Q4 2022 Vinci Partners Investments Ltd Earnings Call
We do not undertake any duty to update these statements for a discussion of some of the risks that could affect results. Please see the risk factors section of our 20-F.
We will also refer to certain non-GAAP measures and you'll find reconciliations in the release also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any of each partner spot.
With that I'll turn the call over 12%.
Thank you Anna good afternoon, and thank you all for joining our call. We are very pleased to join the wall today, as we announced results for the fourth quarter and full year of 2022.
Vinci posted adjusted distributable earnings of 55.8 million Reais in the quarter for the full year of <unk> 20 to adjusted distributable earnings totally 247.7 million reais or four.
47, reais per common share an increase of 9% in our cash earnings per share when compared for the full year of two ended to anyone.
Our business model has once again proven its resilience, while navigating through more turbulent and uncertain markets Vinci was able to generate substantial amounts of cash flow beckoned by predictable FRE. We found added contribution from liquid.
Investment portfolio.
As a result, the company will be able to maintain a meaningful dividend distribution to its shareholders, we announced a quarterly dividend of <unk> 17 cents on the dollar per common share in the fourth quarter totaling 71 cents in the full year, representing a core.
Palin dividend yield while we undergo a fund raising cycle that can drive significant growth for the following years.
<unk> ended the fourth quarter with 63 billion Reais in assets under management up 10% year over year, driven by fund raising across private market funds in the acquisition of Sps in the second half of the year.
In 2022, we started a fund raising cycle for private market products raising those two 6 billion reais in your captive subscriptions over the year, which alongside the acquisition of Vinci SBS represented roughly 8 billion reais in new long term AUM for them.
<unk>.
This cycle of fundraising will drive long term growth and is expected to allow us to push margins higher as disciplines carry a higher fee rate than the current blended average fee for beach and on top of that long term lockups that directly contribute to our fee related earnings stability.
<unk> and predictability.
This quarter, we activated 1 billion reais in commitments from the Mds as we anticipated in our last earnings call being 500 million for the ICC or climate change fund in infrastructure and another 500 million for Vinci credit <unk> our infrastructure.
Debentures funds in credit.
Which had already and Namco commitment signing form a local institutional player in the first half of 2022.
These investments reinforce <unk> position as the one stop shop and partner of choice for institutional investors in Brazil as relevant institutional players continue to increase their exposure to alternatives. We believe that should be an important trend going forward given that traditional players.
I feel extremely under allocated to alternative locally.
Moving on to our rights despite facing a challenging fund raising environment. Following a sharp interest rate tightening cycle in Brazil, we were able to raise approximately 800 millions <unk> across two existing products. While also launching two additional products inquiry.
<unk> diversification in allowing us to better tackle market opportunities and leverage our fund raising capabilities.
We will continue to rely on our highly experienced team to be creative in a tougher environment why we position ourselves for a new window of opportunity in rates.
If you look at the trend between 2019 in 2020, we raised roughly 3 billion reais across only four reached at the time we.
We have now seven each across our real estate and credit segments.
<unk> diversification that can be an important contributor to our AUM growth when we encounter more favorable market conditions for our primary capital raise.
This year, we faced several market challenges not only in Brazil, but worldwide with central banks around the world pursuing a tightening cycle in interest rates.
In Brazil, we have the benefit of being ahead of the global curve with room for easing rates over the next few quarters.
However, we still face volatile public markets in a harsh environment for fund raising for the year on top of Mark to market effect that also impacted our AUM numbers.
Nonetheless, we have been experiencing a favorable market for capital deployment across the platform.
This has led to and an exciting pipeline of opportunities to continue to deploy capital as we enter 2023 and several of our investment strategies.
In private equity, our new vintage we see our flagship strategy visit before announced it this quarter. Its first investments a controlling stake in Oclock, a leading hardware as a service company in Brazil.
In our private equity impact strategy var. We are seeing an exciting pipeline of investment opportunity and its fourth vintage is already 50% invested.
<unk> for us.
Exceptional investment base aligned with its strong performance may anticipate its fifth vintage for a more regionally in 2024 to the back half of 2023.
Another vertical with compelling room to deploy capital is each Sps and we are thrilled with the outcome of this transaction so far.
