.

Speaker 3: One moment for our first question.

Speaker 3: Our first question comes from the line of

Speaker 3: Mike Brown with KBW. Your line is now open.

Speaker 8: Great. Great. Good morning, everyone.

Speaker 9: I for my coareian part.

Speaker 4: Good, thank you. I wanted to start with the, on the fundraising commentary. So I thought that was certainly a positive that you guys are targeting five to six billion of inflows for 2023. And you gave a lot of great comments there on the call. Could you just maybe dimensionize that a little bit here? There's a lot of moving pieces.

Speaker 4: of the market, but what would be the main drivers there if you had to split that organic info number up a bit.

Speaker 5: Hi there, this is Alex and thanks for participating and thanks for your question. I think it's hard to give a specific detailed guideline. As you mentioned, we have several moving parts and the market is adjusting itself. But I would say in general terms that infrastructure and...

Speaker 5: kind of obvious what I'm going to say now. The interest rate environment does affect specifically what I just mentioned, actually related products, hard at fundraise and no fixed income, no infrastructure like products, easier to fundraise. So we're on the road, as you know, with our...

Speaker 5: infrastructure front five and private credit, infrastructure credit and some other credit products. And those I think might be the big chunk of those five to six billion. Of course, we have a AAD.

Speaker 5: fantastic track record on the private exit and as I mentioned we feel confident that as we move into 2023 we're going to be able to reach our targets there the flagship fund we're also on the road with our venture capital fund and our growth equity fund and we'll hit our internal targets there as well but of course it's

Speaker 5: of the next fundraising and a lot of drawdown funds in that bucket, as mentioned, Infrastructure Fund 5, Private Credit Fund 2 for Brazilian investors, Infrastructure Credit Fund 1 also for international and Brazilian investors.

Speaker 5: a lot of time private credit fund also that we are raising, that the target is less than America as a whole on the private credit side. And plus the real estate of permanent capital vehicles and infrastructure permanent capital vehicles. So that's more of where we see how things going.

Speaker 5: Again, I think when we look into the number of general total $20 billion capital formation that we gave as a guideline in our back stay in December from 2022-25, having raised $2.5 billion in the last year, we have raised $2.5 billion in the last year.

Speaker 5: Organically, in organically, close to 4.5 last year and have another 5 to 6 billion this year, puts us in a very, very good position to reach the 20 billion targets capital formation by 25.

Speaker 5: So I think we know we feel comfortable far from easy, as you know, but I think we feel very comfortable that we'll get there, but I think a different kind of profile of products I hope I answered your question.

Speaker 4: Yes, thank you, Alchairn. That was great. Thank you. If we could just maybe double click in a little bit on the infrastructure side here. So, you know, clearly investor demand is very strong for that asset class.

Speaker 4: When you, when we think about PACS, can you just help us?

Speaker 4: You know understand a little better. How do you differentiate your infrastructure strategies versus some of the larger global peers that also invest in the Latin region? How does PACS approach infrastructure differently?

Speaker 5: Okay, and thanks for your question again. Within our infrastructure vertical, I think we have our flagship fund. As I mentioned, we're raising right now our infrastructure flagship number five.

Speaker 5: The strategy of the differentiator of that fund, the strategy that makes that fund or family of funds very different is the fact that we take on development risk. And we have dominated that.

Speaker 5: And I think that's why we do continue to perform extremely well.

Speaker 5: As mentioned also during the call and also doing some of our earlier calls late last year, the divestments of two great companies that we had in our infrastructure fund tree. And what does it mean taking development with here? Now in the end what we do.

Speaker 5: is pretty easy to explain. I think it's harder to execute. No, we do win an auction or we buy an asset. We then take the risk that asset by taking the development of that project and then we sell it. So no, we buy the risk of sell.

Speaker 5: and we did risk mainly through development of that asset. It can be a greenfield when you win a concession of a new power project, for example, or we can buy a small brownfield and then develop that.

Speaker 5: to create a larger asset. You know, an example of the data center business that we just sold last year, you know, we started from scratch. We actually bought a piece of land. We constructed our first data center in the...

Speaker 5: the outskirts of Sao Paulo, here in Brazil. And from there, we created a over 60 megahertz company with no potential to expand to 100 this year. And we have pent-up demand already. Sign contracts to bring this company to 400 mega.

Speaker 5: And we sold it and we made over four times our money there in New West Art. So that's an example of beginning of thesis from scratch and taking you on the development risk and then creating this platform and selling it. We did the same with toll rolls that we just sold.

Speaker 5: to an international global player, strategic global player, total that we had here in Brazil.

Speaker 5: In this case, we won the concession with Tukon, the development risk of, you know, that who came with the concession of expanding, duplicating parts of the highway, creating new toe classes and blah, blah, blah. And two years later, you know, we had the risk, the main portion of the caffix needed to modernize the...

Speaker 5: in the market. So taking that development risk that we do dominate makes us different. It's ourselves, I think most of the international players that you mentioned, they buy mature assets in the region that are already performing. We sold our data sets of company to another global data set, the company's sponsor bike.

Speaker 5: a major infrastructure fund and they are buying our mature asset already and of course they're going to take it to a different level but it's already a developed asset, already grown from scratch as I just explained.

Speaker 5: In the case of Vancide, this international tow road cleared the thing. They are buying also a tow road in the state of São Paulo that as I mentioned, we took on the development risk and gave and sold that tow road already as a quasi-mature asset and that's what we do well. And I don't think the...

Speaker 5: But I'm generalizing, but most of the infrastructure funds that do do play Brazil, they take that development risk besides one or two players. So on the other strategy that we have within the vertical, we have also a core infrastructure product. And there we do, no, we don't take the development risk there, but we know of course it's...

