Q3 2023 Vinci Partners Investments Ltd Earnings Call
So section and instructions will follow at that time as a reminder, this call will be recorded I would now like to turn the conference over to Ana Castro Investor Relations manager. Please go ahead Anna.
Thank you and good afternoon, everyone joining today Alessandro after Chief Executive Officer.
When does that Amber private equity chairman and head of Investor Relations and surpass Chief Financial Officer.
Earlier today, we issued a press release slide presentation, and our financial statements for the quarter, which are available on our website.
At IR <unk> com.
I'd like to remind you that today's call may include forward looking statements, which are uncertain and outside of the funds control and may differ from actual results materially.
We do not undertake any duty to update these statements for.
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 anything to partner.
Our results Vince are generated fee related earnings of 51.3 million houses are 95 cents per share and distributable earnings of 51 8 million houses are 96 cents per share for the third quarter 2023, we declared a quarterly dividend of 17 cents.
On the dollar per common share payable on December seven to shareholders as of records as of November 22nd.
With that I'll turn the call over to Allison. Thank.
Thank you Anna good afternoon, and thank you all for joining our call.
We're very pleased to join you today as we announced results for the third quarter of <unk> 23.
In my opening remarks, I'd like to cover some important topics before Bruno as Sergio go further deep into details on our results for the quarter.
To start I want to give some more color on our recently announced partnership with Arris.
I truly believe despite the ship will set an important milestone not only for our growth trajectory, but for the company's history as a whole.
We are very broad two parts or repair is one of the leading alternative asset managers globally and believe there will be significant gangs for both companies from D. As a partnership.
That transaction or fee.
Initially closed less than two weeks ago, and we have already made significant progress with the Arris team. This week, we had our first board meeting with the participation of Peter Ogilvy partner and head of Ares Corporate strategy group, who has formally taking us.
Seat on their board.
We are thrilled to have areas in our board to share best practices and strategic guidance on investment strategy and business operations to pursue the growth of our platform.
In addition to our board several sub committees have to kick it off such as the global distribution opportunities for Vinci in the short term, we will focus on our flagship strategies, which are currently fundraising visit before and V ICC across private equity and infrastructure.
Going forward, we believe there is substantial opportunity to drive value also for other private market strategies, such as private granted and vgs at Sps.
We also commenced discussions for local product distribution for areas in Brazil and of course M&A opportunities at <unk>.
Additionally, we connected several of hours and areas heads of strategies do you have conversations with the management teams over partnerships and new investment opportunities.
We believe a close relationship and proximity between our senior employees could be an important driver to maximize our growth opportunities.
We are very excited about the first few weeks of the partnership and about the impact heavy areas on board can generate for our platform in coming years.
Moving on I would like to give a brief overview of what we talked about in our Investor day.
We hosted the event at NASDAQ headquarters and it was a huge success with substantial interaction from analysts on both onsite and webcast attendance.
There we went through ventures history main areas of focus investment strategies and targets for what we expect <unk> to be at over the medium to long term.
We set out a path over the next five years.
Leaf double our distributable earnings power.
We believe we are in a strong position to achieve these targets we set out in the Investor Day Matthews.
The drivers of growth in our view.
Ready in place we have a strong secular <unk> that are driving asset migration to alternative asset class in Brazil, and Latin America, and those should be the main driving forces for our growth going forward.
We are focusing our efforts across all fronts with the objective to position Vinci as one of their regional winners in alternatives.
This is really important for us to be able to take advantage of the market opportunity the best way we can.
We believe that partnering with a leading global players such as Ares substantially increases our chances to achieve our long term goals.
I would like to highlight a few key messages from the event.
The Brazilian market has operated in a very cyclical manner, especially when it comes to interest rates over the last 15 years.
We build our business model to XL, when we have favorable market cycles, and we have proven to be resilient when facing tougher ones.
We are now at an inflection point, leaving a span with difficult markets given the outcome of the Covid crisis.
Entry a positive scenario with an easing cycle for interest rates starting in Brazil.
The last positive cycle, we managed to grow the company with a substantial CAGR of close to 30% in AUM.
We expect this next few years to present interesting growth opportunities.
Furthermore, we are focused on inorganic growth locally and expanding our footprint into other geographies with a focus on Latin America.
Divestments ROM areas put us in a very competitive position to make transactions that could be meaningful to our growth going forward.
We invite investors that want to dive deeper in our targets and learn more about Vinci to watch our investor day that is available on our IR website.
To close my remarks, I would like to discuss a macroeconomic perspective, and what we experienced this quarter.
Last week, the Brazilian Central Bank continued its easing cycle, maintaining the same pace.
Nominal rates are now at 12, 25%. This cycle started with rates of 13, 75% and after three meetings they are down 150 basis points.
Expectations for our future cuts continue to be at the same pace and we expect nominal interest rates close to the 9% level by the end of 'twenty 'twenty four.
This implies a 475 basis points cut over a year and a half Stan.
This would mean.
A much more constructive environment for Brazilian assets.
We have been actually talking about is likely path over the best quarters. In this scenario is developing as always strategy Department predicted.
However, it is important to note that this quarter, we suffered from a short term adjustment in long term real interest rates, which had a negative impact on market to market and in our liquid portfolio.
The short term impact on where interest rates were not the Brazilian phenomenon, but rather a worldwide one.
With the macroeconomic environment, the Wes and the short term hike in medium to long term real rates for treasury bonds Brazilian bonds followed.
This led to the impact on our investment portfolio.
And a temporary halt in the proven who had started to see overall flows during the second quarter.
I feel it's important to share with investors.
Our medium to long term outlook for the easing cycle remains extremely constructive and we are optimistic on our ability to delivered solid growth over the next few years. However, the short term trends got a little bit more volatile.
I would like to conclude with the following message.
When we founded Vinci in 2009, we decided.
To pursue a business model that could have significant room to scale and they kept best to rethink capital in challenging scenarios.
We divide our history in three phases.
The first phase of our company was structured where we built our segments capabilities and invested heavily in developing our operations.
Does that efforts in the first phase paves the way into the second which was diversification.
Interest phase, we already had all major business lines, and we work it on creating new products and strategies, we've seen this segments.
Our third and current phase is it scaling we believe to have a complete array of products ranging from private markets illiquid strategies to business solutions, such as IP N S with few bunch of strategies to complement.
Vinci is ready to scale and a favorable environment as we foresee is the few needed to really being impactful and taking our company to the next level.
With that I will turn it over to Bruno to go over our fund raising efforts and pipeline.
Thank you Alessandro and good afternoon, everyone. This quarter, we have exciting news to share regarding our fundraising.
First let me cover a private market segments.
This quarter, we had some important contributions coming from funds across private equity real estate and infrastructure. Our private markets group has a stellar last 12 months' period and now represents nearly 60% of our revenues.
First our fourth vintage for a private equity flagship fund visit before.
They're an important closing with XP any more than 600 meter rising capital commitments. We've disclose visit before is that approximately three quarters the size of BCP III and we expect further commitments in coming quarters.