Sps vintages continue to delivery strong performance in the third vintage has already called one third of its capital commitments in little over than one year from its inception.
We expect to start fund raising its fourth vintage between the end of 2023 and the beginning of 'twenty 'twenty four.
Finally, Vinci credit <unk> is now in a position to start deploying capital in a QE fees as this blood only charged the management fee on invested capital credit spreads have increased recently in light of tighter credit conditions, allowing the funds to build a good quality ports.
Our superior risk adjusted returns.
Let me now turn to our view regarding our business outlook in our platform development.
Since our IPO, we have been focused on scaling our firm to develop its capabilities and continue to improve our market leading team with aim on developing new products driving strong risk adjusted performance and ultimately drive growth across the platform.
We believe wed be able to hit several of these objectives and we are proud of what we have accomplished since becoming a public company.
At the time of the IPO, we had a total of 49 billion <unk> AUM against our year end 63 billion Reais figures.
This is almost 30% expansion achieved against a backdrop of a historical rise in local interest rates and volatile global markets now our focus will be reaping the benefits of our investments in the platform focusing on efficiency to deliver growth with strong margins.
We are also acutely aware of Margaret Terence and how that could affect our business.
Giving worldwide challenges with higher level of inflation and interest rates, we are enhancing our cost consciousness and faculty on efficiency. This year looking to drive increased productivity across the platform.
Why would keep focusing on efficiency and productivity, we are still active in growing our business in both organic and inorganic at bats.
We are seeing a number of high quality firms facing headwinds raising capital in a challenging environment and this should make away for conversations around partnership that would allow us value generation for all parties involved.
Our strong cash balance also adds flexibility around use structured as was the case with our transaction with Sps into antitrust issue.
We're having very active source on the corporate M&A front and are looking into several different opportunities for potential acquisitions, focusing on recurring FRE growth in client base expansion, which we believe can be an interesting complement to our cash deployment on top of our cedar location.
Two proprietary private market funds.
We believe there is significant room to grow FRE by acquiring smaller private market oriented managers, there are under scale into softer macro environment, especially in perpetual capital products, which can be highly synergistic to our current product offering.
To finalize my remarks, let me spend some and provide an update on our efforts into our new retirement services vertical vrs.
In the end of November we published a press release announcing that <unk> has been approved by the Brazilian superintendency for private insurance Suzette to operate life insurers and open ended pension plans in Brazil.
So as that approval was an important milestone for Vrs as we are now set to launch our product and start fund raising.
Before I go into the product characteristics, we would like to cover why we are increasing our investment into the pension plans industry.
Currently we have $3 5 billion Reais, we see now in investment solutions platform, which our products stamp it as pension plan products. In response, we are the active manager of the product, which is distributed and remains under custody of our partner regulated insurance company.
With Crs, we will also have the opportunity to come the custodian of the assets and thus, allowing us to access another for fees.
<unk> will provide service in addition to our current pension plans funds, increasing our contact points with clients and our ability to fund raise from this pool of capital.
We believe there are three main reasons to access this market.
First it is a sizable addressable market with more than one trillion <unk> AUM and double digit growth over the last years, while liquid markets have struggled with outflows. The open ended issues plants posted another year of inflows into end of 'twenty two.
Second close to 90% of the industry is in the hands of the incumbent banks. This has a direct connection join us beaches growth opportunities the capital decentralization from incumbent banks use has been adapted by recent pension plans portability numbers as we are seeing a significant number of.
Flows from traditional banks to independent insurers.
And third there is a lack of independent tentative players offering open and pension plans current in Brazil. This number it is a low single digit number of relevant plays.
The market has several barriers of entries caused by expertise and infrastructure requirements to Zappy has a number of requirement that's only sizable and consolidated players can address which places <unk> in a unique position to capture a relevant portion of the industry.
Aligned with the vast market opportunity Vrs has been set up to assure strong competitive advantages that position our product offering with a differentiated approach from that of our competition.
We have developed a tailor made asset allocation algorithm based on many factors, including individuals retirement goals risk appetite objectives et cetera, and it is customized for a full lifecycle and beckoned by solid risk tolerance metric.
<unk>.
Moreover, Prs will provide an annual review to clients as priority targets may evolve through our investor's lifetime.