Speaker 5: We're focused more on the youth side, mostly for Brazilian investors up to now. We plan to also help these square infrastructure funds in other countries in Latin America, like Chidi, Colombia, and Mexico. We also now have infrastructure credit, which is a very interesting product.

Speaker 5: that we have already anchored by two major institutional investors. So, but the flagship strategy differentiator is the development nature development angle that I just explained. Again, I hope I answered your question there.

Speaker 8: Yes, thank you for all of that color out. Appreciate it.

Speaker 1: Thank you.

Speaker 3: And after, Ricardo Buthier with BTG PACSUAL, your line is open.

Speaker 10: at? Vaccin only central

Speaker 11: I have a fraction across.

Speaker 10: So despite the performance fee bonus, they did book in the choir, give the organization of performance fee, we set off taxes fee, pretty much flat, follow the choir. Can you please explain what happened with the line? And we should see the margins of...

Speaker 10: of related to FRA, that should be similar in the following quarter. Thank you.

Speaker 5: We call it your voice. Alex again here. Yeah. Yeah. Mark, Mark, will you let us take a second? Thanks.

Speaker 6: Yeah, I'm not sure what I got the full just confirm to me if I got the full question because the voice came in a little bit Broken up the question is about overall margins and and also Income tax is that what those are the two components of the the question?

Speaker 10: No, sorry, we just saw that the hot packs were pretty much flat despite the performance people were booking the choir. So we're going to understand what drove this better performance.

Speaker 10: And exactly if we can, normalize this level of bags for the following quarter.

Speaker 8: I'm not sure if you heard me now.

Speaker 6: Okay, so let's first differentiate the two kind of expenses. The expenses related to the

Speaker 6: to the carry.

Speaker 6: You're gonna find that below the FRE.

Speaker 6: on the carry interest allocation and bonuses for the quarter which is 10.2.

Speaker 6: So that ties to the 29.1 that you see for the quarter.

Speaker 6: which is completely different from the personal and admin expenses that you see on the top.

Speaker 6: The 58% margin is what it's in sync with the overall margin for the year. It is slightly above what we have indicated throughout the quarters during the last year. We indicated in the mid.

Speaker 6: 50s and we are ending up slightly higher than that.

Speaker 6: We're gaining some margin on personal expenses.

Speaker 6: throughout the year. And we were losing a little bit of margin on the admin expenses due to some of the fixed costs associated with a position of more neta that had a lower margin, a lower overall margin. But overall we can say that we're happy with the margins and with the progress.

Speaker 3: Next question.

Speaker 3: Next question comes from the line of Beatrice.

Speaker 3: A brew with Goldman Sachs, she aligns now open.

Speaker 12: Hi Alex, Marco and Anna. Good morning. Thank you for taking my question. First question would be on the FRA guidance of 150 million for 2023, which implies a 15% increase from 2022. Could you tell us how much of that growth do you expect to come from organic growth?

Speaker 12: versus how much coming from inorganic growth, if any. And a second question, if I may, would be on the real estate strategy.

Speaker 12: So this was a segment that you expected to grow the most in VA UN by 2025 if I'm not mistaken. So if you could give us some color on the segments that I look for 2023 and what kind of growth you're expecting that would be great. Thank you.

Speaker 5: Hi, I'd be a treat to this, Alex. Mark, do you want to take the first question and I'll take the second? Please.

Speaker 11: Sure.

Speaker 6: So, this is, we don't provide the distinction between what is the FRE organic and inorganic.

Speaker 6: I think what you can have as a reference, as Alex indicated in the call, is he guided on the 5 to 6 billion of a creation of capital and that's all organic a creation, if you will. So this is not encompassing any sort of a creation that is...

Speaker 6: of 1.4 billion out of the total 4.5 billion dollars.

Speaker 5: And going to your second question and then I'll ask if we did answer both of them, Beatriz, this is Alex again. Yes, we're very excited with the whole real estate expansion of our product lines and of course our general AUM.

Speaker 5: more specifically, I think, in...

Speaker 5: in Brazil and countries like Chile and Colombia where we're looking into this very closely in Brazil. We did an acquisition as you know called VBI. I think to say, you know, very interesting consolidation play on the read side and we're looking into that very closely and.

Speaker 5: VBI has been very active looking into that as well. We have...

Speaker 5: Within the Brazilian context, 8, 220 billion reais reach market, which are the listed Brazilian real-states trusts.

Speaker 5: listed in the Brazilian Stock Exchange B3 as you know.

Speaker 5: And you have several listed real reads in the Brzeonostock exchange that are basically single a single asset reads or very few assets within that reads. And that reads trades very poorly in the secondary market because it's a single asset reads.

Speaker 5: one headed by our VBI partners is a great opportunity. Within VBI we have three thematic reads, one focused on corporate, the other one focused on logistics, the other one focused on credit related...

Speaker 5: instruments in the real estate market, what we call Brazil, the CRIs. And there I think we have so much to do on those fronts in consolidating other reads in those thematic, other those themes that I just mentioned. So there's so much we manage around five billion

Speaker 5: in Colombia and a very large market of these real estate rates in Mexico. And if we are successful in Brazil, I think we can have the goal, the aim to do the same in these other countries that I just mentioned. Also...

Speaker 5: I think on the development real estate products which are now draw down in nature what we call real estate private equity to use the expression that we use in our industry here. Also very interesting to products that are now with the targets of course higher returns.

Speaker 5: but takes on the development risk contrary to the risks that buy already mature assets.