And this has been achieved in the most challenging global fund raising environment of the best 20 years. Please note that this in any further commitments have a retroactive fees clause that's for charging management see since the start of the funds, which wasn't the mute off 2020 to disclose positively impacted third quarter.
<unk>.
This fund raising with XT. It also bodes well with something that we have been saying for a while.
Brazilian investors are increasingly there are location stars alternative products.
Visit before as a fish feed the vintage with the most local capital since we started the visa B strategy. This is true in both absolute and relative basis.
We're thrilled with the traction seen from locals, especially in this environment, where interest rates are still at high levels.
We expect with the easing cycle developing that locals interest for alternative products should increase for future vintages across our private market strategies.
Shifting to our real estate strategy later this quarter, we held a follow on offering for our shopping mall REIT risk.
This was truly a milestone because for the past few years primary issuance for listed Reits were basically muted due to the market environment.
This follow on offerings for these are biggest and oldest Reits marks the reopening of our strategy that is highly important for each.
Given the difficulty to raise capital for Reits over the last few years the pipeline for our high quality assets is stacked.
We closed the offer in the end of the quarter and then less than one month. The proceeds were fully allocated.
This reinforces our ability to deploy in a better market outlook bodes well for more offerings over the next quarters.
All of our seven leased Reits are fully allocated and ready to come back to market as soon as there is a window.
We believe that in a positive environment this could be impactful to us.
Moving onto our infrastructure segment now.
This quarter, we had additional commitments for our climate impact Fund V ICC.
G. ICC continues to see strong demand from international investors.
This quarter, we added more than 300 million reais to the funds.
At this level the fun already has 75% of its to beat in Reais target between signed and approved commitments.
We should see new subscriptions over the next few quarters as we expect to reach the funds targets in the first half of 'twenty 'twenty four.
To finalize my remarks on private markets I would like to cover a topic, we introduced at our Investor day.
Early last year, we shared our fundraising target of temporary ice in capital commitments for a private market funds. We are at approximately 60% of this targets and things were on track to achieve at some point next year. However, as we will launch new funds at the beginning of 'twenty 'twenty four we decided to roll that target to 15 billion.
<unk> four at year end 'twenty to 'twenty four in addition to new commitments across the vintages. We're currently raising we should experience a pickup in follow on offerings in our rights and the launch of three new funds.
First we are working on launching <unk> five our fifth vintage for APAC strategy within our private equity Division.
We expect some good traction as you are for is delivering solid returns and has already divested from assets and return capital to obese.
Second Sps for the fourth vintage in our special situation strategy.
Sps is less advantage totaled just over 1 billion reais in commitments and those were raised only through high network investors.
We believe the extensive track record of the strategy alongside reaches distribution capabilities should contribute significantly for the fund raising aspect of Sps for.
Lastly, we plan to launch <unk> to our second vintage for our development strategy within our real estate.
We are working on divesting from the assets within the F. D O one which could be an important driver to determine the next vintage fund raising tiny.
To summarize all of these products show great prospect and are expected to launch in the first half of 'twenty to 'twenty four.
As previously mentioned by the sounds of the one driving behind our partnership with Arris was to leverage their wide and extensive worldwide relationship to offer first class products in Latin America, and Brazil. Therefore, we are excited as this partnership could be an important driver to capture international capital for this next round of fundraising.
Aires reach and scale are substantial incremental to our own distribution capacity and the partnership has the goal to allow us to reach capital pockets that are currently not available to us our increase our penetration in the ones that are.
We are very excited to work with them from design to market in these funds in the class of 'twenty to 'twenty four.
We will keep investors on the loop as we evolve other fund Raisings now to close my remarks, let me provide some insights for the liquids and I P. N S portion of the business.
The Brazilian environment over the past quarters with interest rates at a high level and some political noise was harmful for both segments.
This is not an exclusivity for each.
Over this period, the Brazilian liquids, the industry suffered from sizable redemptions and mark to market effects.
I would like to reinforce that our close relationship with our clients alongside our preparatory distribution channels and EMR institutional exposure provided us stability when several local liquid managers were struggling and sustain the business with that said as we have been saying over the last months, we expect that the positive.
Economic trend in Brazil will be an important driver for inflows to return to liquid products.
In our experience investors need to observe rates effectively falling to churn there are locations from fixed income tomorrow diversify Lucas products, such as hedge funds and long only funds.
The overnight rates in Brazil continues to decline, but it's still at a higher level, making the trade off yes, a bit harsh.
For IP NFS products institution stand to outsource their investment decisions when long term real rates stabilized at a level below their actuarial goes.
We reached this threshold at the end of last quarter, but as Alessandro mentioned in his remarks, we experienced a short term market adjustment that is still not constructive.
However, we are optimistic with trans going forward that could result in a more appealing San airframe flows across the segments.
Bottom line, we expect improvement in both IP and ASUR leak with at some point next year.
Bear in mind that I P. N S experienced a huge pickup in inflows less time facing favorable conditions as we raised 5 billion reais in 'twenty to 'twenty one.
And with that I'll turn it over to Sasha to go through our results. Thank you Bruno.
Let's start with management and advisory fees.
Fee related revenues totaled 107 million has in the quarter, our best quarter ever in revenues.
Management fees, where the center of this growth.
Boosted by new commitments for the ICC, and obviously before and they catch up effect.
Organizing fees since the beginning of each of the funds in just one quarter.
It's important to highlight these one off effects, but keep in mind, the subscriptions translate into fees for Vinci over the long term with the commitments charging fees for the next quarters wrong.
With new subscriptions coming over the next few quarters for both the ICC and we said before we should expect retroactive FX once again and possibly more discreet upsides from FRE as the funds have order closings how.
However, it's difficult to predict when exactly disclose and contributions will take place.
Yeah.
When we look into our segments private demands has been pushing growth for the platform.
While offsetting challenging markets for legal discharges and IP N S.
As Bruno mentioned, we expected despite of the business shrink proving to rein in 'twenty four as we continue to expect nominal interest rates to go towards single digit levels.
Another important factor to remain strong.
Third quarter revenues is that advisory fees.
Both a weaker quarter.
As we anticipated on our last earnings call.
This revenue stream presents a significant cyclicality than paying the only time that did disclose.
That's why when you think about advisory revenues, we target full year revenues.
We can anticipate that we just signed two transactions that should close assuming 2023 or at the latest early 2024 with the amount already in house for the fourth quarter, we will meet our annual targets for advisory revenues.
Can you still see some upside into an intermediary.
Depending on the closing time for discharge sign the transactions.
Turning to have on your results. This quarter FRE was $51 3 million highs or 95 cents per share up 7% year over year on a per share basis.
F. R. E continues to grow if the strong fund raising for.
Our private marks products over the last 12 months with highlights for this quarter subscriptions, that's triggered retroactive fees.
When we discuss trends for F. R E going forward, we should continue to boost health numbers.
One growing fund raising for private market products that should extend into any 24 with new vendors incoming although there could be some quarter to quarter volatility as the clauses for V C. Before envy ICC would take place.