To enhance the offering for our customers. We have developed a one of a kind of technological experience supported by a user friendly digital platform.
<unk> advisor mechanism to assist our clients. Our goal is to have the best solution in the industry, which will ultimately simplify the most complex process for patient beneficiaries.
The product suitability is based on a customized experience that we will have two positive outcomes for our users.
First it will shrink the gap between customers expectations and results as our asset allocation approach diminishes the impact of short term volatility focusing on long term returns.
And second a tailor made investment portfolio will ultimately increase efficiency as we allocate capital for different type of funds, depending on market condition and investors' preferences.
It should also be a driver to reduce clients' cost.
And we work for low cost passive funds as part of the product matrix.
We start fund raising efforts leveraging our proprietary high net worth individual investor base extending over the next quarter just selected corporate pension plans a segment with over 100 billion Reais of addressable market, which has in addition to the large curved capital pool.
Assume mendel's growth opportunity.
We will keep updating investors on our quarterly calls at the business evolve a new milestones are achieved.
To finalize my remarks, I would like to stress the following.
It seemed challenging environments that we set ourselves apart from the competition.
Our highly diversified platform.
Both in product offerings and client base provide us the stability to continue to deliver solid results in a still challenging capital raising market. We are excited about our potential long term growth and continue to position the platform to capture these opportunities.
With that I'll turn it over to Bruno to go over our financial results.
Thank you Alessandro and good afternoon, everyone.
Starting on slide 11, we will cover AUM trends for the fourth quarter and full year 2022.
As each ended the quarter with $63 1 billion Reais in AUM up 10% year over year.
Here with both strong growth in our credit strategy growing its AUM by 72% when compared to the end of 2021.
The growth in credits was driven by the launch of <unk> crediting for our new strategy focused on infrastructure debentures with a long term oriented structure.
The fund has shown great demand from institutional investors, who committed $1 3 billion reais to the new strategy so far.
We will continue to fund raise for this product throughout 2023.
Another highlight this year was the further development of the partnership between our credit and real estate teams launching two new perpetual rights, one exposed to the agribusiness sector, leading sector of the Brazilian economy, and the Audrey focus on MBS instruments.
These two new funds are able to raise capital in a tough market environment and broaden our product offering in the suite perpetual vehicles.
Combining these two new routes with creative pain kind operations in our offices and shopping mall Reits.
We raised approximately 800 million reais in perpetual capital through 2022.
In infrastructure, our climate change funds, the ICC signed its first commitments, including an anchor investment from the NDS for 500 million arise.
The ICC is expected to hold a first close in the first quarter of 2023 and continue to fund raise throughout the year.
The fund will start to earn fees beginning at the first close and following capital raises should accrue retroactively management fees.
Another important contributor to our AUM growth in 'twenty to 'twenty two was the acquisition of Sps capital.
Adding long term capital in a new vertical to our platform.
At the end of the year long term capital comprised over 50% of AUM, resulting in a more predictable revenue stream for our management fees.
We will keep actively pursuing opportunities to add long term capital to our AUM beat organic or inorganic.
Moving on to Slide 13, we go over accrued performance fees in our private markets funds performance fee receivable increased to one.
$167 five meter ads in the fourth quarter, 8% increase quarter over quarter.
The visit these strategy currently accounts for roughly 90% of accrued performance fees, representing unappealing upside for future performance fees.
At the end of the quarter Vitia had 11 billion Reais in performance eligible AUM coming from private market funds steering investment period that can further contribute to our group of pharmacies as these funds answered your divestment periods turning to slide 14, we will cover our fee related revenues.
Revenues from management and advisory fees totaled 100 formulary is in the quarter.
Management fees accounted for roughly $100 million in the quarter up 9% year over year.
This increase was a result of the fundraising experienced across our private market strategies over the year and the impact of each SBS. Following the acquisition close in the third quarter of 2022.
We should see a continuing positive trends coming in the next few quarters with new capital raises in our closed down products and private markets.
Lined with capital deployment in <unk> and <unk> credit in for.
Both have significant dry powder to allocate this year.
Total fee related revenues were $393 5 million reais for the full year down 8% year over year due to a reduction in advisory fees in the year.
As for our management fees, they were up by 3% when compared to the full year of 2021.
In slide 15, we present, our operating expenses for the quarter and full year.