Speaker 5: And I think there, I think that the room for expansion as well as the economies in the region are back to their growth pattern. This all Brazil growing around 3% and a little much higher than that last year. And one and a half to 2-something percent this year. Same and Chile is same in Colombia.

Speaker 5: same in Mexico, again the whole need for these real estate investments. Now if we, an advertising also, the whole near-shoring, and friendly-shoring that I mentioned in my earnings call, Mexico on that front I think really stands out, because it will need a lot of investments in logistics.

Speaker 5: and also factories, whatever, and the real estate market in Mexico. I think we'll be looking to take parts of this year's foreign thesis.

Speaker 5: So now we're very excited with this opportunity. We tripled our AOM in the real estate space in Brazil last year, mainly through the acquisition of the EBI. And I think we know we really look forward to continuing to expand the space. Lastly, as we do expand within the REAPMAR.

Speaker 5: the product. So I hope we answer your both questions with lead advisors if we missed anything.

Speaker 12: No, that's very clear. Thank you.

Speaker 3: As a reminder, to ask a question, you'll need to press star 11.

Speaker 3: I would now like to hand the conference back over to Mr. Alex, signed for closing remarks.

Speaker 5: Well, thank you very much again for your participation in this call, your patients who go through this 50 minutes an hour with us. I think as all of us mentioned here, Anna, Marco and Josh, myself, Alex, extremely pleased with 2022 results.

Speaker 5: I think we did manage to hit our targets and the targets that we actually designed for 22 and 2 in late 21 when we had a different world environment and a different market for alternative assets.

Speaker 5: As we look into 23, I think we're confident that we're going to be able to deliver again on our $150 million guideline for FRE and hopefully be able also to...

Speaker 5: Convert some of that non-perfor-that performance fees into realizations throughout the next years We have over 400 million dollars as you know of inventory right of performance fees and some of our funds Namely our infrastructure from three already in the carry mode

Speaker 5: of carry status. So thanks again and I also want to know again congratulate here the team for an amazing year. Far from easy but I think the the team managed to perform. Now we wouldn't be having this call here if it were not for the team, the competence, the dedication and congratulate Anna as well here on her new CFO road.

Speaker 5: for Patria. Thanks again. Hope to see you soon. And they'll have a great week. Thank you.

Speaker 3: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

Speaker 2: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1-1.

Speaker 1: The F.

Speaker 1: I you.

Speaker 3: Good day and thank you for standing by. Welcome to Patrick's fourth quarter in full year.

Speaker 4: but today's conference is being recorded. I would now like to hand the conference over to you to speak today, Josh Wood, head of Shareholder Relations. Thank you. Good morning, everyone, and welcome to Patrick's fourth quarter in four year 2022 earnings call. Joining today are our chief executive officer, Alex Syed, our chief financial officer, Anna Russo.

Speaker 4: and our Chief Corporate Development Officer, Marco Di Palazzo. This morning, we issued a press release and earnings presentation detailing our results for the fourth quarter in full year 2022, which you can find posted on our investor relations website at ir.patria.com or on form 6k filed with the Securities and Exchange Commission.

Speaker 4: Any forward-looking statements made on this call are uncertain, do not guarantee future performance, and undue reliance should not be placed on them. Patria assumes no obligation and does not intend to update any such forward-looking statement.

Speaker 4: Such statements are based on current management expectations and involvement here at risk, including those discussed in the risk factors section of our latest Form 20F annual report. Also note that no statements on this call constitute an offer to sell or solicitation of an offer to purchase an interest in any patchary of funds.

Speaker 4: As a foreign private issuer, Patrick reports financial results using International Financial Reporting Standards, or IFRS, as opposed to US GAAP.

Speaker 4: 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 IFRS. Reconciliations of these measures to the most comparable IFRS measures are included in our earnings presentation. We would like to Athletics Single Karate

Speaker 4: On headline metrics, Patrick had generated fee related earnings of $35.3 million in distributable earnings of $53.3 million or $36.4 per share for Q22. We declared a quarterly dividend of $30.8 per share, payable on March 22nd to share voters of record as of March 22nd.

Speaker 4: with that, I'll now turn the call over to Alex.

Speaker 5: Thank you, Josh, and good morning to everyone joining today as we close out our second year as a public company. After a generated strong results in the fourth quarter of 2022, and again demonstrated our ability to deliver on our third-ings guidance from the beginning of the year. In 2022,

Speaker 5: This required performing amid a backdrop of uncertainty and transition across the globe. And conditions have caused many companies to fall short or adjust expectations.

Speaker 5: We continue to execute on our growth plans and strategically position the firm to achieve our ambitions in the coming years.

Speaker 5: We generated $147 million of distributable earnings for $1 per share in 2022.

Speaker 5: The resulting 85 cents in dividends per share would give a shareholder who bought the stock at the beginning of the year a 5.2% annual yield. With few related earnings of $130 million, we delivered on our annual growth target of 250 per cent.

Speaker 5: our third generation infrastructure fund.

Speaker 5: reach the threshold to crystallize performances, realizing 19 million dollars net.

Speaker 5: in Q4 following the exit transactions of our data, our data center platform, and interviews one of our tow roads in Brazil.

Speaker 5: While it was a challenging year across our industry on the front-raising front, we raised $3.1 billion.

Speaker 5: and including acquisitions totaled $4.5 billion in overall inflows. While timelines have lentened in areas like private equity, we are also seeing strength in areas like infrastructure.

Speaker 5: where we now see a larger first closing for the next flagship fund in early 2023.

Speaker 5: versus a smaller one at the end of 2022. We clearly shared our aim to grow the platforms through M&A and following our major transaction with Moneda in late 2021. We have continued that effort in 2022.