Margins remained flat on a year over year basis, and we should own experience increase after the receipt.
Our significant re acceleration off of your AUM growth.
Even though we have been very cost conscious in 2023 management fees have not reached its full potential photos to see some margin expansion as we continue to experience very tough environment across our liquid business that is partially offsetting the <unk>.
Success across our fund raising and privates shifts intra period results as we discussed before first and third quarters are usually softer corporate pharmacy fees.
Given that most of our liquid funds reorganized fees in June and December and most of our illiquid funds are not yet at the crystallizing vies fees.
Diving deeper into our private democracy fund's gross accrued performance fees, surpassing 200 million has in the third quarter.
As we divest from assets and returning capital to our limited partners.
We should see a very important impact coming from this front.
As we talked about in our Investor day.
Results from our private demands funds should it be expected starting from 'twenty to 'twenty five.
To wrap up I would you like to go over our distributable earnings.
Stupid <unk> totaled $52 million has ended third quarter of 2023, or 96 cents per share down 27% year over year on a per share basis.
Although posting another solid quarter for our asset management business with the heck are the high management fees, we experienced a strong headwind.
National income this quarter.
As previously mentioned by Alessandro This quarter, we had a global short term effect on long term real interest rates due to a prolonged the rate hike in U S.
Which alongside persistent inflation and economic distress translated into higher long term rates for U S treasures.
Brazilian bonds rate curve, followed suit and widening considerably.
Affecting our liquid portfolio.
Which is mostly comprised by Brazilian federal government fixed rate bonds.
As a comparable basis on bema, Hasnt Andy's IH F fee for funds, we've seen that allocation as those in our portfolio and they also struggled this quarter with returns close to 20% of the CDI rates.
Our total cash return in the third quarter, you did just above 40% of the CDI rate.
These resulted in our realized GP and financial income to shrink.
55% year over year negatively impact distributable earnings results.
We experienced that the basic the same effect, but in the opposite way during the last quarter.
Our distributable wounds received a significant positive boost from financial income as our total cash return reached approximately 120% of the CDI index in that quarter.
And we.
We anticipated in our call that we would expect a lower contributions in the third quarter as markets have turned.
On a positive note Brazilian central Bank continues to cut rates and we see a more constructive scenario for 'twenty 'twenty four.
With that I would like to close our remarks and open the call for questions. Once again, we'd like to thank you for joining our call.
Please operator, you can proceed with the questions. Thank you.
We are now going to start the question and answer section. If we reach you ask a question. Please press the reason button wait while we pull for questions.
Our first question comes from Ricardo <unk> from BTG Pactual. Please.
Mr. Buck Bingo and my phone is open.
Hi, I wanted to ask about two topics.
First can you visit data is a little bit with the net inflows environment, especially for liquid funds.
Looking particularly into 2024.
And still related to this kind of a fundraising topic and also remind us how much capital have you have already raised in the flagship funds and why are there targets. So it Ken.
No what we could expect in the following quarters.
And then for the second question for a second theme I want understand that during the Investor Day, you guys mentioned unexpected.
Annual PRA of.
Around 100 true 120 meter high is between 24 and 28.
But given the still challenging environment that we are facing capital markets and still.
Private market vintage yet to mature their their results.
It makes sense you expect a much lower average of Gary <unk>.
Our next year and picking up to this target and the folly.
And also what would be the main asset classes driving performance fee next year. Thank you.
Hi, Ricardo that's Alessandra.
Thank you for the question regarding the current net.
Flow flows.
In terms of the more liquid.
Asset classes, we are we have seen more muted.
Our moods. So we are not seeing strong either inflows or outflows. So we are seeing more stable AUM.
Regarding of course, there is a current depreciation of the illiquid specially public equity because the market move it up in the recent weeks, but not relevant or outflows or inflows.
That is really very bad to do it's more.
Volatile movements that we didn't see recently, so it's kind of stable.
Regarding the flagship funds.
We said before we are reaching about 60%.
So a little bit more of the target fund raising.
We expect.
This fund raising for Vascepa before too and just on.
Middle of 2024, so do you.
Waiting for a final push especially for international peace.
So we are still confident that we'll reach.
The target and maybe we can even surpass since we are currently.
Making a further push especially in Asia middle East and far east as we speak.
Regarding P. R E O leave to Bruno to go in more details about it.
Okay got it good to talk to and thanks for the question.
I think you also asked on the targets we are working now on three funds visit.
This is before three main funds this before versus CN.
And then for credits funds.
These three funds together they have a target of about 7 billion.
We are probably across the three of them were probably around 70% of the target at this point.
The rest was raised in the in the routes right. So for the rest of 'twenty three 'twenty four we're going to work the balance of this through funds.
And in 2000 and Fargo banner ads.
Five.
And Sps for.
Those two funds should have a targets are between three or 4 billion.
So that's how we get to.
The 15 beat them overall target that we gave them to year end 2024, you add all of those funds and also the expectations that we have for.
For the REIT side of the business, we just raised 300 meeting.
And we are in the market now to raise additional money for Vuzix. So so that's how you get to the to the 15 billion.
<unk> you.
We gave this investor day guidance.
But the main contribution here will be Oh are starting probably in 2025 2026, when DCP three starts a core performance.
So until that.
Our paint performance right until that happens.
Going to be basically mostly with the liquids and Ips funds.
These funds woods and a good year, probably be able to give us a number between 50 and 60 million.
Revenues, if we have a good year.
By the second quarter.
This year, we were very optimistic about the rest of the year and the markets were looking up and things were looking good for.
For the country of the markets given what.
What was happening with interest rates, but with the hike in the in the interest rate curve in the United States that that movement got temporarily.
The delayed right. So we had the same.
Movement in the curve in Brazil.
That affected the markets, which was in effect that happened, mostly during the third quarter and as Sandra I made a comment it impacted our liquid.
Liquid portfolio as.
As we have been saying over the years that most of the liquid portfolio.
Is it a federal bonds.
Is that why does any.
Being triggered by the widening in the United States, We had a negative mark to market in that.
In that position if that's the case for the overall market. So fixed income funds performed poorly in the third quarter.
And the stock market is also did not perform very well.
But now that the U S. The U S interest rates are starting to come down a little bit with some deceleration of the economy, we're already seeing tightening in Brazil.
Hopefully that will translate at some point with.
Better flows in the in the liquid sites.
Very clear thank you.
Our next question comes from Pedro Leduc from <unk> BBA.
Mr Law, Duke gut microbes open.
Thank you guys. So much for the call and taking my question first of all this negative impact of the higher rates had an <unk> Boston funds another positions given that in <unk>. So far rates have come down a little bit again as you just mentioned as you would expect the opposite swing. So some sort of benefit there or have you closed out or.
Some hedges or something like that and that's the first question and the second a little more structural you mentioned have used a local <unk>.
Our retail distribution platform for one of them funds there was a record both relative and nominally no.
Guessing that you like the experience that you would like to continue using them.