Other expenses accounted for $56 3 million reais in the quarter down 4% year over year.
In the full year total expenses were $208 5 million reais down 5% year over year.
Excluding bonus compensation fixed and variable expenses for the full year increased 7% year over year, following inflationary pressures on fixed costs and our investments in duress.
As mentioned by the foundry challenging market environments require even more attention to our overall efficiency with that said while expenses remain well behaved in 2022, we will enhance our cost cautiousness, focusing on protecting margins and accelerating operating leverage once our revenues accelerates.
We believe we have opportunities to be more productive across the firm, while maintaining a superior service to our Lps.
Moving on to Slide 16, we will go over our fee related earnings for the quarter.
<unk> totaled $51 3 million reais or <unk> 93 per share in the quarter down 5% year over year due to a stellar fourth quarter 2021 for our advisory vertical.
Bear in mind that our core business remained healthy with healthy trends and growing.
Advisory fees will carry a significant amount of seasonality as we highlighted a few times in previous earning calls.
In addition, higher interest rates also play a role in M&A and capital market activities as transaction, usually grow in periods of loser monetary policy.
This characteristic is currently being offset by stronger returns and our cash balance.
Coming back to the core asset management business, if we consider only there for you from our asset management segment, excluding that for Ya for advisory and our investments in Crs, which did not exist in 2021 with both a and F. Our increase of 22% year over year, an acceleration in the fourth quarter when comp.
There through the rest of 2022.
As we have been communicating we expected growth to accelerate in the back half of 2022 as private market Fundraisings gained traction N V. Chesapeake has had a full quarter impact in our FRE.
In regards to the full year 2022, given the advisory segment had an outstanding performance throughout 2021 the year on year comparison also carriers did effect on top of the Vrs investments, which was not present in the prior year.
As previously mentioned last quarter, we should continue to see growth for our core business for you over the next quarters due to some key factors first we will continue to fund raise for private market funds throughout the year. These.
These funds carry higher fee rates than the average fee rates of the platform and in some cases, such as the ICC and visit before we have retroactive fees to start the start of the funds.
We have funds that charge higher fees over invested capital such as each Sps funds and Vinci credit infra.
As they increase their capital allocation during the year, we should see an increment in fees.
Both still have significant amount of dry powder to deploy.
Third as already covered by the foundry, we are starting to raise capital for Vrs and should see revenues coming from this segment in the next few quarters.
This new a wham should begin to offset the run rate cost for the segments.
We are now also working with the possibility of potentially anticipating the launch of <unk> five mg each Sps for so the back half of 'twenty three depending on how capital allocation opportunities developed for our current vintage funds.
And finally potential additional M&A opportunities and a big focus company wide on productivity and efficiency could also presents further FRE expansion drivers.
The combination of these factors creates a solid base for FRE growth in 2023 irrespective of a significant improvement in market conditions.
Moving onto margins FRE margin was 49% in the quarter up one percentage point when compared to the same period last year.
For the full year FRE margin was also 49% well.
When we adjust the margin to disregarding investment easier as FRE margins would have been 50% for the full year compared with 52% for the prior year.
Shifting to slide 18, we go over our realized <unk> vast when it finally shrink them.
Vijay had $17 7 million Reais, he realized U P and financial income this quarter down 18% year over year due to realizations in CPM infiltrating T cell that occurred in the fourth quarter of 2021.
As we anticipated last quarter, we had a stronger than usual performance in our financial results due to local markets positive traction over the third quarter in the fourth quarter, we face a more challenging market environments with future interest rates widening considerably which impacted our liquid portfolio.
This resulted in a more modest financial results in the quarter when we compare results.
With the third quarter.
As highlighted in the past these movements are cyclical and we should see returns of at least 80% of CDI rate in the long term return for our liquid portfolio, which has been the average return since our IPO.
As of the fourth quarter <unk> reached a total GP commitments of $1 1 billion reais across private markets and close end products with close to one third of this commitments already been called the reminder, will be called overtime as funds to deploy capital.
We will continue to leverage our cash balance to raise new products across private markets. Nonetheless, as Alessandro mentioned, we're closely monitoring opportunistic M&A transactions to accelerate FRE growth, adding value to our shareholders.
Our strong free cash flow also played an important role delivering substantial value to our shareholders through share repurchases.