Speaker 5: Through our transactions with Kamaru P in growth equity VBI in real estate

Speaker 5: and more recently, IGA in the venture capital space. We have also made great progress in our corporate areas.

Speaker 5: making systems and process improvements, hiring key talent and creating a scalable framework that makes us a better public company.

Speaker 5: and also facilitates smooth M&A integration as we continue to grow. We close the year with our first tax investor day event in December .

Speaker 5: where we gave a comprehensive showcase of our platform and people, as well as an update of our multi-year outlook. Mainly, our targets include reaching 50 billion of AUM and 35 billion of three earnings AUM.

Speaker 5: by the end of 2025, driven by a 20 billion of total new capital formation from 2022 through 2025.

Speaker 5: Grow in few related earnings to 200 to 225 million by 2025.

Speaker 5: And, with significant realization of performance fees from our mature drawdown funds, we believe we can roughly double our equivalent distributable earnings per share over the next few years compared to the prior three years.

Speaker 5: Our accomplishments in 2022 provide a great start. And now we must continue to build momentum in 2023. As noted at our investor day, we anticipate few related burnings growing.

Speaker 5: to $150 million in 2023. This year should also see the bulk of fundraising for our flagship drawdown funds.

Speaker 5: as we continue to fund raise for private acting and look to raise a substantial portion of the next infrastructure development fund.

Speaker 5: We also expect meaningful contributions from new Drawdown Fund products like our Infrastructure Credit.

Speaker 5: and growth equity funds, and a host of perpetual products with continuous fundraising. Overall, we are aiming towards 5 to 6 billion of organic inflows this year.

Speaker 5: Not including the potential influence from M&A activity, as we track towards the longer-term capital formation target.

Speaker 5: Let me now stand a moment on the macro front and then give some color across the platform.

Speaker 5: Latin America navigated well through the distress in global financial markets last year.

Speaker 5: On top of better terms of trade, higher domestic interest rates, low fiscal deficits.

Speaker 5: and reduced geopolitical risk, new long-term trends such as near-shoring or friendly-shoring by US and European firms led to larger net capital inflows to the region last year. In Brazil, it happened through traditional ways.

Speaker 5: A large trade surplus of $62 billion and robust foreign direct investment of $90 billion for approximately 4.8% of the Brazilian GDP. In Mexico, the region's second largest economy.

Speaker 5: It also took place through unconventional channels. Mexicans working abroad send a record $58 billion or approximately 4.1% of the Mexican GDP to their homeland. Lots of American exchange rates generally strengthen.

Speaker 5: in 2022, while most of global currencies depreciated against the US top, and equities generally outperform peers in emerging markets and advanced economies alike. The local dynamics have been a...

Speaker 5: a bit more complex in our region. The larger Latin American nation selected said to left administrations in their latest election cycles. And like in the U.S. these days.

Speaker 5: These governments have ambitious ESG agendas that call for additional public spending. Because there is a commitment to preserve fiscal discipline, the only feasible way to deliver on the promises is to increase the tax burden.

Speaker 5: the S.G. Agendas that call for additional public spending. Because there is a commitment to preserve fiscal discipline, the only feasible way to deliver on the promises is to increase the tax burden, which...

Speaker 5: along with a more biting environmental regulation should have adverse impacts on certain industries. But then the fundamental framework of solid institutions independent central banks.

Speaker 5: And the legislation that is friendly to private investments stands out in the region. It also helps.

Speaker 5: that is friendly to private investments stands out in the region. It also helps that the elected legislatures

Speaker 5: are more conservative, maintaining a crucial check-and-balance to excessive of state activism by the executive branches.

Speaker 5: Assuming that the worst of the adjustment of economic policies in advanced economies is behind us.

Speaker 5: Assuming that the worst of the adjustment of economic policies in advanced economies is behind us. The external outlook bodes well.

Speaker 5: for Latin America in 2023. Even expecting noise from governments of domestic actions, and thus some headwinds for economic growth this year.

Speaker 5: The combined scenarios should gradually become net positive and lead to larger cap of flows to the region.

Speaker 5: Operating in any environment, Bacchia has an edge in the region because of our ability to attract

Speaker 5: Operating in any environment, Batre has an edge in the region because of our ability to attract top homegrown talent.

Speaker 5: and the diversity of our classroom. We now have more than 30 products across five asset classes.

Speaker 5: accessing a full spectrum of distribution channels, allowing us to be more opportunistic in our approach to both investing and raising capital.

Speaker 5: Now, looking across our asset traffic. In private acting, our portfolio continues to perform well.

Speaker 5: With the most recent vintage flagship front 5 and 6, generating net IIRs of 21% and 15% respectively in USDOT. The portfolio remained very active in 2022.

Speaker 5: with the most recent vintage flagship front 5 and 6, generating net IRRs of 21% and 15% respectively in USDOT. The portfolio remained very active in 2022, completely...

Speaker 5: 29 M&A transactions with 30% year-over-year organic EPDOT growth and 57% if you include the impact of acquisitions. The divestment cycle for our mature funds remains a major priority in 2023.

Speaker 5: and we have made some positive steps towards liquidity in several portfolio companies. Our next vintage flagship fund has been in the market doing a difficult 2022, raising more than a billion dollars, which we have already started to invest.

Speaker 5: We are optimistic about gaining traction as the calendar rolls over to 2023 and expect to continue on the fundraising trail until the end of the year. This protocol has diversified into growth equity through Kamaru-Ping.

Speaker 5: with our first fund together in the market now and being seeded with four outstanding portfolio companies. And as we recently announced our acquisition of EGA, that very talented team will begin raising their fourth venture fund.