But how does it differ a little bit on distribution commissions from the other channels that youre using shows us that we can model it properly. Thank you.
Oh Pedro Thanks, a lot for the for the question.
So on the on the returns of the liquid portfolio you are right I mean, if.
With with market's tightening the performance should be better.
We have talked.
<unk> talked about this over time as well that we expect.
The the return on the liquid portfolio on a net basis to be around 80% or 85% of the of the fixed rate in the in any given quarter.
In the third quarter in the second quarter, we did 130% in the third quarter, we did about 40%.
If you add the two quarters, we're kind of around.
The average, let's say, it's around what we expect from a normalized standpoint.
So hopefully we can get back to that.
Kind of 80% level with a more stable.
Market environment in regards to the distribution.
The distribution of the cost is amortized in our in our income statement.
Cross the life of the funds. So we had already started in the third quarter and it's gonna be going on for the next several years. So that's our.
That's how it it will be impacting the.
The income statements.
So that it does its already backed out for you and we will continue to impact that for you over the course of the next several years.
As the fund life.
<unk>.
Okay and should we expect you to use this channel more for other products.
Going forward as well yeah. We we have we have used this channel in the past.
It wasn't our first.
Time.
So visit three already used our high net worth distribution.
Channel var for Us high net worth distribution channel disappear for us as well.
We are planning to use.
Plans to use it for Sps for a V is which is are you for.
<unk> in the water sewage space also use it so.
I think overall what has been I think the main takeaway here in my view is this is what I mentioned during the the.
Prerecorded part of the call.
<unk>.
Despite the fact that we had.
Interest rates above 13% for most of the fundraising cycle or is it before.
It is the biggest allocation we had from local investors to the strategy.
So we had the biggest felt and this is for all investor requests. So we had the biggest allocation from high net worth we had the biggest allocation from <unk>.
Distribution in platforms in Brazil.
So I think this is a very important point with globe, which will back it goes back to the the thing that we have been discussing over time the under a location that we see to our asset classes in the in the local market and even with the Ah <unk>.
Double digit 13% nominal interest rates, where you able to see those.
Those inflows into the into the private funds. So it's something that's really.
We will help you I mean has helped over the past year and a half.
And we will continue to help.
Going forward as the relocation in the local community to dollar the alternative asset management space continues.
And.
Sorry that fill it sounded just to add on top off Bruno said one message is very important we use this channel, but we are very cost conscious in terms of the cost of the distribution. So we always compare with the cost of a placement agent outside Brazil, and et cetera to really.
This fund raising effort to make sense for us in terms of costs and more than that as Linda said, we have been very.
Successful in terms of fund raising with institutions in that in that case for Vinci at least we use our proprietary distribution channels. So.
This specific disc.
Distribution.
<unk> for for instance, it's more for retail and high net worth enough fluent than really a cauvery any kind of institutional distribution inside this number so.
On average I think in terms of cost for us we have been able to keep distribution costs very under control.
And we are very aware that should make sense at the end of the day, so not raise money at a very high cost does it make sense for us.
Okay, but on Alessandro Thank you for the questions and answers.
So far.
Our next question comes from Beatrice <unk> from Goldman Sachs.
Please Mrs Beatrice.
Yeah My phone shopping.
Hi, good evening understand little bit Ono and says you. Thank you for the call and taking my question.
So my first question is regarding fee revenues. So I know that this quarter you had the benefit of retroactive fees and the VC before N V ICC funds.
Which naturally inflated the implied management fee for private market strategies this quarter, but what should we expect in the coming quarters I understand that that can vary depending on additional closing for these funds, but do you think that the implied management fee for a price.
Market strategy should come down from the strong number into Q or should it be similar from thank you.
And then my second question is on <unk>.
So if you could comment a little bit on how you are listed Reits are currently trading versus an EV.
If you expect any additional follow ons already on in this quarter.
And then you mentioned that you were looking to raise a new development strategy Fund would then you'll see a S V gel too.
Is that included in the $15 billion is guidance and what would be the size that you expect to raise in that fund.
Thank you.
Okay, but if there's just room thinks a lot for the questions. So far.
<unk>.
Or the.
For the third quarter, we had a one time impact on our revenues, it's a number between five and $8 million from the from the retroactive fees. So I think thats something that going forward.
We would expect to happen.
But it's as Sandro mentioned, its very difficult to time window close are going to happen right. So we expect to have a closing before the fourth quarter again.
You should also have he flows.
And then probably.
The middle of next year, we should have continued inflows in both funds.
Social depth.
It could be bigger one quarter to the other good depends on.
On when the closings happen right.
But the but the third quarter impact was was the one that I mentioned to you in regards to Reed's.
We mentioned this also in our in our prior call.
Retard the asset class that we have on the private side that are most correlated to interest rates.
So when there was during the second quarter are very strong our optimism.
And regarding lower lower interest rates and the curve lowered them.
Expectations on future interest rates lowered as well the Reits had a phenomenal performance and we had a very strong.
Net earnings number.
During the quarter because of the mark to market from the REIT.
Death reverted somewhat into the third quarter and it continues to revert somewhat in the fourth quarter. So we had a situation.
That's the end of the second and beginning of third quarter, we had several of our funds above and easier.
And we had a very short period of time charter short window of time.
To do a primary offering we did with <unk>.
In that short period of time that we had that the window was open.
But now unfortunately, the window is closed again right. So we had I mean overall, the retail industry coming down as a mirror image of the <unk>.
Horizon in the curve right over the interest rate curve. So now we need to see our interest rates on a nominal terms really going down which will continue to happen in our view.
And that should lead to opportunities for us to come back to market with the.
With the Reits at some point to the next few quarters, we are again Dewey.
Asset for sure.
Transactions, which we did some in the past few years a few quarters.
The issue with those transactions that they are very complex destruction uses the volume.
Is smaller so we cannot do like several hundred million primary issues, we wish we could do with these.
Doing a assets for a share swap.
The numbers are less relevant, but we are exploring that.
<unk> Avenue, and now that the window for rich or.
Is closed.
And then finally on the <unk>. The first fund was just slightly above 300 million.
And any of you.
That's first fund is doing very well.
We were very.
Successfully deploying the capital in the <unk>.
In the construction of the of the of the industrial sites, there and the outcome of the fund is looking to be very positive. So I would expect that when we come back to a second vintage fund is going to be a bigger volume.
We still haven't figure out the exact number but it could be like half a beat and stuff like that and it is included in the 15 billion target that we have.
That we put forward in the in the Investor day.
Perfect. Thank you so much.
Clear.
Lean, but otherwise movies, but opposite bit wound desperate attainable don't live with Amo.
There are no further questions at this time I would like to turn the call back to Alison to water for closing remarks.
Okay.
Again I'd like to thank you all for attending our call for your continued support.
And hope that to come back in the next quarter to deliver.
Again, our results and we hope that.
We'll have a very constructive scenario going forward with interest is going down and we are very confident.
In the performance of our platform going forward. Thank you very much and have a good night.
The venture partners third quarter 2010, three earnings conference call is now close thank you for participating and have a good night.
