Q4 2023 Patria Investments Ltd Earnings Call

Operator: www.siegenthaler.com Hello, and thank you for standing by. Welcome to Patria's 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Okay.

Hello, and thank you for standing by welcome to Patriot's fourth quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised.

After the Speakers' presentation, there would be a question and answer session.

To ask a question. During this session you will need to press star one on your telephone you within your automated message advising your hand is raised.

Operator: To withdraw your question, please press star 11 again. I would now like to hand the conference over to your host, Josh Wood, head of shareholder relations. Sir, you may begin.

To withdraw your question. Please press star one again.

I would now like to hand, the conference over to your host Josh what head of shareholders Relations. Sir you may begin.

Thank you good morning, everyone and welcome to Patria is fourth quarter 2023 earnings call Sneaky.

Josh Wood: Thank you. Good morning, everyone, and welcome to Patria's fourth quarter 2023 earnings call. Speaking on the call are our Chief Executive Officer, Alec Seid, our Chief Financial Officer, Anna Russo, and our Chief Corporate Development Officer, Marco DiPaolo. And we're also joined by our Chief Economist, Luis Fernando Lopez, for the Q&A session. This morning, we issued a press release and earnings presentation detailing our results for the quarter, which you can find posted on our investor relations website or on Form 6K filed with the Securities and Exchange Commission. Any forward-looking statements made on this call are uncertain, do not guarantee future performance, and undue reliance should not be placed on them. Patria assumes no obligation and does not intend to update any such forward-looking statement.

Speaking on the call are our Chief Executive Officer, Alex <unk>, Our Chief Financial Officer, Anna Russo and our Chief Corporate Development Officer, Marco to volatile and were.

Also joined by our Chief Economist Lewis Fernando logos for the Q&A session.

This morning, we issued a press release and earnings presentation detailing our results for the quarter, which you can find posted on our Investor relations website or on form 6K filed with the Securities and Exchange Commission.

Any forward looking statements made on this call are uncertain do not guarantee future performance and undue reliance should not be placed on them.

<unk> assumes no obligation and does not intend to update any such forward looking statements.

Such statements are based on current management expectations and involve inherent risks, including those discussed in the risk factors section of our latest form 20-F annual report.

Josh Wood: Such statements are based on current management expectations and involve inherent risks, including those discussed in the risk factors section of our latest form 20th annual report. Also note that no statements made on this call constitute an offer to sell or solicitation of an offer to purchase an interest in any Patria fund. As a foreign private issuer, Patria reports financial results using International Financial Reporting Standards, or IFRS, as opposed to U.S. GAAP. Additionally, we will report and refer to certain non-GAAP industry measures, which should not be considered in isolation from, or as a substitute for, measures prepared in accordance with IFRS.

Also note that no statements made on this call.

Such an offer to sell or a solicitation of an offer to purchase an interest in any patria song.

As a foreign private issuer Patria reports financial results using international financial reporting standards or <unk>.

As opposed to U S GAAP.

Additionally, we will report and refer to certain non-GAAP industry measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with ISR.

Alec Seid: Reconciliations of these measures to the most comparable IFRS measures are included in our earnings presentation. On the headline metrics for the quarter, Patria generated distributable earnings of $70.5 million, or $0.47 per share, for 4P23. We declared a quarterly dividend of 39.9 cents per share, equating to 85% of distributable earnings per share and payable on March 8th to shareholders of record as of February 22nd. With that, I'll now turn the call over to Alex. Thank you, Josh, and good morning, everyone.

Reconciliations of these measures to the most comparable <unk> measures are included in our earnings presentation.

On headline metrics for the quarter Patriot generated distributable earnings of $70 5 million or.

<unk> <unk> 47 per share <unk> 23.

We declared a quarterly dividend of $39 nine per share equating to 85% of distributable earnings per share and payable on March eight to shareholders of record as of February 20 <unk>.

With that I'll now turn the call over to Alex.

Thank you, Josh and good morning, everyone.

Alec Seid: 2023 marked Patria's third year as a public company, and I'm very pleased with the performance we delivered in the fourth quarter and the full year. We generated $47 million of fee-related earnings in Q4'23, bringing our full year 2023 F.R.E. to $148 million, with an FRE margin of 60%. This is up 14% from 2022, driven mostly by organic growth. Performance-related earnings for Q4 2023 were $27 million, driven mostly by Infrastructure Fund III, and we finished the full year 2023 with $47 million of PREs, with strong performance in both earning streams. We delivered more than $70 million of distributable earnings, for $0.47 per share, for 4Q23, bringing distributable earnings for the full year 2023 to $188 million, or $1.26 per share.

2023 marked battery us third year.

Public companies and.

And I am very pleased with the performance we delivered in the fourth quarter and the full year.

We generated $47 million of fee related earnings in Q4 dollars 23.

Bringing our full year 2000 $23 million to $148 million.

With an FRE margin of 60%.

This is up 14% from 2022, driven mostly by organic growth.

Performance related earnings for Q4 2023.

Were $27 million, driven mostly by infrastructure fund III.

And we finished the full year 2023 with $47 million of the.

R E.

With strong performance in both earning streams.

We delivered more than $70 million of distributable earnings.

<unk> <unk> 47 per share for <unk> 2003.

Bringing distributable earnings for the full year 2023.

Through a $188 million.

Or $1.26 per share.

That translates to EPS growth of 26% year over year for our shareholders and the resulting $1 seven.

Alec Seid: That translates to EPS growth of 26% year-over-year for our shareholders, and the resulting $1.07 in dividends equates to a yield of 7.7%, based on our share price at the beginning of 2023. This was also our first year on the path to deliver the multi-year target, shared at our 2022 Investor Day, which looks out through 2025. We aim to grow fee-related earnings from $130 million in 2022 to more than $200 million in 2025, equating to an annualized growth rate of approximately 15% or more, given our performance in 2023, our Organic Growth Initiative, and the additional earnings power embedded in our pending M&A transaction. I'm confident in our path to meet this target, while it's challenging to guide you on PRE in a given quarter or year.

Dividends.

Wait two or yields or of seven 7%.

Based on our share price at the beginning of 2023.

This was also our first year on the path to deliver the multiyear targets shared at our 2022 Investor day, which look out through 2025.

We aim to grow fee related earnings from $130 million in 2022.

More than $200 million in 2025.

Equating to an annualized growth rate of approximately 15% or more.