Speaker 5: fund together in the market now and being seated with four outstanding portfolio companies. And as we recently announced our acquisition of IGA, that very talented team will begin raising their fourth venture fund and our first together.

Speaker 5: during 2023. In infrastructure, the big story here was divested. As we announced exit for all data, our data center platform, an interest is one of our toe roads in Brazil in Q4.

Speaker 5: which will generate proceeds of more than $1.4 billion to fund investors. Both of these investments were made from infrastructure fund 3. And as we announced previously, the recent exit activity moved this fund through the performance for assumed ump????? fee realisticallysation Though as whole.

Speaker 5: allowing us to recognize $19 million of net realized performance fees in Q4. Part 3 continues to perform well with a net IIR of 13% in US dollars and a net performance fee accrual of $129 million, which importantly, is a net worth of $1.5 million.

Speaker 5: we can now continue to monetize with each subsequent exit event. Diversment activity like this one also gives a boost to our fundraising process for the next generation fund, which is approaching a first clothing in the next few months. Our most recent fourth vintage.

Speaker 5: Fund is also showing great early performance with a net IR of 17% in US dollars and we continue to pursue expansion.

Speaker 5: is also showing great early performance with a net IIR of 17% in US dollars and we continue to pursue expansion of our infrastructure core offering.

Speaker 5: where we now have both a listet and a list of vehicle focus in Brazil. Our credit strategies had a strong 2022 performance.

Speaker 5: relatively to their respective benchmarks. With Latham, corporate high yield, outperforming by 260 basis points.

Speaker 5: and Latin corporate local currency by more than a hundred basis points. Most notably, our local currency credit strategies had positive returns in US dollars. In a year that saw the Bloomberg Global aggregate index down more than 16%. It was a very challenging year.

Speaker 5: Open and perpetual products are well positioned to capture increased clienty man. And we also expect to see inflows from new drawdown fund products.

Speaker 5: and perpetual products are well positioned to capture increased client demand. And we also expect to see inflows from new drawdown fund products like our infrastructure credit fund.

Speaker 5: which has already secured backing from two institutional anchor investors. In public equities, investment performance was solid in 2022.

Speaker 5: And notably impressive in the Chilean small cap strategy, where the Pionero fund outperforms a benchmark by nearly 12% for the year.

Speaker 5: Despite great performance, some of the same forces impacted credit funds also drove Q4 outflows from Chilean investors in our public equities product. While these redemptions were related to the general reduction of allocation by domestic institutions, there was a significant poets'

Speaker 5: To local funds, we believe investment performance will ultimately be the driver of flows as we look forward in 2023. Finally, in real estate.

Speaker 5: VBI, our platform in Brazil, generated more than $20 million of inflows in Q4.

Speaker 5: including the launch of a new unlisted real estate credit product, demonstrating their capacity to innovate and offer investment opportunities across the capital stack.

Speaker 5: Real estate continues to be an area where we have an attractive opportunity to expand, both organically and inorganically. All in all, real estate is an area where we have an attractive opportunity to expand,

Speaker 5: We feel like the platform is well positioned to capture opportunity in each of these vehicles and we look to solidify our place as the gateway for alternatives in Latin America. Let me now turn the floor to Marco and Anna to cover the results in more detail and I'll come back for some closing thoughts.

Speaker 6: Marco. Thank you, Alex. As planned, we have transitioned the CFO role to Ana Russo, effective as of the beginning of this year. We will accordingly cover the 2022 results and then turn over to Ana for commentary as we look forward. Rest assured, you will continue to hear from me as I will remain highly involved with our shareholders' relations efforts from the executive level.

Speaker 6: We generated $35.3 million of fee-related earnings in 4 quarter 22, up 20% compared to 4 quarter 21 and $130 million for the full year 2022.

Speaker 6: Up 51% from 2021 and reaching the guidance with reiterated throughout the course of the year. Total fee revenues of $227.1 million were up 55% in 2022 compared to the prior year. Supported by 52% growth in management fee revenues as well as higher transaction and other fee revenues.

Speaker 6: Of the 52% management fee growth, approximately 38% was generated by the addition of Moneza and VBI to our platform. With a reminder, resulting from the organic growth, driven primarily by deployment in our drawd alpha. Operating expenses increased 61% year-over-year, driven primarily by the addition of Moneza and VBI.

Speaker 6: as well as increased costs related to public company satisfaction. Our effort-margined remains in the 56-58% range for each quarter in 2022, slightly higher than our expectation.

Speaker 6: demonstrating our ability to maintain consistent margin levels following a major acquisition. We generated $19 million of performance we later earning.

Speaker 6: in 4 quarter, 22 and full year 2022 from the first realization of performance piece in our infrastructure of?? 3.

Speaker 6: While this compares to 58 million in 2021, it's worth noting the different circumstances. Our 2021 PRE came from the final exit and realization in our private equity fund 3.

Speaker 6: meaning no additional performance fees coming from that fund. In 2022, however, we are seeing just the beginning of the performance fee straight from the infrastructure fund. A fund would steal 129 million in net accrued performance fees.

Speaker 6: as of the year end. Now that we are through the phase of returning capital and hurdles, we would expect subsequent exit events for D-Sun to generate real-life performance fees for shareholders.

Speaker 6: The distributable earnings were $53.3 million or $36 cents per share for 4.22. Up from $27.7 million or $19 cents per share in 4.21. For the full year 2022, the distributable earnings of $147 million.

Speaker 6: Equate to $1 per share, closely in line with a dollar and two cents per share with the lever last year. So overall, the year-over-year dynamics for DER, higher FRE, in line with our guidance of set by the lower performance fees and additional shares related to our transaction with desconto and for simplicity, this Campbell here us is young woman. I make, of course, some of you have already misses here.