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Good afternoon, and welcome to the venture partners third quarter 2023 earnings Conference call. At this time all participants are in listen only mode. Later, we will conduct a question and answer section and instructions will follow at that time as a reminder, this call will be recorded I would now like to turn the conference over to Anna.
Castro Investor Relations manager. Please go ahead Anna.
Thank you and good afternoon, everyone joining today Alessandro after Chief Executive Officer, but who knows that amber private equity chairman and head of Investor Relations and Sascha paths.
<unk> financial officer.
Year to date, we issued a press release slide presentation, and our financial statements for the quarter, which are available on our website.
At IR <unk> <unk> Dot com.
I'd like to remind you that today's call may include forward looking statements, which are uncertain and outside of the firm's control and may differ from actual results materially.
We do not undertake any duty to update these statements for a discussion of some of the risks that could affect results. Please see the risk factors section of our 20-F, we will also refer to certain non-GAAP measures and you'll find reconciliations in the release.
Also note that nothing on this call constitutes an offer to sell.
Or solicitation of an offer to purchase an interest in anything to partners.
Our results vintage generated fee related earnings of 51.3 million.
Our 95 cents per share and distributable earnings of 51 8 million highs are 96 cents per share for the third quarter 2023, we declared a quarterly dividend of 17 cents on the dollar per common share payable on December seven to shareholders as of record.
As of November 22nd please.
With that I'll turn the call over to Alison.
Thank you Anna good afternoon, and thank you all for joining our call.
We are very pleased to join you today as we announced results for the third quarter of 2023.
In my opening remarks, I'd like to cover some important topics before Bruno as Sergio go further deep into details on our results for the quarter.
To start I want to give some more color on our recently announced partnership with Arris.
I truly believe despite the ship will set an important milestone not only for our growth trajectory, but for the company's history as a whole.
We are very proud to partner with various one of the leading alternative asset managers globally and believe there will be significant gangs for both companies from DSM partnership.
That transaction will officially closed less than two weeks ago, and we have already made significant progress with the arris team. This week, we had our first board meeting with the participation of Peter Ogilvy partner and head of Ares corporate strategy group.
Who has formally taking a seat on their board.
We are thrilled to have.
Areas in our board to share best practices and strategic guidance on investment strategy and business operations to pursue the growth of our platform.
In addition to our board.
<unk> had to kick it off such as the global distribution opportunities for Vinci in the short term, we will focus on our flagship strategies, which are currently fundraising BCP for N V ICC across private equity and infrastructure.
Going forward, we believe there is substantial opportunity to drive value also for other private market strategies, such as private granted in VTS at Sps.
We also commenced discussions for local product distribution for areas in Brazil and of course M&A opportunities.
Additionally, we connected several of hours and areas heads of strategies do you have conversations with the management teams over partnerships and new investment opportunities.
We believe a close relationship and proximity between our senior employees could be an important driver to maximize our growth opportunities.
We are very excited about the first few weeks of the partnership.
The impact heavy areas on board can generate for our platform in coming years.
Moving on I would like to give a brief overview of what we talked about in our Investor day.
We hosted the event at NASDAQ headquarters and it was a huge success with substantial interaction from analyst on both onsite and webcast attendance.
There we went through <unk> history, my areas of focus investment strategies and targets for what we expect <unk> to be at over the medium to long term.
We set out a path over the next five years.
At least double our distributable earnings power.
We believe we are in a strong position to achieve these targets we set out in the vessel Dave Matthews.
The drivers of growth in our view.
In place we have a strong secular <unk> that are driving asset migration to alternative asset class in Brazil, and Latin America, and those should be the main driving forces for growth going forward.
We are focusing our efforts across all fronts with the objective to position <unk> as one of their regional winners in alternatives.
This is really important for us to be able to take advantage of the market opportunity the best way we can.
We believe that Barton, we felt leading global players such as Ares substantially increases our chances to achieve our long term goals.
I would like to highlight a few key messages from the event.
The Brazilian market has operated in a very cyclical manner, especially when it comes to interest rates over the last 15 years.
We build our business model to excel when we have favorable market cycles, and we have proven to be resilient when facing tougher ones.
We are now at an inflection point, leaving a span with difficult markets given the outcome of the Covid crisis.
<unk> a positive scenario with an easing cycle for interest rates starting in Brazil.
The last positive cycle, we managed to grow the company, we faced substantial CAGR of close to 30% in AUM.
We expect this next few years to present interesting growth opportunities.
Furthermore, we are focused on inorganic growth locally and expanding our footprint into other geographies with a focus on Latin America.
The investment from areas put us in a very competitive position to make transactions that could be meaningful to our growth going forward.
We invite investors that want to dive deeper in our targets and learn more about Vinci to watch our investor day that is available on our IR website.
To close my remarks, I would like to discuss a macroeconomic perspective, and what we experienced this quarter.
Last week, the Brazilian Central Bank continued its easing cycle, maintaining the same pace.
Nominal rates are now at 12 point, 25%. This cycle started with rates of 13, 75% and after three meetings they are down 150 basis points.
Expectations for our future cuts continue to be at the same pace and we expect nominal interest rates close to the 9% level by the end of 'twenty 'twenty four.
This implies a 475 basis points cut over a year and a.
Hoff Stan.
This would mean a much more constructive environment for Brazilian assets.
We have been actively talking about these likely path over the past quarters and this scenario is developing its always strategy department predicted.
However, it is important to note that this quarter, we suffered from a short term adjustment in long term real interest rates, which had a negative impact on market to market and in our liquid portfolio.
The short term impact on where interest rates were not the Brazilian phenomenon, but rather a worldwide one.
With the macroeconomic environment, the Wes and the short term hike immediate your long term repo rates for treasury bonds Brazilian bonds followed.
This led to the impact on our investment portfolio.
A temporary halt in the proven who had started to see overall flows during the second quarter.
I feel it's important to share this with investors.
Medium to long term outlook for the easing cycle remains extremely constructive and we are optimistic we'll know where the ability to delivered solid growth over the next few years. However, the short term <unk> got a little bit more volatile.
I would like to conclude with the following message.
When I founded <unk> in 2009, we decided.
To pursue a business model that could have significant room to scale and they kept best to rethink capital in challenging scenarios.
We divide our history in three phases.
The first phase of our company was structured where we built our segments capabilities and invested heavily in developing our operations.
This is efforts in the first phase phased away into the second which was diversification.
Interest phase, we already had all major business lines, and we work on creating new products any strategies, we think this segments.
Our third and current face is it scaling we believe to have a complete array of products ranging from private markets illiquid strategies to business solutions, such as Ibs with few bunch of strategies to complement.
Vinci is ready to scale and a favorable environment as we foresee is the few needed to really being impactful and taking our company to the next level.
With that I will turn it over to Bruno to go over our fund raising efforts and pipeline.
Thank you Alessandro and good afternoon, everyone. This quarter, we have exciting news to share regarding our fundraising.
First let me cover a private market segments.