Since the announcement of our first buyback plan in the second quarter of 'twenty. One we have concluded the repurchase of one 8 million shares.
We are announcing today, an additional buyback program of 60 million Reais, which reflects the boards confidence in the company's prospects and long term growth by deploying cash from our cash journeys in a way that will benefit our shareholders.
Turning to slide 19, we will we'll go through our adjusted distributable earnings our adjusted distributable earnings totaled $55 8 million Reais or one real in one sense down 19% on a year over year basis, driven by realizations and fifth anticipated Russo which occurred in the last quarter of 'twenty two.
One.
Adjusted <unk> totaled $247, seven minera ice or four reais in 47 cents in the full year up 9% on a per share basis, when compared to the last year.
Our adjusted <unk> margin was 5% in the full year, an increase of two seven percentage points compared to last year.
We expect to continue to add shareholder value by expanding distributable earnings results overtime as a combination of organic growth through fundraisings across our platform and inorganic AUM expansion through acquisitions, such as the transaction with Sps capital drive our FRE and ultimately our bottom line.
And with that I'll turn it over to Serge to go through our segments.
Thank you Bruno.
Turning to our segment highlights as you can see in slide 20 true about the pharma and remains highly diversified which we believe should be the main contributor to the resilience of our business.
Disregarding the investments made in the Vrs segment.
56% of our FRE over the full year 2020 through <unk>.
<unk> from our private market strategies.
Followed by IPL Nash with 21%.
<unk> strategies with 19%.
In financial advisory contributing with 4%.
The same level of diversification is reflected in our segments distributable earnings.
Moving on to each of the segments, starting with our priority markets strategies on slide 23.
FRE totaled $33 7 million higher in the quarter.
25% year over year.
Driven by the strong fund raising over the year and the incorporation of Sps.
The biggest achievement across private remarks, Dishwater was the signing of the NDS investment in Vinci corrected amphora and ICC totaling 1 billion Reais in capital commitments.
Both investments were activated in the fourth quarter, but we will start to have it positively back the management fee revenues in 2023.
S predictor in previous quarter, we started to experience an increase in private markets average management fee rate. We should see continued stable wings to average management fee rates as we advance on fund raise and capital deployment over the next few quarters.
Segment of distributable earnings were $134 3 million and has in the full year, an increase of 5% year over year boosted by FRE growth.
Yeah.
Total AUM was $28 7 billion for the end of the quarter up 30% year over year, driven by strong fund raising across all private democracy strategies and the acquisition of Vinci Sps.
Adding to the previously mentioned contribution from the NDS we are.
So had contributions throughout the year in our fourth vintage for our flagship.
But I've had equity strategies visit before.
Lastly, although face an environment with high nominal interest rates, our rates were resilient and raised close to 800 <unk> over the year. The success behind the capital raise was due to two factors first the partners.
Between our credit and real estate groups launching reach with it.
Exposure to private credit transactions, which are more appealing in this environment.
Second being kind of transactions for the reach we can raise.
AUM without having trucks SaaS necessarily.
Mary markets, which has proven to be a valuable asset in tougher market scenarios.
Moving on to Slide 24, we go over our results for liquidity strategies fee.
Related earnings in the quarter of $8 8 million highs up 20% year over year.
Over the year to date totaled $38 3 million of hearings down 10% when compared to last year as a consequence of intra quarter depreciation of AUM that impacted the management fee revenues throughout the year and limited redemptions experienced Cindy.
At the beginning of 2020.
Total AUM was standpoint too.
At the end of the quarter, we say Ram being resilient compared to the Brazilian industry. Firstly, you can just start with <unk>.
We have public remarks, improving Brazil.
Should see a pickup in equity strategist trona influence standpoint. Meanwhile, we used to rely on our speaking vessel Beast to continue to provide.
Stability to our earnings.
Moving on to our Ips business on slides 25 F. R E totaled $9 seven <unk> in the quarter up 14% on a year over year basis.
Segment totaled <unk> 3 million man hours in the quarter up 9% year over year.
Over the year segment <unk> was 43 million is down 19% due to the stronger year for international exclusive mandates contributing to pre pharmacy revenues in 2021.
Turning to slide 26, we go over our results for financial adviser.