Speaker 6: As Alex noted, the 2022 total dividend of 85 cents per share delivers a use of more than 5% to an investor who bought our stock at the beginning of the year. For an investor in our IPO, the 2021 and 2022 dividends combined delivered a cumulative 2-year yield of more than 10%. We believe a very nice income stream to compensate the headwind...

Speaker 6: We've seen on valuation in our sector and across the equity market Turning to A1 Our total A1 of 27.2 billion dollars is up 14% from one year ago reasoned by the 4.5 billion of organic and inorganic inflows previously mentioned Looking by asset class

Speaker 6: Private equity AUM increased 21% on the year, driven by the ongoing fund raising for our next fund. Infrastructure increased 15% driven primarily by strong portfolio appreciation and real-states grew by nearly one billion through the transaction with the BBI. The earnings AUM ended the year at 19.2 billion. Up 7% from one year ago.

Speaker 6: with inflows from draw-dow fund, deployment, and M&A partially of that by the redemption pressure in credit and public expertise. As well as the end of the contractual feature in our second infrastructure fund.

Speaker 6: After delivering strong performance in a challenging year, I see a work lab from a business well-positioned to deliver on our multi-year goals. On that note, let me now turn to Anna for some comments as she takes the CFO range looking into 2023.

Speaker 7: Good morning everyone. I'm thankful for Marco and the team for onboarding me during this transition period. I'm looking forward to engaging with all of you. As we bring a successful 22 to a close, we look forward to our task of executing on 2023 and the next few years as we discuss with you at our investor event. Our top line outlook remains very strong, even in the current perspective of the world of our economy.

Speaker 7: based on where we begin the year and our expected deployment pace. We do expect the revenue and therefore, the fee-related earnings to wrap over the course of the year in contrast to the more steady FRA results we saw over the four quarters of 2022. Given factors such as the holiday for the first quarters in our new private equity fund, we expect FRA in the first quarter of 2023.

Speaker 7: to be similar to the run rate level we saw in 2022, excluding the impact of incentives in the Q4 and then rumping up through the rest of the year. As of December 31, our Netacrupe performance fee is 10 at $462 million up 33% from one year ago, and that's after realizing $19 million in the fourth quarter. At more than $3 per share, this accruis predominantly supported by our TruePort solvers in private equity funds.

Speaker 7: the end of 2025. As we progress in integrating our recent M&A transaction, we are focusing on instanturizing and automating back office process.

Speaker 7: is streaming line-in through systems and ensuring efficiencies throughout the organization. This will be crucial as we pursue a high rate of growth and will enable patches to mitigate inflationary pressure, reinvest in the business, and maintain current margins with continued highest standards of control in VR. The future of for-patteries bright, and I'm thrilled to be part of the journey. I'm thrilled to be part of the journey.

Speaker 5: Let me now turn back to Alice for some closing remarks. Thanks, Anna. All together, we're very pleased with the firm's performance in 2022.

Speaker 5: While it was a year of headwind in our industry and challenges across the globe, we believe the stability of our business model and talent of our people are the key drivers of our resilience and success. We have set ambitious goals over the next several years.

Speaker 5: And I'm confident we have the right team and resources at place to deliver on the targets. Delivering on 5 to 6 billion of fundraising and 150 million of fee related earnings this year will have us well on the path to our 2025 goals. And I'm confident we have the right team and resources at place to deliver on the path to our 2025 goals.

Speaker 5: and we expect to continue to be active on the MMA front. We believe we are uniquely positioned to be the gateway for our turn to the Latin America, and with success in that endeavor, we can deliver significant value to all of our stakeholders. We are now happy to take your questions. Thank you.

Speaker 5: to continue to be active on the MMA front. We believe we are uniquely positioned to be the gateway for our turn to the Latin America, and with success in that endeavor, we can deliver significant value to all of our stakeholders. We're now happy to take your questions. Thank you. Thank you.

Speaker 3: As a reminder, to ask a question, you'll need to press star 1-1 on your telephone to withdraw your question. Please press star 1-1 again. Please wait for your name to be announced. One moment for our first question. Our first question comes from the line of Mike Brown with KBW. Your line is now open. Please wait for your name to be announced.

Speaker 3: As a reminder, to ask a question, you'll need to press star 1-1 on your telephone to withdraw your question. Please press star 1-1 again. Please wait for your name to be announced. One moment for our first question. Our first question comes from the line of Mike Brown with KBW. Your line is now open. Great. Great. Hi. Good morning, everyone.

Speaker 8: Morning, Mike. How are you? Good. Thank you. I wanted to start with the, on the fundraising commentary. So I thought that was certainly positive that you guys are targeting five to six billion of inflows for 2023. And you gave a lot of great comments there on the call. Could you just maybe dimensionize that a little bit here? I know you don't have a crystal ball. There's a lot of moving pieces in the market. But what would be the,

Speaker 5: the main drivers there if you had to split that organic info number up a bit. Hi there, this is Alex. Thanks for participating and thanks for your question. I think it's hard to give a specific detailed guideline. As you mentioned, we have several moving parts and the market is adjusting itself. What I would say in general terms that infrastructure and credit related products are now

Speaker 5: Easier if you can say that expression that's a fundraiser today. And I think the all the equity related products are no harder to fundraise in this current environment. Of course, kind of August was what I'm going to say now, the interest rate environment does affect specifically what I just mentioned, actually related products, hard at fundraiser and fixing infrastructure like products easier to fundraise. So we're on the road, as you know, with our...