This quarter, we had some important contributions coming from funds across private equity real estate and infrastructure. Our private markets group has a stellar last 12 months' period and now represents nearly 60% of our revenues.
First our fourth vintage for a private equity flagship fund visit before.
Are there any important closing with XP any more than 600 million reais in capital commitments.
We've disclosed this before is that approximately three quarters the size of BCP III and we expect further commitments in coming quarters.
And this has been achieved in the most challenging global fundraising environment of the past 20 years. Please note that this in any further commitments have a retroactive cease clause that FERC charging management see since the start of the funds, which was into mute off 2022 disclosed positively impacted third quarter fee.
<unk>.
This fund raising with XD also bodes well with something that we have been saying for a while.
Brazilian investors are increasingly there are location stars alternative products.
Basically for ease of fish feed the vintage with the most local capital since we started the VIP strategy. This is true in both absolute and relative basis.
We're thrilled with the traction seen from locals, especially in this environment, where interest rates are still at high levels.
We expect with the easing cycle developing that locals interest for alternative products should increase for future vintages across our private market strategies.
Shifting to our real estate strategy later this quarter, we held a follow on offering for our shopping mall REIT risk.
This was truly a milestone because for the past few years primary issuance for listed Reits were basically muted due to the market environment.
This follow on offering for these are biggest and oldest Reits marks the reopening for a strategy that is highly important for each.
Given the difficulty to raise capital for Reits over the last few years the pipeline for our high quality assets is stacked.
We closed the offer in the end of the quarter and the last in one month the proceeds were fully allocated.
This reinforces our ability to deploy in a better market outlook bodes well for more offerings over the next quarters.
All our seven listed Reits are fully allocated and ready to come back to market as soon as there is a window.
We believe that in a positive environment this could be impactful to us.
Moving on to our infrastructure segment now.
This quarter, we had additional commitments for our climate impact fund the ICC.
G. ICC continues to see strong demand from international investors.
This quarter, we added more than 300 million reais to the funds.
At this level the fund already has 75% of its to beat in Reais target between signed and approved commitments.
We should see new subscriptions over the next few quarters as we expect to reach the funds targets in the first half of 'twenty 'twenty four.
To finalize my remarks from private markets I would like to cover a topic, we introduced at our Investor day.
Early last year, we shared our fundraising target of temporary ice in capital commitments for private market funds.
We are at approximately 60% of this targets and things were on track to achieve at some point next year. However, as we will launch new funds at the beginning of 2024, we decided to roll that target to 15 <unk> for <unk> 'twenty 'twenty four in addition to new commitments across the vintages. We're currently raising.
We should experience a pickup in follow on offerings in our rights and the launch of three new funds.
We are working on launching <unk> five our fifth vintage for APAC strategy within our private equity Division.
We expect some good traction as you are for is delivering solid returns and has already divested from assets and returned capital to Lp's.
Second Sps for the fourth vintage in our special situation strategy.
Sps is less advantage totaled just over 1 billion reais in commitments and those were raised only through high network investors will.
We believe the extensive track record of the strategy alongside reaches distribution capabilities should contribute significantly for the fund raising aspect of Sps for.
Lastly, we plan to launch <unk> to our second vintage for our development strategy within the real estate.
We are working on divesting from the assets within the F. D O one which could be an important driver to determine the next vintage fund raising tiny.
To summarize all of these products drove great prospect and are expected to launch in the first half of 2024.
As previously mentioned valla sounded one driving behind our partnership with Arris was to leverage their wide and extensive worldwide relationship to offer first class products in Latin America, and Brazil. Therefore, we are excited as this partnership could be an important driver to capture international capital for this next round of fundraising.
Aires reach and scale are substantial incremental to our own distribution capacity and the partnership has the goal to allow us to reach capital pockets that are currently not available to us our increase our penetration in the ones that are.
We are very excited to work with them from design to market in these funds in the class of 2024.
We will keep investors on the loop as we evolve other fund Raisings now to close my remarks, let me provide some insights for the liquids and <unk> portion of the business.
The Brazilian environment over the past quarters with interest rates at a high level and some political noise was harmful for both segments.
This is not an exclusivity for each.
Over this period, the Brazilian liquids, the industry suffered from sizable redemptions and mark to market effects.
I'd like to reinforce that our close relationship with our clients alongside our preparatory distribution channels and EMR institutional exposure provided us stability when several local liquid managers were struggling and sustain the business with that said as we have been saying over the last months, we expect that the positive.
Economic trend in Brazil will be an important driver for inflows to return to liquid products.
In our experience investors need to observe rates effectively following two churn there are locations from fixed income to more diversify Lucas products, such as hedge funds and long only funds.
The overnight rates in Brazil continues to decline, but it's still at a higher level, making that tradeoff, yet a bit harsh.
For IP NFS products institution stand to outsource their investment decisions when long term real rates stabilized at a level below their actuarial goes.
We reached this threshold at the end of last quarter, but as Alessandro mentioned in his remarks, we experienced a short term market adjustment that is still not constructive.
However, we are optimistic with trans going forward that could result in a more appealing scenario frame flows across the segments.
Bottom line, we expect improvement in both IP anessa leak with at some point next year.
Bear in mind that Ips experienced a huge pickup in inflows less time facing favorable conditions as we raised 5 billion reais in 'twenty to 'twenty one.
And with that I'll turn it over to Sasha to go through our results. Thank you Bruno.
Let's start with management and advisory fees.
Fee related revenues totaled 107 million has in the quarter.
Our best quarter ever in revenue.
Yeah.
Management fees, what are the center of this growth boost.
Boosted by new commitments for the ICC, and obviously before and they catch up effect.
Recognizing fees since the beginning of each of the funds in just one quarter.
It's important to highlight these one off effects, but keep in mind. These subscriptions translate into fees for vinci over the long term with the commitments charging fees for the next quarters long.
With new subscriptions coming over the next few quarters for both the ICC.
And we said before we should expect retroactive effects once again and possibly more discreet upsides from FRE as the funds have order closings.
However, it's difficult to predict when exactly disclose and contributions will take place.
Yeah.
When we look into our segments private two months has been pushing growth for the platform.
While offsetting challenging markets for liquidity strategies, and IP N S F.
As Bruno mentioned, we expect that despite of the business shrink proving to answer any far.
As we continue to expect nominal interest rates to go towards single digit levels.
Another important factor to mainstream.
Third quarter revenues is that advisory fees posted a weaker quarter.
As we anticipated on our last earnings call.
This revenue stream presents a significant cyclicality than paying during the time that the <unk>.
That's why when you think about advisory revenues, we target full year revenues.
We can anticipate that we just signed two transactions that should close during 2023 or at the latest early 2024 with the amount already house, while the fourth quarter, we will meet our annual targets for advisory revenues.
We can still see some upside in 2023.
Depending on the closing time for this to sign the transactions.
Turning to have on your results this quarter F. R E.
Was $51 3 million highs or 95 cents per share up 7% year over year on a per share basis.
<unk> continues to grow if the strong fund raising.