F for financial Advisory was $8 2 million has over the full year 2022.
Representing an decrease of 7% to 7% compared to last year. This was a result of a record 221 for the advisory business as previously discussed the several quarters.
Revenues for our financial Advisory Gary I, certainly have ourselves analogy and although uncertain to predict they should resume most impactful results when markets improve and do you activity re accelerates.
Finally, moving on to Slide 27, we go over our results for the retirement service segments fee related earnings for the quarter was negative one 5 million in her eyes and over the year represented a negative 6 million heritage.
As Alessandro mentioned earlier, we should launch the product this quarter. Therefore, we should start to see revenue contribution at some point this year, you're starting to offset our setup cost for the vertical well.
We are very optimistic and excited with the prospect of the EIS and we will keep you update our investors as the business develops through the year.
That's it for today's presentation once again, we'd like to thank you for joining our call.
With that I'd like to open the call for questions operator.
We will now start the question and answer session for investors and analysts if you wish to ask a question. Please press the button raise hand.
If your question is answered you can exit the queue by clicking on the same button wait whoa pool for questions.
Our our first question comes from Ricardo <unk> from BTG Pactual.
Please Mr. Ricardo your microphone is open.
Good morning, Good morning, guys and congrats on the results.
I have a couple of question here.
First can you please talk about how do you guys.
See the asset class mix that you have today.
If we believe they you are to concentrate in a specific asset class. If you believe you went to the develop another area or something like that.
And also can you please talk a little bit about your pipeline in terms of M&A is and what types of.
Eventually new segments would you be interested in looking to.
And finally, we signed the results there was a positive nonrecurring back related to adjustments on contingent consideration. So could you. Please provide more color on why this is the adjustments alright. Thank you.
[laughter].
Thank you. Thank you Hey, Corrado that Sally Thunder here I will pick up the first two questions and I'll leave to Bruno to answer the adjustment.
In terms of asset classes, we continue to believe that we have.
Already a very important diversification so.
We will continue to Falkland asset classes that we have as we have been stressing during the time that we have been a public company of course.
Movements in terms of AUM the Grove changes on one asset class to another over time, but we believe that will grow all of them as we as you saw recently, we saw pickup activity our fund raising for private markets being private equity infrastructure infrastructure and private credit.
Few quarters ago, we saw more in investment solutions, but that will come and go in that way, but we still believe that we have around.
Very important diversification in terms of asset classes, and we should concentrate in these asset classes going forward.
Second in terms of M&A pipeline.
With the market the conditions of the market that we have today as we mentioned before.
We are seeing a lot of good quality teams and firms we've not so easy environment to fund raise.
But.
We see that as an opportunity for M&A transactions right now have a very big pipeline and we are focusing more in long term lockup type of products being perpetual capital or very long term. So we are right now focusing on M&A activity more on the <unk>.
But market side.
And the last question I'll leave to Bruno to answer.
Thanks for the question Carter good to hear from you.
So the nonrecurring impact that you mentioned that its impact impacted our net earnings number for the quarter was an adjustment on the obligation that we have that is attached to the Sps transaction. So there is a portion of that transaction, which is.
A link to stock issuances. So we had two two components in that deal we had a cash component at closing in the third quarter of last year.
And we have and equity component, which is based on earn outs regarding additional revenue generated by the company. So that earn out was adjusted in the fourth quarter for the change in stock price of each so so that's the impact that we had the one that you mentioned.
Yeah.
Very clear thank you.
Our next question comes room via Teresa Brill from Goldman Sachs.
Mrs. Beatrice your microphone is open.
Hi, everyone can you hear me well.
Yes, Yes go ahead.
Uh huh.
Good evening, Thanks for taking my question.
I guess the first question would be I noticed that there was an outflow in.
In the quarter, if you could maybe talk a little bit about that give us some color around what that was in your expectations for the segment going forward.
We expect any more outflows this quarter or are in the next few quarters and the second question would be around Vrs. So you did mention.
We expect to launch this quarter first quarter of 'twenty three.
Do you have any expectations as of now in terms of when you expect a breakeven.
And in that segment.
And also what kind of management fee levels are you expecting from Drs. Thank you.
Okay. Thanks.