Speaker 5: infrastructure front five and private credit, infrastructure credit and some other credit products and those I think might be the big chunk of those five to six billion. Of course, we have a fantastic track record on the private equity and as I mentioned, we know we feel confident that as we move into 2023, we're going to be able to reach our targets there, the flagship fund. We're also on the road with our venture capital fund and our growth equity fund.

Speaker 5: fund to Brazilian investors, infrastructure credit, fund one also for international one Brazilian investors, a lot of private credit fund also that we are raising, that will target the whole Latin America as a whole on the private credit side.

Speaker 5: plus the real estate of permanent capital vehicles and infrastructure permanent capital vehicles. So that's more of where we see things going. But again, I think when we look into the number of general $20 billion, total $20 billion capital formation that we gave as a guideline in our backstay in December from 22 to 25, having raised organically and inorganically.

Speaker 5: close to 4.5 last year and having another 5 to 6 billion this year puts us in a very, very good position to reach the 20 billion targets capital formation by 25. So I think we know we feel comfortable far from easy, as you know, but I think we feel very comfortable that we'll get there, but I think a different kind of profile of products I hope I answered your question. Yes, thank you, Alex. That was great. Thank you. If we could just maybe double click in a little bit on the infrastructure side here. So, you know, clearly investor demand is very strong for that, that asset class.

Speaker 8: When we think about PACS, can you just help us understand a little better? How do you differentiate your infrastructure strategies versus some of your larger global peers that also invest in the Latin region? How does PACS approach infrastructure differently?

Speaker 5: Okay, and thanks for your question again. Within our infrastructure vertical, I think we have our flagship fund. As I mentioned, we're raising right now our infrastructure flagship number five. The strategy of the differentiator of that fund, the strategy that makes that fund or family of funds very different is the fact that we take on development risk.

Speaker 5: And we have dominated that. And I think that's why we do continue to perform extremely well, as mentioned also during the call, and also doing some of our earlier calls late last year, the divestments of two great companies that we had in our infrastructure fund three. And what does it mean taking development this year? Now in the end, what we do is pretty easy to explain. I think it's harder to execute. No, we do win an auction or we buy and ask it.

We then take the risk that asset by taking the development of that project and then we sell it. So no, we buy the risk itself and we did risk mainly to develop one of that asset. It could be a green field. Now when you win a confession of a new power projects, for example, or you can buy a small brown field and then develop that to create a larger asset. An example of the data.

center business that we just sold late last year, now we started from scratch. We actually bought a piece of land. We constructed our first data center in the outskirts of São Paulo here in Brazil. And from there we created a over 60 megahertz company, now with no potential to expand to 100 this year. And we have pent up demand already sign contracts to bring this company to 400 mega. And we sold it and now we made over four times our money there in US dollars.

So that's an example of beginning a thesis from scratch and taking on the development risk and then creating this platform and selling it. We did the same with TOROs that we just sold to an international global player, strategic global player TORO that we had here in Brazil. The same in this case we won the confession we took on the development risk of, you know, that came with the concession of expanding duplicating parts of the highway, creating new toe plazas and blah, blah, blah. And two years later, we had the most portion of the Catholics needed to model.

or by a major...

infrastructure fund and they are by our mature assets already and of course they are going to take it to a different level but it's already a developed asset or already grown from scratch as I just explained. The case of Unseed is international toll road player the thing. They are buying also a toll road in the state of Sompala that as I mentioned we took on the development risk and gave and sold that toll road already as a much quasi mature assets and that's what we do well and I don't think the

But I'm generalizing, but most of the infrastructure funds that do do play Brazil, they take that development risk besides one or two players. So on the other strategy that we have within the vertical, we have also a core infrastructure product. And there we do know we don't take the development risk there, but we know of course it's we're focused more on the youth side, mostly for Brazilian investors up to now. We plan to also help these core infrastructure funds in other countries in Latin America, like Chidi, Colombia and Mexico. We also now have infrastructure credit, which is a very interesting product that we have already anchored by two major institutions for investors.

But the flagship strategy differentiator is the development nature development angle that I just explained. Again, I hope I answered your question there. Yes, thank you for all of that color, Alex. Appreciate it. Thank you. And action from Ricardo Bustiel with BTG Pactual, your line is open. Thank you. So, this is the performance fee, that you book in the choir, give it the realization of performance fee.

We set off taxes still pretty much flat for a recording, right? Can you please explain what have happened with this line? And if you should see the margins of the related to FRD, actually be similar in the following questions. Thank you.

Ricardo, you're the voice artist again here. Yeah, yeah, Mark, Mark, you're the lead. Thank you. Thanks. Yeah, I'm not sure I got the full, just confirm to me if I got the full question because the voice came in a little bit broken up. The question is about overall margins and also income tax. Is that what those are the two components of the, the question? No, sorry. We just, we saw that the impact was pretty much flat. Despite the performance people are booking the car, so we understand what, what drove this better performance.

And exactly if you can normalize this level of bags for the following quarter, I'm not sure if you heard me now.

Okay, so let's first differentiate the two kind of expenses, the expenses related to the carry.

You're going to find that below the FRE on the carry interest allocation and bonuses for the quarter, which is 10.2. So that ties to the 29.1 that you see for the quarter.

which is completely different from the personal and admin expenses that you see on the top. The 58% margin is what it's in sync with the overall margin for the year. It is lightly above what we have indicated throughout the quarters during the last year. We indicated in the mid-sifties and we are ending up slightly higher than that. We're gaining some margins.

on personal expenses throughout the year. And we were losing a little bit of margin on the admin expenses due to some of the fixed costs associated with a position of more nada that had a lower margin, a lower overall margin. But overall, we can say that we're happy with the margins and with the progress of the expenses in a year where of course inflation hit very strong. Very clear. Thank you.

on personal expenses throughout the year. And we were losing a little bit of margin on the admin expenses due to some of the fixed costs associated with a position of more nada that had a lower margin, a lower overall margin. But overall, we can say that we're happy with the margins and with the progress of the expenses in a year where of course inflation hit very strong. So very clear. Thank you. Thank you.