Given our performance in 2023.

Our organic growth initiatives.

And the additional earnings power embedded in our pending M&A transactions.

I am confident in our path to meet this target.

While it's challenging to guide you on B R E.

In a given quarter or year.

We said, we could generate $180 million of performance fee realizations between our Investor day, and the end of 2025.

Alec Seid: We said we could generate $180 million of performance fee realization between our Investor Day and the end of 2025, including the amount realized in the fourth quarter of 2022. We have now delivered more than $66 million of PRE since our Investor Day, pointing us right on pace to deliver this target as well, in terms of growing the platform. We also set targets for total AUM to reach $50 billion and for earning AUM to reach $35 billion by the end of 2025. To achieve that, we estimated a need for at least $20 billion of capital formation, from a combination of organic fundraising and M&A, between 2022 and 2025.

Including the amount realized in the fourth quarter of 2022.

We have now delivered more than $66 million of B R E.

Since the Investor day.

Putting us right on pace to deliver this targets as well.

In terms of growing the platform.

We also set targets for total AUM.

To reach $50 billion and fee, earning AUM to reach $35 billion by the end of 2025.

And to achieve that.

Estimated needs for at least $20 billion of capital formation.

From a combination of organic fund raising and M&A.

Between 2022 and 2025.

Starting from a base of $24 billion of total AUM and $18 billion of fee, earning.

Alec Seid: Starting from a base of $24 billion of total AUM and $18 billion of fee-earning AUM at the beginning of 2022, we have had organic inflows of nearly $8 billion and added nearly $3 billion of additional inflows from acquisitions that have already closed. As you know, we have recently signed two significant M&A transactions, which we expect to close during 2024. Based on existing AUM levels, we expect these transactions to add more than $10 billion of additional fee-earning AUM to the platform.

AUM in the beginning of 2022.

Over the last two years, we have had organic inflows of nearly $8 billion.

And added nearly $3 billion of additional inflows from acquisitions that have already closed to our fee, earning AUM base.

As you know.

We have also recently signed two significant M&A transactions.

Which we expect to close during 2024.

And based on existing AUM levels we.

We expect these transactions to add more than $10 billion of additional fee, earning AUM to the platform.

When you put that altogether.

Alec Seid: When you put that all together, combined with our goal to raise around $5 billion of gross organic inflows again this year, we believe that by the end of 2024, by the end of this year, we should have a tree, the $20 billion of capital formation, and $35 billion of fee-earning AUM a year earlier than expected. We are not only growing.

Combined with our goal to raise around $5 billion of gross organic inflows again this year.

We believe that by the end of 2024 by the end of this year.

We should have already a trieste the $20 billion of capital formation.

And $35 billion of fee, earning AUM.

A year earlier than expected.

We are not only growing.

Alec Seid: We are growing with quality by adding stable and sticky AUM. Our permanent capital AUM is expected to grow to near 20% of total fee-earning AUM with the closing of pending M&A, with over 70% of fee-earning AUM continuing to be denominated in hard currency. Seeing this progress and the meaningful evolution of our platform, we expect to host another Investor Day event later this year to share our vision for the next phase of growth. Now, looking at some highlights and updates across the platform for the quarter of the year. Organic inflows to total AUM were $1.4 billion in Q4, and $4.8 billion for the year, counting an additional $175 million of commitments that were approved in December and closed in January.

We are growing with quality by adding stable and sticky AUM.

Our permanent capital AUM is expected to grow to near 20% of total fee, earning AUM.

With the closing of pending M&A.

With over 70% of fee, earning AUM continuing to be denominated in hard currency.

Seeing this progress.

And the meaningful evolution of our platform <unk>.

We expect to host another Investor day event late this year to share our vision for the next phase of growth.

Now looking at some highlights and updates across the platform for the quarter of the year.

Organic inflows to total <unk>, one $4 billion in Q4.

And $4 8 billion for the year.

Counting additional $175 million.

Of commitments that were approved in December and closed in January.

Our fund raising for the year really showcases the power of diversity and reinforces why it's such an important aspect of Patras growth.

Alec Seid: Our fundraising for the year really showcases the power of diversity and reinforces why it's such an important aspect of Patria's growth. Our latest flagship infrastructure, Vintage, raised more than $1 billion in 2023, with more than $400 million in the fourth quarter. Our credit, real estate, public equities, and advisory verticals each contributed $700 to $800 million of gross inflows, with some notable highlights. We secured more than $200 million in 4Q23 for our Infrastructure Private Credit Fund, and our PAN-LATAM large-cap and small-cap public equity strategy raised combined gross inflows of more than $740 million. The VDI real estate platform had a fantastic year with broad inflows across the product offering totaling more than $750 million. And while the industry has seen a major slowdown in private active fund rates,

Our latest flagship infrastructure vintage raised more than $1 billion in 2023.

With more than $400 million in the fourth quarter.

Our credit real estate public equities and advisory verticals, each contributed $700 million to $800 million of gross inflows.

With some notable highlights.

We secured more than $200 million in <unk> 23 for our infrastructure private credit funds.

Our Pan Latam large cap and small cap public equity strategies raised combined gross inflows of more than $740 million.

Yeah.

So VDI real estate platform had a fantastic year with broad inflows across the product offering totaling more than $750 million.

And while the industry has seen a major slowdown in private equity fundraising.

Alec Seid: We are quite optimistic that our flagship private equity fund extension through the end of 2024 will allow us to significantly add to the capital we have already raised, to reach over $2 billion, for us to sustain strong inflows. We have to always continue to perform for our clients, and I'm very pleased with the strong returns our strategies are delivering. We saw particularly strong performance in the fourth quarter, with more than $1.1 billion in positive valuation impact driving full year 2023 appreciation to more than 1.9 billion dollars. Leading the charge here was strong performance in some of our larger publicly traded positions on the private FT platform, like Lavoro, our agriculture inputs distributor. Smart Fit, our low-cost gym chain, on Ultrapar, our gas station network company.

We are quite optimistic that our flagship private equity funds extension through the end of 2024.

We will allow us to significantly add to the capital we have already raised to reach over $2 billion.

For us to sustain strong inflows.

We have to always continue to perform to our clients.

I am very pleased with our strong returns our strategies are delivering.

We saw particularly strong performance in the fourth quarter.

With more than $1 $1 billion in positive valuation impact.

Driving full year 2023 appreciation.