Thanks for the questions. This is bruno so I'm going to answer the first question I listen that tackle the second one so in regards to IP N S. The outflow was concentrated in one commingle fund that we have in that segment.
And the reason was basically the same reason why.
We had a little bit lower return and our assets are in our liquid portfolio in the third quarter I'm, sorry in the fourth quarter.
Which was the widening of interest rates. So this fund is a fund that has.
Usually positioning in short duration bonds, it's a quasi fixed income funds.
That is looking to shorten our AR increase the duration of.
The portfolio, depending on the view on the views on the markets.
But usually it carries very short term duration bonds and with the widening in the interest rates that we signed the fourth quarter the fund.
Ran a couple of months or two or three months below the nominal CDI rates.
And that led to some redemptions I think we had the same effect in the third quarter, but due to a different reason, which was a couple of branch monthly prints of deflation that we had that also also hurt the short term duration really interest rate bonds. So this fund was.
Let's see.
A couple of quarters for different reasons in terms of performance. We saw some redemptions in the fourth quarter that was very we're very focused on this funds now in the first quarter, where red uranium above CDI.
In this fund so the first couple of months.
The performance is above 100% of CDI. So we expect that effect too so now too to become material.
And in in and also regarding <unk> S. We do expect to have some new mandates to come online.
Eventually in the next few months and those should also have a positive impact. We have won a few mandates that are going to be.
Yeah.
The dose those funds are going to be transferred to us in the next few months. So that's should probably have a positive impact.
And I've been asking flows.
In the next couple of quarters, we expect that to happen so.
And then I'll ask.
<unk> will cover the second the second question.
Hi, Beatrice. Thank you for your question regarding Vrs.
As we said we are <unk>.
Very near the launch of the product, but we will restart.
<unk> Peru.
Our high net worth.
Kind of clients and also with later we've selected corporate.
Having said that that.
Means that we will start with more wholesale type of clients that of growing more with through massive clients. So the idea to start slowly to test all the systems to use the technology to make it everything graddy is to have more and more transaction in our platform.
Having said that our idea in terms of breakeven will be in 2024.
Maybe at the beginning of 2024 will start in our view already Ronnie.
Our breakeven for Vrs Vrs as a unit.
Stand alone.
Perfect and just a follow up on that if I may just in terms of management fee level. If you guys are thinking something closer to <unk>.
And I P N S or something closer to liquid strategies.
The client base.
It's a very good question that will depend on the type of their mandate because inside Vrs will have.
Two different sources of income Okay. The management fee itself and the insurance company will also have the part of the insurance company Thats already charge. It today in the scheme that will have on the funds that are related with pension plans. So have these two type of revenues.
Of course, one would be related to this nature of the company itself and another one more like an asset management and that will depend on the type of the of demand. It will have a lot of flexibility to build a kind of more like traditional portfolio debt to carry as you said something more similar to <unk>, but.
We could have technically something more towards alternatives that took care of the higher fees and we use our own products and external products and also as maybe ETF composed overall portfolio of AR.
Client so that will have different component of these if you will allocate more like liquid stuff with some more like.
On asset allocation point of view, we'll go for more like Ibms, but if you go more into the direction and the client wants when the alternatives, who have a higher fees related to that.
Perfect that's very clear thank you.
Our next question comes from William Barr and Gerard from <unk> BBA.
Please Mr. William your microphone is open.
Okay.
Thank you for the opportunity and good night, So I have two questions here. The first one is regarding the <unk>.
Realization of performance fees for 2023.
So can you share with us how do you expect it to evolve earlier this year and then later second half of the year.
And the second question here is.
Also regarding capital race, so I would like to understand how you view, which products should be easier or harder to grow and raise capital.
This year and then with that.
We should expect the increase in overall AUM being pushed mainly by.
The long term part of the business.
That's the question.
Yeah.
Thank you for the question is whether this is bruno so on on the Prs sides.
We haven't seen quanta in their comments in the past and just reaffirm that there is unexpected realization for 'twenty three.
And the private side, which is our expected exits.
The remaining asset in CPM, if it really was saw which is one of the funds that we have in the infra side.
And that asset is already booked in our income statement Im sorry in our balance sheets.
The expectation of that realization, we have that in the slide that shows the.
The future the future potential performance fees and also in the in the balance sheet.