One moment for our next question. Our next question comes from the line of BHS, a brew with Goldman Sachs. Your line is now open. Hi, Alex, Marco, and Anna. Good morning. Thank you for taking my question. Our first question would be on the FRE guidance of 150 million for 2023, which implies a 15% increase from 2022. Could you tell us how much of that growth do you expect to come from organic growth versus how much coming from inorganic growth, if any? And a second question, if I may, would be on the real state strategy?

So this was a segment that you expected to grow the most in VA UN by 2025 if I'm not mistaken. So if you could give us some color on the segments that I'll look for 2023 and what kind of growth you're expecting that would be great. Thank you. Mark, would you want to take the first question and I'll take the second? Please. Sure. So this is, we don't provide the distinction between what is the FRE organic and inorganic. I think what you can have as a reference.

as Alex indicated in the call, is he guided on the five to six billion of accretion of capital, and that's all organic accretion, if you will. So this is not encompassing any sort of accretion that is coming from acquisitions. I confirm that we will remain active on acquisitions. And the other data point, if it's worth, is that last year, the accretion of fee paying AUM.

inorganic was in the vicinity of 1.4 billion out of the total 4.5 billion dollars. And going to your second question, and then I'll ask if we did answer both of them, Beatrice, this is Alex again. Yes, we're very excited with the whole real estate extension of our product lines and of course our general AUM. More specifically, I think in Brazil and countries like Chile and Colombia where we're looking into this very closely and Brazil we did an acquisition as you know called VBI. I think to say very interesting consolidation play on the read side.

And we're looking into that very closely. And VBI has been very active looking into that as well. We have within the Brazilian context, a 220 billion REI's REIT market, which are these listed Brazilian real-state trusts listed in the Brazilian Stock Exchange B3, as you know. And you have several listed real REITs in the Brazilian Stock Exchange that are basically single-asset reads or very few assets within that REITs. And that reads trades very poorly in the secondary market because it sees no single asset read.

has very low liquidity and investors are basically stuck with that, with that leads having difficulty in selling their shares. So I think no merging a group of those leads to create a large one, headed by our VDI partners is a great opportunity. Within VDI we have three thematics reads one focus on corporate.

The other one focused on logistics, the other one focused on credit related instruments in the real estate market, what we call in Brazil, the CRIs. And there I think we have so much to do on those fronts in consolidating other reads in those thematics, other those themes that I just mentioned. So there's so much we manage around five billion reais of reads.

in a 220 billion reais market. So you can imagine what we can do there. We see the same in a lesser extent in Chile. But I think an interesting and significant market in Colombia, and a very large market of these real estate rates in Mexico. And if we are successful in Brazil, I think we can have the goal, the aim to do the same.

in these other countries that I just mentioned. Also, I think, on the development real estate product, which are no drawdown in nature, what we call real estate private equity, to use the expression that we use in our industry here. Also very interesting to a product that are now with the targets, of course, higher returns, but takes on the development risk contrary to the reach that buy already much your assets.

I think there's a room for expansion as well as the economies in the region are back to their growth pattern. We saw Brazil growing around 3% and a little much higher than that last year, 1.5 to 2 something percent this year, same in Chile, same in Colombia, same in Mexico, again the whole need for these real estate investments. If we are emphasizing also the whole near shoring.

friendly shore and that I mentioned in my earnings call Mexico on that front I think really stands out because it will need a lot of investments in logistics and also factories whatever and the real estate market in Mexico I Think we'll be looking to take parts of this year's foreign thesis We're very excited with this opportunity

We tripled our AOM in the real estate space in Brazil last year, mainly through the acquisition of the EBI. I think we know we really look forward to continuing to expand the space. Lastly, as we do expand within the REAP market, it is a permanent capital structure product. So that also is extremely interesting for us because it does give us predictability, and see predictability in our future earnings because of the permanent capital nature of the product.

So I hope we answered your both questions with these advisors if we missed anything. Now that's very clear, thank you. Thank you. As a reminder, to ask a question you'll need to press star 11.

I would now like to hand the conference back over to Mr. Alex, signed for closing remarks. Well, thank you very much again for your participation in this call, your patience to go through this 50 minutes an hour with us. I think as all of us mentioned here, Anna, Marco and Josh, myself, Alex, extremely pleased with 2022 results. I think we did manage to hit our targets and the targets that we actually designed.

For 2022, in late 2021 when we had a different world environment and a different market for alternative assets, as we look into 2023, I think we're confident that we're going to be able to deliver again on our $150 million guideline for FRE and hopefully be able also to convert some of that performance fees into realizations throughout the next years. We have over $400 million, as you know, of inventory of performance fees. And some of our funds, namely our infrastructure from three, are already in the carry mode.

of carry status. So thanks again and I also want to know again congratulate here the team for an amazing year. Far from easy but I think the the team managed to perform. Now we wouldn't be having this call here if it were not for the team, the competence, the dedication and congratulate Anna as well here on her new CFO role. So as we go through 23, Anna will be taking more of a protagonist role here in our finance department as a CFO as Marco heads to a

these are our corporate development side and looks for no additional exciting acquisition opportunities for Patria. Thanks again, hope to see you soon and we'll have a great week. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.