Through more than $1 9 billion.

Leading the charge here with strong performance in some of our larger publicly traded positions and the private equity platform like level, our agriculture inputs distributor smart fits our low cost gym chain.

So far our gas station network company.

This drawdown fund appreciation has driven our net accrued performance fees to $541 million.

Alec Seid: This drawdown fund appreciation has driven our net accrued performance fees to $541 million, up more than 15% from the prior quarter and 13% from one year ago, even after the realization of $47 million of PRE in 2023. The strategies in our public access vertical also generated strong gains, with Pan-Latam strategies yielding nearly 29% in U.S. dollars, and Chilean equity strategies yielding more than 18% in local currency for the full year. The performance of our credit strategies was also notable, with our LATAM high-yield fund, which is dollar-denominated, yielding 14% in 2023, while the local currency fund yielded nearly 30% in U.S. dollars for the year.

Up more than 15% from the prior quarter and 13% from one year ago, even after the realization of $47 million of P. R. E in 2023.

The strategies in our public equities vertical also generated strong gains with pan Latam strategies, yielding nearly 29% in U S dollars and Chilean equity strategies, yielding more than 18% in local currency for the full year.

The performance of our credit strategies. What's also notable with our Latam high yield fund, which is dollar denominated yielding 14% in 2023.

While the local currency fund yielded nearly 30% in U S dollars for the year.

We have continued to stress that returning capital to our investors has also been a key focus in 2023.

Alec Seid: We have continued to stress that returning capital to our investors has also been a key focus in 2023, and our divestment activity in the drawdown funds continues to gain momentum. We've closed sales transactions for OData, our data center business, and Andrew Vias, one of our toll roads in Brazil, in our Infrastructure Fund III, which delivered more than $1.5 billion of proceeds to investors and pushed this fund through the performance fee realization hurdle to generate much of our PRE in 2023. We also announced the sale of Dellys.

And our divestment activity in the drawdown funds continue to gain momentum.

We closed sales transactions for all data our data center business.

And <unk>.

One of our toll roads in Brazil.

Our infrastructure fund III, which delivered more than $1 $5 billion of proceeds to investors.

And pushed this fund through the performance fee realization hurdle.

To generate much of our P. R E in 2023.

Yeah.

We also announced the sale of Daddy's, our food distribution platform as well as block sales in publicly traded positions.

Alec Seid: Our food distribution platform, as well as block sales in publicly traded positions, which secured more than $600 million of additional proceeds. In total, we realized more than $2.5 billion across the platform for our limited partners during 2023. Finally, I want to take a moment to highlight some new initiatives that are moving forward here in early 2024. We have been very active on the M&A front in 2023, but I want to also pay equal attention to some of the great things we are doing organically to grow our platform. First,

Which secured more than $600 million of additional proceeds.

In total we realized more than $2 $5 billion across the platform for our limited partners during 2023.

Finally, I want to take a moment to highlight some new initiatives that are moving forward here in early 2024.

Yeah.

We have been very active on the M&A fronts in 2023, but I want to also give equal attention to some of the great things, we are doing organically to grow our platform.

First.

Alec Seid: We are nearing the formal launch of our first infrastructure private credit fund, which is something we have been diligently working towards over the course of 2023. We believe this is a major opportunity to grow our private credit offering while leveraging our extensive experience and deal flow access in the infrastructure space. This fund will have a very long-dated 50-year term structure, making it effectively permanent capital for our platform.

We are nearing the formal lounge.

Our first infrastructure private credit funds.

Which is something we have been diligently working towards over the course of 2023.

We believe this is a major opportunity to grow our private credit offering while leveraging our extensive experience and deal flow axis in the infrastructure space.

This fund will have a very long dated 15 year term structure.

Making its effectively permanent capital for our platform.

As noted earlier, we formally secured more than $200 million in initial commitments for this fund in Q4 anchor.

Alec Seid: As noted earlier, we formally secured more than $200 million in initial commitments for this fund in Q4, anchored by multilateral, and now have commitments taking us up to 350 million dollars. We see good momentum for this fund to become a meaningful contributor to fees in the next few years. We are also announcing the start of a new platform within our infrastructure practice. Patria has a long and successful track record in the energy sector, being one of the largest investors in solar, wind, small hydro, natural gas, and transmission assets.

Thank god by multilateral agencies and.

And now have commitments, taking us up to $350 million.

We see good momentum for this fund to become a meaningful contributor to fees in the next few years.

Second.

We are also announcing their starts.

Of a new platform within our infrastructure practice.

Patrick has a long and successful track record in the energy sector.

Being one of the largest investors in solar wind small hydro natural gas and transmission assets.

Alec Seid: Overall, Patria has historically committed $2.3 billion to the sector over the past 18 years, representing more than $5 billion of overall capex, in connection with the remarkable growth of the energy free market in Brazil. We are excited to announce the launch of our energy trading platform, which will build on Patria's historical expertise in this area. As energy supply volume continues to migrate from the regulated markets, the Brazilian free market is expected to grow from just over 30 billion Reais, approximately $6 billion in 2023, to around 70 billion Reais, approximately $12 billion by 2028.

Overall, Patrick has historically committed to $3 billion in the sector over the past 18 years reps.

Representing more than $5 billion of overall capex.

In connection with the remarkable growth of the energy free market in Brazil.

We are excited to announce the allowance of our energy trading platform.

Which will build on Patras historical expertise in this area.

As energy supplier volume continues on migration from the regulated market.

The Brazilian free market is expected to grow from just over 30 billion Reais approximately $6 billion in.

In 2023 to around 70 billion Reais approximately $12 billion by 2028.

Within this backdrop, we believe there is a compelling opportunity in a very fragmented independents trading space.

This initiative will be developed in first Q 'twenty four in partnership with a talented team with an outstanding track record alongside Patraeus team.

Alec Seid: Within this backdrop, we believe there's a compelling opportunity in a very fragmented, independent trading space. This initiative will be developed. 1st Q24, in partnership with a talented team with an outstanding track record, alongside Patria's team, will be funded with an initial contribution of R$100 million, approximately $20 million from Patria's balance sheet, with up to 50 million reais, approximately $10 million, of value at risk. We expect this new strategy to be a positive contributor to Patria's earnings with limited impact in the first few years, but with attractive We believe it would also progress into an asset management strategy with third-party capital and a relevant contributor in our infrastructure vertical.