Our private marks products over the last 12 months with highlights for this quarter subscriptions, that's triggered retroactive fees.
When we discuss trends for F. R E going forward, we should continue to boost health numbers.
Ongoing fund raising for private remarks products that should extend into any 24.
New vendors incoming although there could be some quarter to quarter volatility as they close as far as we see before NV ICC take place.
Margins remained flat on a year over year basis, and we should own experience increase after the receipt a more significant reacceleration of AUM growth.
Even though we have been very cost conscious in 2023 management fees have not reached its full potential followers to see some margin expansion as we continue to experience very tough environment across our liquid business that is partially offsetting the <unk>.
That's across our fund raising privates shifts into period results as we discussed before first and third quarters are usually softer corporate pharmacy fees.
Given that most of our liquid funds reorganized fees in June and December and most of our liquid funds are not yet at the.
Crystallizing vies fees.
Diving deeper into our private to Max funds garage accrued performance fees, surpassing 200 million has in the third quarter.
As we divest from assets and returning capital to our limited partners.
We should see a very important impact coming from this front.
As we talked about in our Investor day, Yeah, we results from our private demands funds should it be expected starting from 'twenty to 'twenty five.
To wrap up I would like to cover our distributable earnings.
<unk> totaled $52 million has in the third quarter of 2023, or 96 cents per share down 27% year over year on a per share basis.
Yeah.
Although posting another solid quarter for our asset management business with the heck are the high management fees, we experienced a strong headwind.
National income this quarter.
As previously mentioned by Alessandro This quarter, we had a global short term effect on long term real interest rates due to a prolonged the rate hike in U S.
Which alongside persistent inflation and economic distress translated into higher long term rates for U S treasures.
Brazilian bonds rate curve, followed suit and widening considerably.
Affecting our lease portfolio.
Which is mostly comprised by Brazilian federal government fixed rate bonds.
Our comparable basis on Bema has an index H F fee for funds, we've seen that allocation as those in our portfolio and they also struggled this quarter with returns close to 20% of the CDI rates.
Our total cash return in the third quarter yielded just above 40% of the CDI rate.
These resulted in our realized GP and financial income to shrink.
55% year over year negatively impact distributable earnings results.
We experienced that the basic the same effect, but in the opposite way during the last quarter.
Our distributable wounds received a significant positive boost from financial income as our total cash return reached approximately 120% of the CDI in the quarter and we.
We anticipated in our call that we would expect a lower contributions in the third quarter as markets have turned.
On a positive note Brazilian central Bank continues to cut rates and we see a more constructive scenario for 'twenty 'twenty four.
With that I'll do that.
To close our remarks and open the call for questions. Once again, we'd like to thank you for joining our call.
Please operator, you can proceed with the questions. Thank you.
We are now going to start the question and answer section. If you issue asking a question. Please press the racing button wait while we pull for questions.
Our first question comes from Ricardo <unk> from BTG Pactual. Please Mr Book Bingo got my phone is open.
Hi, I want to ask about two topics.
First can you visit data is a little bit with the net inflows environment, especially for liquid funds.
Looking particularly in 2024.
And still related to this kind of a fund raising topic can you also remind us how much capital have you have already raised in the flagship funds and why are there targets. So you can.
No what we could expect in a falling cars.
And then for the second question for a second theme I want understand that during the Investor Day, you guys mentioned, our expected average annual CRE of.
Around 100 through 120 meter high is between 24 and 28.
But given the still challenging environment that we are facing tough tomorrow kids and still a private market vintage yet to mature their their results.
Does it make sense you expect a much lower average of Gary <unk>.
For next year and picking up to this target and the folly.
And also what would be the main asset classes driving performance fee next year. Thank you.
Hi, Ricardo debt for Lasalle drew.
Thank you for the question regarding the current net.
Flow flows.
In terms of the more liquid.
The asset classes.
We have seen more muted.
Our moods. So we are not seeing strong either inflows or outflows. So we are seeing more stable.
Regarding of course, there is a current depreciation of the illiquid specially public equity because the market move it up in the recent weeks, but not relevant.
Our outflows or inflows.
There's really very bad to do it more.
Volatile movements that we didn't see recently, so it's kind of stable.
Regarding the flagship funds.
We said before we are reaching about 60%, so a little bit more of the target fundraisings.
We expect this fund raising for Vascepa before too and just on <unk>.
Middle of 2024 so.
Uh huh.
Waiting for a final push especially for international peace.
So we are still confident that we'll reach.
The target and maybe we can even surpass since we are currently making a further push especially in Asia middle East and far east as we speak.
Regarding P. R E L leave to Bruno to go in more details about it.
Okay Gotta go to.
Talk to you and thanks for the question.
I think you also asked on the targets we are working now on three funds.
This is before three main funds this before versus CN and.
And then for credits funds.
These three funds together they have a target of about 7 billion.
We are probably across the three of them were probably around 70% of the target at this point.
The rest was raised in the in the routes right. So for the rest of 'twenty three 'twenty four we're going to work the balance of these two funds.
And in 2000 and Fargo can I add a var fives.
And Sps for the.
Those two funds should have a targets are between three or 4 billion. So that's how we get to the 15 beat them overall target that we gave them to year end 2024, you add all of those funds and also the expectations that we have for our.
For the REIT side of the business, we just raised 300 million.
And we are in the market now to raise additional money for Vuzix. So so that's how you get to the to the 15 billion.
<unk>.
We gave this investor day guidance.
But the main contribution here will be Oh are starting probably in 2025 2026 win a VIP three starts a core performance.
So until that.
Our paint performance rights until that happens.
Gonna be basically mostly with the liquids and Ips funds.
These funds woods in a good year, probably be able to give us a number between 50 and 60 million.
Revenues, if we have a good year.
By the second quarter.
This year, we were very optimistic about the rest of the year and the markets were looking up and things were looking good for.
For the country of the market's given.
What was happening with interest rates, but with the hike in the in the interest rate curve in the United States that that movement got temporarily.
The delayed right. So we had the same movement in the curve in Brazil.
And that affected the markets, which was in effect that happened, mostly during the third quarter and as Satish I made a comment it impacted our.
Liquid portfolio as.
As we have been saying over the years that most of the liquid portfolios him is federal bonds.
With that are widely being triggered by the widening in the United States, We had a negative mark to market and that are in that position. If that's the case for the overall market. So fixed income funds performed poorly in the third quarter.
And the stock market also did not perform very well.
But now that our USD U S interest rates are starting to come down a little bit with some deceleration of the economy, we already see tightening in Brazil.
Hopefully that will translate at some point with a.
Better flows in the in the liquid sites.
Very clear thank you.
Our next question comes from Pedro Leduc from <unk> BBA.
Duke you got my phone is open.
Thank you guys. So much for the call and taking my question first on this negative impact of the higher rates had in three key.
Boston funds another positions given that in <unk>, so far rates have come down a little bit again as you just mentioned.
You would expect the opposite swing so some sort of benefit there or have you close out or done hedges or something like that and that's the first question and the second a little more structural you mentioned have used a local retail distribution platform for one of them funds. There was a record both relative and nominally.