In this particular asset we also have a GP of investments. So as was the case of the first assets that really are realizing 21.
Second assets, we will have an impact in both lines. So we're going to have an impact in <unk> and all of a sudden impact them and realize it be investments.
That impact should be around 2015 to 20 million combines the two impacts for our distributable earnings.
There is significant demand for the assets we are finalizing.
Am I getting the the required licenses for the assets would be fully approved by the regulatory body, but we have already received inbounds from strategic players. So we feel.
Confident that having the approval from the regulatory body, we should be able to move the assets quite easily.
And that's expected to happen in 'twenty three.
In regards to fundraising.
We have discussed in the past few quarters the targets for fundraising in 2023.
Coming from a private market funds.
We have all of them.
In the market today the ones that we have mentioned so we have the credit fund who have the ICC.
We have private equity before.
We should have.
So essentially the onset patients.
There are five in and of.
Each Sps.
My view today is that between all of these funds what were seeing most interest from our Lps are is in the climate transition funds that has been a theme really very strong theme on a global basis.
A lot of investors today. Despite the fact that globally, we're seeing a little bit of a pullback in demand for private markets. This is an area of the market that we haven't seen that affect at all so people are really still looking quite strongly into.
Into climate transition funds I think there is a serious severe on their location.
To this theme globally and Brazilian our view has a competitive advantage to answer part of this question right. We have very good geological.
And natural resources in the country.
The load factors, if you look at load factors for our renewable Andrews in Brazil. They are very very.
Differentiated when you compare to a b or even American load factor. So we can operate a.
Renewable energy in Brazil in a much more efficient way. So this has been.
One of the.
One of the funds that we're seeing more traction there.
The other one that we're very excited about as well is each Sps for.
So we're very happy with the with the partnership with the Sps capital team.
We are seeing a lot of anticipation in.
In regards to Veatch Sps for.
We received inbounds as well from local investors regarding the fond window fund will come to market.
Everybody wants to talk to us about the funds.
So that's another product that we feel that once we have it online and available for investing we also have.
Potential impact.
A favorable impact to our AUM I think for 'twenty three as was the case of the second half of 'twenty two.
We are going to see a protagonist from private markets right. That's what we saw in the second half of last year.
Given the sheer size of the fund raise that theyre going to pursuing these in these.
<unk> I think it's very likely that the worker will continue we're going to continue to see a protagonist from.
Private markets funds again in.
In 2003 as well as was the case over the last two quarters of 'twenty. Two we still have that target of 10 billion.
Now we are kind of halfway through a little bit less than halfway through but are kind of getting halfway through and with what we're seeing from the market from a demand standpoint, I think we're gonna probably hit that target by the end of.
23, so that's.
What we see on that side and obviously, we continue to hold.
<unk>.
Let's say a positive outlook for our <unk>.
Improved fund raising for the liquid names in our portfolio as well IP N S and equities.
Our areas of growth that we have an opportunity to raise money if the market conditions improve.
And also.
Talking about the rights right I think we've talked about that in.
In the call today.
The rates will be a strong AG for us for fund raising eventually.
It's a it's a group of products. That's when we had an open markets. We raised in a couple of quarters, a $1 4 billion in the <unk>.
First half of 'twenty, one that was the number that we raised.
So it's and we had fewer reach than we have today. So today, we have more products available for fundraising then we did have in 'twenty. One. So we expect once the market has lower interest rates hopefully in next year or by the end of this year when interest rates start coming down and we have a more benign environment for me from an interest rates.
Standpoints.
This can be a group of products that can contribute quite meaningfully for the for the AUM of the firm from a from a fundraising standpoint.
On an ongoing basis it can be of relevance.
Contributor on a on an ongoing basis for us.
Very clear thanks for the for the answer.
Thank you that's all for today I would like now to turn the call over to Mr. Alessandro for the final remarks. Please Mr. Alessandro you can proceed.
Okay.
So I would like to thank you all for your support and confidence the last two years since we became a public company.
And I'd like to share our optimism that derives from our Veritas.
<unk> model that we expect to continue to grow at the same time, providing a very good profitability and dividend yield.
So with an eye to you and thank you all.
Yeah.
Vinci Partners' conference call has now conclude.
You for attending today's presentation, you may now disconnect and have a great day.
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