It will be funded with an initial contribution of 100 million reais approximately $20 million from Patriot balance sheets.

With up to 50 million Reais approximately $10 million.

Our value at risk.

We expect this new strategy to be a positive contributor to <unk> earnings with limited impact in the first few years.

But with attractive margins and exciting growth potential over time.

After establishing a track record of success.

We believe it would also progress into our asset management strategy.

With third party capital and the relevant contributor in our instance structure vertical.

We expect to provide more details in coming quarters as these initiatives take shape.

To finish year I'm very pleased with <unk> performance in 2023.

Alec Seid: To finish here, I'm very pleased with Patria's performance in 2023 and our growth path, and I'm very proud of what we have accomplished in the three short years since our IPO. Our platform has significantly expanded beyond two successful flagship strategies, private equity and infrastructure, to provide a diversified client offering across major asset classes, adding scale and expertise in credit, real estate, and public finance. This expansion turned a limited offering of less than 10 products into a versatile menu of more than 30 products to serve a range of client profiles and needs. We extended our geographic presence in the region, both investment expertise and distribution capability, through new partnerships in Chile and Colombia.

And our growth path.

And I am very proud of what we have accomplished in.

In the three short years since our IPO.

Our platform has significantly expanded beyond two successful flagship strategies private equity and infrastructure to provide a diversified clients offering across major asset classes.

Adding scale and expertise in credit.

Real estate and public equities.

This expansion turned a limited offering of less than 10 products into a versatile menu of more than 30 products to serve a range of clients profiles and needs.

We extended our geographic presence in the region.

In both investment expertise and distribution capability.

Through new partnerships in Chile, and Colombia.

Through this expansion and diversification our fee, earning AUM has grown from approximately $8 billion at our IPO to a pro forma of more than $34 billion today, including pending M&A.

In turn we have grown our fee related earnings from less than $60 million in 2020.

Nearly $150 million in 2023.

Marco DiPaolo: Through this expansion and diversification, our fee-earning AUM has grown from approximately $8 billion at our IPO to a pro forma of more than $34 billion today, including pending M&A. In turn, we have grown our fee-related earnings from less than $60 million in 2020 to nearly $150 million in 2023, with more growth embedded as we progress towards our 2025 target of over $200 million. And importantly, through this growth, I believe we have maintained the high standards of investment performance that is valued and demanded by our clients, and this always remains the key to our growth over the long term. Let me now turn to Marco for an update on corporate development and then to Anna for a walk through the numbers. I'll be back for some final thoughts. Marco, it's over to you.

With more growth in beverage as we progress towards our 2025 target of over $200 million.

And importantly through this growth I believe we have maintained the high standards of investment performance that is valued and demanded by our clients.

And this always remains the key to our growth over the long term.

Let me now turn to Marco for an update on corporate developments.

And then <unk> to walk through the numbers.

And I'll be back for some final thoughts Marco.

Over to you.

Thank you Alex and good morning, everyone.

It was indeed, a very active year for Patria on M&A front and since the IPO.

Have now signed or closed on six acquisition transactions.

Part of our strategy to expand the platform and grow our earnings capacity.

Industry consolidation seems to be the newest hot topic in the sector.

This is certainly nothing new to Patriot.

And we've made inorganic growth as key part of our strategy over the last three years.

For ammonia that we have.

Marco DiPaolo: Thank you, Alex, and good morning, everyone. It was indeed a very active year for Patria on the M&A throne. And since the IPO, we have now signed or closed on six acquisition transactions, part of our strategy to expand the platform and grow our earnings capacity. Industry consolidation seems to be the newest hot topic in the sector. This is certainly nothing new to Patria, which has made inorganic growth a key part of our strategy over the last three years. Through Moneda, we acquired a scaled credit and public equities platform, along with key leadership talent, as well as geographic expertise and distribution relationships in Chile. We also added depth and versatility to the private equity vertical through the acquisition of teams focused on growth equity with Camarope and venture capital, with the EGOT Fund. In real estate, we acquired 50% of VBI Real Estate, with an option to acquire the remaining stake to anchor our presence in Brazil.

Acquired scaled credit in public equities platform.

Along with the key leadership talent as well as geographic expertise and distribution relationships in Chile.

We also added <unk>.

And versatility on the private equity vertical through the acquisition of team focused on growth equity with commodity and venture capital.

In the case of Vega.

In real estate, we acquired 50% of <unk> real estate.

We had an option to acquire the remaining stake to anchor our presence in Brazil.

And recently in the fourth quarter 2023.

We're able to act on a very attractive opportunity to acquire credit Suisse real estate.

Also recently in the fourth quarter.

Sign of the agreement to acquire a private equity solutions business from Aberdeen.

To close this transaction, we will launch a new vertical for Patriot called global private market solutions.

Which add SaaS growing secondaries and co investment strategies.

And we will enhance our ability to offer a diversified global alternatives exposure to our clients.

In addition to the acquisitions in the Colombian market, we have joined forces with <unk>.

Marco DiPaolo: And recently, in the fourth quarter of 2023, we were able to act on a very attractive opportunity to acquire Credit Suisse Real Estate. Also, recently, in the fourth quarter, we signed the agreement to acquire the private equity solutions business from Aberdeen. Once closed, this transaction will launch a new vertical for Patria called Global Private Market Solution, adds fast-growing secondaries and co-investment strategies, and will enhance our ability to offer diversified global alternative exposure to our clients. In addition, in the Colombian market, we have joined forces with a venture that will anchor our real estate presence in the country and also tapped into a massive distribution network to provide a range of locally focused alternative products to Colombia As substantial as our M&A activity has been, it's worth noting that transactions closed in 2023 contributed effectively only $2 million in FRE for the year.

In a venture that will anchor our real estate presence in the country.

And also tap into a massive distribution network to provide a range of locally focused alternative products to Colombian investors.

As substantial as our M&A activity has been.

Worth noting.

The transactions closed in 2023 contributed effectively only $2 million in FRE in the year.

Likewise, the major M&A transactions signed in 2023.

We'll also have only partial year impact in 2024.

Pending on clothing timing.

We continue to feel good about the process.

The private equity solutions business.

We are acquiring from <unk> on track to close in the first half of the year.

We also feel comfortable with the process on credit Suisse real estate.

Which is slightly more complex as we will go through some level of shareholder approval processes in each REIT vehicle following standard regulatory approvals.