I'm guessing that you like the experience that you would like to continue using them.
But how does it differ a little bit on distribution commissions from the other channels that youre using shows us that we can model it properly. Thank you.
Oh Pedro Thanks, a lot for the for the question. So on the on the returns of the liquid portfolio you are right I mean if.
With the market's tightening.
The performance should be better.
We we have talked.
<unk> talked about this over time as well that we expect.
The the return on the liquid portfolio on a net basis to be around 80% or 85% of the of the fixed rate in the in any given quarter.
In the third quarter in the second quarter, we did 130% in the third quarter, we did about 40%.
If you add the two quarters, we're kind of around.
The average, let's say, it's around what we expect from a normalized standpoint, so hopefully we can get back to that.
80% level with a more stable.
Market environments in regards to the distribution.
The distribution the cost is amortized in our in our income statement.
Cross the life of the funds. So we had already started in the third quarter and it's going to be going on for the next several years. So that's.
That's how it it will be impacting the.
The income statements.
So that it does its already backed out for you and we will continue to impact that for you over the course of the next several years.
As the Sun life.
It goes on.
Okay and should we expect you to use this channel more for other products.
Going forward as well yeah. We have we have used this channel in the past.
It wasn't our first time.
So visit three already used a high net worth distribution.
Channel var for Us high net worth distribution channel disappear.
For us as well.
We are planning to use we are planning to use it for Sps for a V is which is are you for fond in the water sewage space also use it so.
I think overall what has been I think the main takeaway here in my view is this is what I mentioned during the the.
Prerecorded part of the call.
<unk>.
Despite the fact that we had interest rates above 13% for most of the fundraising cycle or is it before.
It is the biggest allocation we had from local investors to the strategy. So we had the biggest all and this is for all invest requests. So we had the biggest allocation from high net worth we had the biggest allocation from distribution in platforms in Brazil.
So I think this is a very important point with globe, which will back it goes back to the.
We have been discussing over time, the under a location that we see to our asset classes in the in the local market and even with Ah Ah Ah.
Double digit 13% a nominal interest rates.
Were you able to see those those inflows into the into the private funds. So it's something that's really we will help you I mean has helped over the past year and a half.
And we will continue to help us.
Going forward as the relocation in the local community to its already alternative asset management space continues.
And.
Pedro sorry that fill it sounded just to add on top off Bruno Sad. One message is very important we use this channel, but we are very cost conscious in terms of the cost of the distribution. So we always compare with the cost of a placement agent outside Brazil, and et cetera to really.
This fund raising efforts to make sense for us in terms of costs and more than that as Linda said, we have been very.
Successful in terms of fund raising with institutions in that in that case for Vinci at least we use our proprietary distribution channels. So.
This specific distribution for BCP for frame, because it's more for retail and high net worth and affluent than really a coffee any kind of institutional distribution inside this number. So on average I think in terms of cost for us we have been able to.
To keep distribution costs very under control.
And we are very aware.
That should make sense at the end of the day, so not raise money at very high cost does it make sense for us.
Yeah.
So far but on Alessandro Thank you for the questions and answers that you are so far.
Our next question comes from Beatrice a video from Goldman Sachs.
Please Mrs to be at risk.
Yeah My phone is open.
Hi, Good evening, Alessandro Bruno and says you. Thank you for the call and taking my question. So my first question is regarding fee revenues. So I know that this quarter you had the benefit of retroactive fees and the VC before N V ICC funds.
Which naturally inflated the implied management fee for private market strategies this quarter, but what should we expect in the coming quarters I understand that that can vary depending on additional closing for these funds, but do you think that the implied management fee for a price.
Is it market strategy should come down from the strong number in Q or should it be similar from the queue.
And then my second question is on wheat.
So if you could comment a little bit on how you are listed Reits are currently trading versus an EV.
And if you expect any additional follow ons already on in this quarter.
And then you mentioned that you were looking to raise a new development strategy Fund would then you'll see a S V gel two.
Is that included in the $15 billion is guidance and what would be the size that you expect to raise in that fund.
Thank you.
Okay, but there's this really takes off for the questions. So far.
Or the or the.
For the third quarter, we had a one time impact on our revenues. It's a number between five and 8 million from the from the retroactive fees. So I think that's something that going forward.
We would expect to happen.
But it's as Sachin mentioned, it's very difficult to time window close are going to happen right. So we expect to have a closing before the fourth quarter again.
You should also have heat flows.
And then probably.
The middle of next year, we should have continued inflows in both funds.
Social depth I mean.
Could be bigger one quarter to the other good depends on.
Oh into closings happen right.
But the but the third quarter impact was was the one that I mentioned to you in regards to Reed's.
We mentioned this also in our in our prior call retard the asset class that we have on the private side that are most correlated to interest rates.
So when there was during the second quarter are very strong our optimism regarding lower lower interest rates and the curve lowered them.
Expectations on future interest rates lowered as well the Reits had a phenomenal performance when we had a very strong.
Net earnings number.
During the quarter because of the mark to market from the REIT.
That's reverted somewhat into the third quarter and it continues to revert somewhat in the fourth quarter.
So we had a situation.
That's the end of the second and beginning of third quarter, we had several of our funds above and easier and we had a very short period of time charter short window of time.
To do a primary offering we did with these Ah.
In that short period of time that we had that the window was open.
But now unfortunately, the window is closed again right. So we had I mean overall, the retail industry coming down as a mirror image of the ryzen.
A rise in the in the curve right over the interest rate curve. So now we need to see our interest rates on a nominal terms really going down which will continue to happen in our view.
And that should lead to opportunities for us to come back to markets with.
With the Reits at some point to the next few quarters, we are again Dewey.
Asset for sure transactions, which we did some in the past few years a few quarters.
The issue with those transactions that they are very complex destruction uses the volume.
Is smaller so we cannot do like several hundred million primary issues. We wish we could do with these doing a assets for a share swap.
The numbers are less relevant, but we are exploring that.
That Avenue and now that the window for rich or.
It's closed.
And then finally on <unk>. The first fund was just slightly above 300 million.
And any of you.
That's first fund is doing very well.
We were very.
Successfully deploying the capital in the <unk>.
In the construction of the of the of the industrial sites there.
And the outcome of the fund is looking to be very positive. So I would expect that when we come back to a second vintage fund is going to be a bigger volume.
We still haven't figure out the exact number but it could be like half a billion something like that and it is included in the 15 billion target that we are.
That we put forth in the in the Investor day.
Perfect. Thank you so much of it in a very clear.
There are no further questions at this time I would like to turn the call back to Alison to water for closing remarks.
Okay.
Again I'd like to thank you all for attending our call for your continued support.
And hope that to come back in the next quarter to deliver.
Again, our results and we hope that we.
We will have a very constructive scenario going forward with interest is going down and we are very confident.
In the performance of our platform going forward. Thank you very much and have a good night.
The venture partners third quarter 2010, three earnings conference call is now close thank you for participating and have a good night.