All in all we expect to begin 2025.

This acquisition is fully on board and fully contributing to reaching our earnings targets.

Marco DiPaolo: Likewise, the major M&A transactions signed in 2023 will also have only a partial year impact in 2024, depending on closing timing. We continue to feel good about the process, with the private equity solutions business we are acquiring from Aberdeen on track to close in the first half of the year. We also feel comfortable with the process on Credit Suisse Real Estate, which is slightly more complex as we will go through a fund-level shareholder approval process in each RIT vehicle, following spender regulatory approval.

With two sizable pending transactions 2020.

Q4 will be an important year of consolidation and integration.

As we close the deals however.

We do remain active and we'll continue to have an opportunistic mindset to achieve our platform growth ambitions through M&A.

I will now turn the floor to <unk> to go through the results in more details.

Thank you Marco and delivered a strong quarter and a solid year with significant growth of our make API and we remain consistent too.

Marco DiPaolo: All in all, we expect to begin 2025 with these acquisitions fully on board and fully contributing to reaching our earnings target. With two sizable pending transactions, 2024 will be an important year of consolidation and integration as we close the deals. However, we do remain active and will continue to have an opportunistic mindset to achieve our platform growth ambitions through M&A. I will now turn the floor to Anna to go through the results in more detail. Thank you, Marco.

Our 2025 target.

Our fourth quarter 'twenty three distributor.

$75 million.

Up 32% from Q4, 2022, and adding to our year to date results. We reached our full year 2022.

$187 $8 million.

Up 28% compared to prior year.

Our resilient management team revenue or 64 7 million in Q4 2003 right.

Rising 18% compared to Q4 'twenty two.

And 245 6 million for the full year 2023.

Anna Russo: Patria delivered a strong quarter and a solid year with significant growth in our main KPIs, and we remain on a consistent path to reach our 2025 target. Our fourth quarter 23 distributor earnings of $70.5 million were up 32% from Q4 2022. And adding to our year-to-date results, we reached a full-year 2023 DE of $187.8 million, up 28% compared to prior years. Our resilient management fee revenues were $64.7 million in Q4'23, rising 18% compared to Q4'22, and $245.6 million for the full year 2022, a 11% increase compared to 2020. This growth was supported by our latest flagship private equity and infrastructure funds, as well as the expansion of our real estate platform. Total operating expenses, including personal and administrative expenses, totaled $18.9 million in Q4-23, down $5 million compared to Q4-22.

11% compared to 22. This growth was supported by our latest flagship private equity and infrastructure.

As well as the expansion of our real estate platform.

Total operating expenses, including personnel and administrative expenses totaled $18 9 million Q.

Q4, 2018 down $5 million compared to Q4 2018.

The decrease.

Mainly by the further implementation.

Our equity compensation plan and the executive bonus level.

I already mentioned last quarter integration.

Our personnel.

Partly offset by M&A expense increase.

Increases in places and the appreciation of the currency.

Full year 2020 total great Nick.

$91 million.

Are you holding the general driver of the quarterly comparison.

Looking at specifically at the personnel.

The quarterly average due in 'twenty planning fleet was approximately $15 million.

The last two quarters of the year impacted by the catch up accrual impact of implementing our equity compensation program.

Therefore, the 2022 quarterly average as opposed to the Q4 2018 result is a more reasonable run rate to consider as we enter 2024.

Fee related earnings were 47.

Kevin in the quarter.

35.

In Q4 2018.

Full year 2020, <unk> hundred $47 7 million with a margin uptick.

Good question.

14% year over year with a two four percentage point increase in margin.

Anna Russo: This decrease is driven mainly by the further implementation and expansion of our equity compensation plan at the executive bonus level, already mentioned last week. Integration, Synergy, and Outsourcing Mailing in IT, partly offset by M&A expenses, salary increases, inflation, and appreciation of the curve. For full year 2023, total operating expenses were $91 million, almost flat versus prior years, and following the same general drivers of the quarterly compensation.

The M&A transaction closed in 2020, considering effectively there about $2 million in the year.

Which was mainly come or is that too much.

Of Bancolombia.

Remainder of the growth being organic.

We finalized.

With 1% to 2% of our assay.

This result continues to keep us on track to deliver at least a 170 million of FRE in 2024.

Well as our 2020 by FY <unk> target of 200 million.

Yeah.

We have also been consistently generating performer throughout the last several quarters during Q4 'twenty.

Anna Russo: Looking specifically at personnel expenses, the quarterly average during 2023 was approximately $15 million, with the last two quarters of the year impacted by the catch-up accrual impact of implementing our equity compensation program. Therefore, the 2023 quarterly average, as opposed to the Q4-23 results, is a more reasonable run rate to consider as we enter 2023. Fee-related earnings were $46.7 million in the quarter, up from $35.3 million in Q4 2020.

Generated $26 6 billion of performance related.

And by a combination of additional net proceeds.

Chuck just on fleet and contribution from one of the drawdown funds.

In summary, we have crystallized $6 6 million out of our $180 million target two out of 2020.

Net accrued performance fees.

10% from the prior quarter to reach $541 million.

Even after considering the final few reallocation.

With the addition of a crude oil coming mostly from private equity firm.

Thanks, Jason and positive currency effects.

It's Karen accrual novel.

Anna Russo: For a year, 2023 FRE reached 147.7 million with a margin of 60%, up 14% year-over-year with a 2.4 percentage point increase in margin. The M&A transactions closed in 2023, contributing effectively about 2 million of FRG in the year, which was mainly Camarguin, Higa, and two months of Bancolombia, with the remainder of the growth being organic. We finalized a stronger year with 1 to 2% of our FIU, and this result continues to keep us on track to deliver at least $170 million in FRE in 2024, as well as our 2025 FRE target of at least $200 million. We have also been consistently generating performance feeds throughout the last several years.

Martin.

<unk> per share outperformance the inventory.

On taxes, our corporate income tax expense in 2020.

$3 1 million compared to 2020 Q3.

Slightly higher effective tax rate driven by a higher mix of course.

Subject to local tax rate.

So again highlighted in the bottom line.

This all led us to a distributor earnings of $187 8 million in 2010.

Which is an increase of almost 30% versus the prior year.

Yes.

Now a few notable comment on our GE net income reconciliation.

As we close our transaction with Bancolombia and find another two acquisitions in the fourth quarter.

We incurred more M&A related costs, which you can also see in the chart.

Thanks, Jim.

In regard to the equity base and long term compensation line.

Implemented.

Voluntary compensation.

Mentioned before on the FRE language.

Yes.

That concludes the convert 50% of their test on X.

Anna Russo: During Q4-23, we generated $26.6 million of performance-related earnings, driven by a combination of additional net proceeds for infrastructure fund 3 and contributions from one of the BI's drawdowns. Since our investment date, we have crystallized 66 million out of our 180 million targets throughout 2020. Net accrued performance fees were up 15% from the prior quarter to reach $541 million, even after considering the performance fee realization in the fourth quarter, with the additional accrual coming mostly from private equity funds, appreciation, and positive currency. His current accrual now represents more than $3.6 per share of performance inventory. On taxes, our corporate income tax expense in 2023 was $3.1 million compared to 2022, with a slightly higher expected tax rate driven by a higher mix of performance subject to local tax rates. So again, highlighting the bottom.

Yes.

And Matthew components to this.

Three to five years.

Zero.

Our senior level, showing the higher long term.

Thank you.

The majority of that.

The P&L line comes from this new program and the remainder relates to previous long term truckloads from Patrick and acquired company as well as equity based compensation of partners.

And finally, an important clarification on the dividend payout.

We announced our agreement to acquire the Brazilian real estate limits on credit.

We noted that posture will give careful consideration.

Our capital structure, as we look into 2024 and beyond and with.

The combination of cash debt equity to fund our M&A program.

Beginning Q1, 2024, we may elect to retain more than 15% of our performance related earnings and realized gains from the energy trading platform net.

Personal <unk> corporate taxes, rather than.

A full 85% as we aim to do with the rest of our distributor earnings stream.

We expect to exercise this incremental retention up to an additional $100 million in order to fund M&A obligations and pay down debt after which point, we will evaluate the appropriate distribution approach for Ernie.

Anna Russo: This all led us to distributor earnings of $187.8 million in 2023, which is an increase of almost 30% versus the prior year. Now, a few notable comments on our DE to Net Income Reconciliation. As we close our transaction with Banco Longo and sign another two acquisition agreements in the fourth quarter, we include more M&A-related costs, which you can also see in the transaction cost. In regard to the equity-based and long-term compensation line, PASA implemented a voluntary compensation bonus code mentioned before in the FRA explanation, which gives us the opportunity for executives to convert 50 percent of their cash bonus into equity shares, receiving and matching components to the surface in 3-5 days.

And going forward.

It can be very clear.

To continue to do to the 85% of our stable and recurring fee related earnings stream, maintaining our commitment to deliver an attractive deal for our shareholders.

I will now turn back to Alex for closing remarks.

Thank you Ana.

As we turn to your questions.

I will just reiterate how pleased I am with our performance in 2023 and over the last three years.

And with the tireless contributions from the entire Patrick team to make it happen.

From approximately $8 billion of fee, earning AUM.

At the IPO.

Through more than $34 billion, including our pending M&A.

I think that.

This is a remarkable with treatments.

This is a people business and we truly have a fantastic group of talented people pushing this company forward.

Anna Russo: This was very well received by our senior level people, showing their high long-term commitment and engagement on the team. The majority of the impact of this P&L line comes from this new program, and the remaining relates to previous long-term programs from Patria and Acquired Companies, as well as equity-based compensation of partners. And finally, an important clarification on Piper's dividend pay. In the announcement of our agreement to acquire the Brazilian real estate business from Credit Suisse back in November, we noted that Patria would give careful consideration to our optimal cash flow structure as we look into 2024 and beyond, as we use a combination of cash, debt, and equity to fund our M&A project. Beginning Q1 2024, we may elect to retain more than 15% of our performance-related earnings and realize gains from the EU energy trading platform, net of a proportional share of corporate taxes, rather than distribute a full 85% as we aim to do with the rest of our distributed earnings. We expect to exercise this incremental retention up to an additional $100 million in order to fund M&A obligations and pay down debt. After that point, we will evaluate the appropriate distribution approach for this earnings-going focus.

As Anil noted 2024 will be a transition year to our multi year growth targets for 2025.

We are comfortable in getting the fee related earnings to at least $107 million in 2024.

All the way through more than $200 million in 2025.

Considering the growth embedded in our pending transactions.

Our organic initiatives.

I am confident that we will reach both the financial and the AUM targets for 2025.

We thank you for your time to listen today, and now happy to take your questions.

Thank you.

Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone.

And then wait to hear your name announce soon.

To withdraw your question. Please press star one again please.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from the line of Craig cited followed with Bank of America. Your line is open.

Hi, Good morning. Thank you for taking the question. This is for the Eagle Ford here on the line for Craig.

For private equity funds seven and infrastructure five can you walk us through the size and timing of those races.

You've already closed on about $1 2 billion for <unk>, seven and about $1 billion for in for five do you expect consistent fund raising throughout 2024 or a few large closes and when should we expect the final close for each of them.

Hi, <unk>. This is Alex here. Thanks for your call and text participating can you hear me well right.

Anna Russo: To be very clear, we plan to continue to distribute 85% of our stable and recurrent fee-related earning streams, maintaining our commitment to deliver an attractive payout for our shareholders. I will now turn back to Alex for closing remarks. Thank you, Juana, as we turn to your questions. I'll just reiterate how pleased I am with our performance in 2023 and over the last three years, and with the tireless contributions from the entire Patria team to make it happen, from approximately $8 billion of fee-earning AUM at the IPO to more than $34 billion, including our pending M&A. I think that this is a remarkable achievement. This is a people business, and we truly have a fantastic group of talented people pushing this company forward.

Yes.

Okay great.

Our private equity fund seven.

On the way to raise $2 5 billion.

Today.

Halfway there.

Halfway between the two partners.

Okay.

Okay.

Okay.

This number is.

Navy or something like that.

We didn't have any closings beginning of this year.

We have another process.

Phil.

When these companies in Brazil, it's a very well.

Walked in fundraising process. So we shouldn't be fundraising in the next 30 45 days.

The investments we're in them.

<unk>.

We expect another <unk> hundred million dollars from coming from there and then the follow on.

Raising this on.

Two to two 5 billion, which is the guidance that we gave.

Last year, we can continue the same.

We're also fundraise.

Alright.

Latin America.

Yes.

No we should push.

Yes.

<unk>.

Fundraising.

And then from there from one $5 billion to $2 billion, we have.

Okay.

From the second quarter to the last quarter, you're three quarters ago.

Which we feel.

Yes.

Okay.

As also mentioned.

Extensive.

The fund raising period for this fund to the end of this year.

Alec Seid: As Anna noted, 2024 will be a transition year to our multi-year growth targets for 2025. We are comfortable with getting fee-related earnings to at least $170 million in 2024, on the way to more than 200 million dollars in 2025, considering the growth embedded in our pending transaction. With our Organic Initiative, I am confident that we will reach both the financial and the AUM targets for 2025. Thank you for your time to listen today. I am now happy to take your questions. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again.

The fundraising period.

In the second quarter.

We extended until the end of 'twenty for fundraising is taking more time than usual foremost funds private equity.

Being one of them.

Already mentioned in previous calls so we extended the Lps that are already.

In the funds agreed with this fundraising extension period.

On the infrastructure front for some side I'm sorry.

We are over $1 billion.

As of.

Beginning of January.

Have some commitments that were.

Prove to the investment committees of some lp's late last year.

Some of them were signed late last year.

One significant.

At the time was signed beginning of this year, so pushes us to over $1 billion.

And more or less the same processes that I have described for infrastructure for.

Private equity fund seven infrastructure from five.

Significant fund raising has to be done in Brazil.

Chile, and Colombia this year more.

The first half of the year and then we continue fund raising wood.

Ex satcom investors.

We still feel very positive that we can reach the two to two and a half billion dollar number closer to the two five.

Operator: Please stand by while we compile the Q&A roster. Our first question comes from the line of Craig Siegenthaler with Bank of America. Your line is open. Hi, good morning. Thank you for taking the question. This is Rodrigo Ferreira on the line for Craig.

So those two together.

We'll be around $4 5 billion to $2 five from private equity on $722 five so infra.

Infrastructure fund five.

Ken.

Ah I see a good demand for infrastructure, so with a higher probability of reaching that two five number that I mentioned.

Rodrigo Ferreira: For Private Equity Fund 7 and Infrastructure 5, can you walk us through the size and timing of those raises? You've already closed on about $1.2 billion for PE7 and about $1 billion for INFRA 5. Do you expect consistent fundraising throughout 2024 or a few large closes? And when should we expect a final close for each of them? Hi Rodrigo.

So infrastructure.

Infrastructure compliance since we started raising last year.

We didn't ask for an extension extension normally.

This fund is a normal foundry.

Fund raising period, which ends at the end of this year.

If they are.

One or two investors are still working on.

Our data room at the end of this year I think we can ask for an extension there I don't think its going to be necessary.

But it is Boston with common for these kinds of fund Raisings.

Hopefully I answered your question hopefully without double right fundraising Korean supply for <unk> and some of the ways, including corporate banking separately.

Alec Seid: This is Alex here. Thanks for your call. Thanks for participating. Can you hear me well, right?

Yes. Thank you so much for the color that was super helpful.

Alec Seid: Yes. Okay, great. Well, Private Equity Fund 7, we are on the way to raising $2.5 billion. We are at today halfway there. Halfway to $2.5 billion. We are a bit behind the latest numbers. We didn't have any closings at the beginning of this year.

For my follow up you had guided before that you expected two to $2 5 billion of realizations and I think 2024 at the beginning of 2025 do you expect this to be concentrated towards a certain part of the calendar year.

And can you remind us which funds should be accounting for most of the realizations.

Yeah.

Alec Seid: We have another process open in Brazil. As you know, when we come to Brazil, it's a very locked-in fundraising process, raising money in the next 30-45 days, something to do for investors. We expect another $50-$100 million coming from there and then follow on raising this to $2-$2.5 billion, which is the guideline that we gave late last year. We're also fundraisers to Latin America, we know we should push, close to Hua Dian in the Bishan area. And then from there, from 1.5 to 2 billion, we have from the second quarter to the last quarter of the year, three quarters to go, which we feel confident about. I was also mentioned.

Unfortunately, it's very hard for me to give you an exact quarter.

For realizations.

Joke with my team does M&A should not be mergers and acquisitions, sometimes will be called Missouri and anguish right.

Selling a company a quarter here quarter there.

On the buy side and the sell side right.

On the sell side, specifically, which our realizations that you asked for.

Our guidance as.

We will continue.

We have a very strong and we will continue with a very strong divestments agenda.

As you can see since we.

IPO.

In early 2021, and we have been delivering first was private equity fund three.

Gave us.

It's very important for 2021 performance fees to pad into our distributable earnings of that game.

Private equity from Fives and.

Beginning of 2022, and then came infrastructure from three in the whole story.

Alec Seid: , and the fund-raising period for this fund will end at the end of this year. And that's the end of the presentation. Thank you. The fundraising period was going to end in the second quarter. We extended until the end of 24, as fundraising is taking more time than usual for most funds, Private Equity Fund 7 being one of them, as already mentioned in previous calls. So we extended the LPs that are already in the fund and have agreed to this fundraising extension. On infrastructure fund four, fund five, I'm sorry, we're over a billion as of the beginning of January. We have some commitments that were in the investment committees of some LPs late last year, and some of them were signed late last year.

So today as of today infrastructure, we still have some important assets to be sold.

And we are in the process of selling them.

And we're beginning to sell assets or infrastructure fund for us.

There are some great assets there.

The strategy I don't want to be repetitive here are redundant with you.

It is a no.

When the concession strategy right when the concession we build the assets we call de risking and then we sell the assets once it's operational.

Several assets alright infrastructure for went operational last year, we had a solar panel form that it is now fully operational so for us ready to be sold.

Thermal power plants already.

So operational as of end of last year. So all of these have since that once they are operational.

Alec Seid: One significant commitment was signed at the beginning of this year, so that pushes us to over a billion. And more or less the same process that I described for infrastructure for private equity fund seven, infrastructure fund five have to be done in Brazil, Chile, and Colombia this year, more in the first half of the year. And then we continue fundraising with ex-FATAM investors. We still feel very positive that we can reach two to two and a half billion dollars, closer to 2.5.

We put them for sale.

Also when we manage toll roads.

First two to four years of the concession we have big Capex.

Vestments and then we know we have more of a maintenance capex.

Five onward for the next 25 years I'm generalizing.

There are some toll roads.

We are in the five years into the concession that we won so they are also ready to be sold as we did with one of the toll roads of our infrastructure funds in the last year.

Private equity fund five and four five and six.

Alec Seid: So those two together will be around 4.5 billion, 2 to 2.5 from private equity fund 7, 2 to 2.5 from infrastructure fund 5. And again, I see good demand for infrastructure. So there is a higher probability of reaching the 2.5 there number that I mentioned.

We are selling assets of these funds.

So we did.

Signed the sale of an asset.

So our private equity fund for.

Beginning of this year. So we haven't closed yet so we didn't announce it when we signed the sale of one of the assets of private equity fund for and we are in a very active agenda in selling assets of these funds.

Alec Seid: So, Infrastructure Fund 5, as we started raising last year, we didn't ask for an extension. The extension normally for this fund is a normal fundraising period, which ends at the end of this year. If they are, one or two investors are still working on our data room at the end of this year. I think we can ask for an extension there. I don't think it's going to be necessary, but it is possible.

No.

Okay.

Adding all of this with a lot of divestments if smelter.

Theres over 15 companies been diverse in our whole digital as we speak because we're adding snow again assets from infrastructure funds, who are core assets from private equity fund four five and six so adding all these assets are over 15 assets being sold from these funds.

So again I think it's very hard for us to give a specific quarter, sometimes even tier four hour outperformance your realizations, however that $180 million since the guidance.

Alec Seid: It's common for these kinds of funding. Hopefully, I answered your question, Hodege, but that was it, right? Fundraising for Infra5 and Fundraising for Private Equity 7. Yeah, thank you so much for the color.

End of 'twenty, two we feel comfortable that we will deliver we already delivered about 66. So we have to deliver another 110 114, which.

Which we are comfortable that we can between this year next year. Thank you.

Great. Thank you very much Alex.

Thank you thank.

Thank you.

Please standby for our next question.

Our next question comes from the lineup Mockado, which Google with BTG Pactual. Your line is open.

Alec Seid: That was super helpful. For my follow up, you had guided before that you expected two to two and a half billion realizations, and I think 2024 and the beginning of 2025. Do you expect this to be concentrated towards a certain part of the calendar year? And can you remind us which funds should be accounting for most of these realizations? Yeah, unfortunately, it's very hard for me to give you an exact quarter for realization.

Good morning, guys I have two questions here on my side.

First I wanted to get an update from your perspective in terms of.

Net inflows in the liquid strategies.

What the true, particularly as you get a sense and the interest from Chilean investors, particularly in equities and credit already during the beginning of the year and you guys have seen Mike Matt.

Given these inside when should progressively improve throughout.

Throughout the following quarters.

And for my second question is more towards the premium is one I want you to bear in a sense in terms of how close is the defense five in different far from the harder right.

Alec Seid: I joke with my team that M&A should not be mergers and acquisitions; sometimes they should be called misery and anguish. You're selling a company a quarter here, a quarter there. On the buy side and the sell side, and on the sell side specifically, which are realizations that you asked for my guidance, we will continue. We have a very strong and we will continue with a very strong divestment agenda. As you can see, since the IPO in early 2021, we have been delivering. First was Private Equity Fund 3 that gave us very important performances in 2021 that added to our distributed learnings, and then came Private Equity Fund 5 at the beginning of 2022, and then came Infrastructure Fund 3, and well, you know the whole story. So today, as of today, Infrastructure Fund 3 still has some important assets to be sold, and we are in the process of selling them, and we're beginning to sell assets of Infrastructure Fund 4. There are some great assets there. You know the strategy. I don't want to be repetitive here or redundant with you. It is a win-the-concession strategy, right?

And after that.

The harder it looks typing performance. Thank you.

Yeah.

Okay.

Thank you very much again for your question. This is Alex again, and Ts team complement my answer.

On the.

Public public equity public content.

Yes.

At 2022.

Net outflows I think we've mentioned in previous quarters.

About 2022, as we went into 2023.

And the perspective there.

No better.

Macro conditions in the U S.

In Latin America, specifically in Chile.

We started seeing all redemptions dry outs.

And then in the second third and fourth quarter of 2020, we saw plus net inflows.

And.

As mentioned in the earnings call.

Each one of these.

Families of strategies.

Public credits.

Public equity each one of them with over 750.

$50 million of inflows.

So we were extremely pleased of course, not only the macro situation improves.

Performance of the funds were extremely positive.

Beating benchmarks and most of them to May 2023.

Some of the numbers during the call.

Extreme Ts.

Really no ground.

Groundbreaking performance, our high yield matching fund with <unk>.

<unk>, 15% net returns our small cap and large cap platform strategy for public equities between 20, and 30% returns in small cap Q&A.

Same for <unk>.

Any thoughts and concerns of course, the macro situation that benefit.

Alec Seid: We win the concession, we build the assets, we call it de-risking, and then we sell the assets once it's operational, several assets of our infrastructure fund for went operational last year, we have a solar panel farm that it's now fully operational. So for us ready to be sold a thermal power plant already also operational as of end of last year. So all of these assets that once they are operational, we put them for sale, also when we manage toll roads the first two to four years of the concession we have big capex investments and then we know we have more of a maintenance capex year five onwards for the next you know 25 years and generalizing so there are some toll roads that we that we are in the five years into the concession that we want so they're also ready to be sold as we did with one of the toll roads of our infrastructure from the last, Traveretti from the five and four, five and six.

Inflows plus the performance of the funds both of them working together for a discount of installs that I mentioned over $750 million for each of these strategies.

<unk> vertical.

Our public equities.

And in addition, the whole vertical for our public debt.

Yeah.

We go into 2024.

We had the same view of slide three we continued seeing.

Very small.

Redemptions.

As you know these redemptions are programs. So we can actually see them ahead of time.

As investors have placed our redemptions ahead of the redemption date, so we'd have a.

Looking forward to kind of the view.

They're very small.

Some of the funds.

Close to none.

And we have inflows coming in and we see inflows coming in also from international investors not only Chilean institutional investors.

In Colombia, and Peru institution vessels of where the bulk of the investors of these two strategies, we see International's X dot com investors coming in.

Also to the strategy some of them I just mentioned.

Redeem in 2022, we had some specific issues will be our U K.

Alec Seid: We are selling assets of these three funds. So we did, signed a sale of an asset of Private Equity Fund 4 at the beginning of this year, so we haven't closed yet, so we didn't announce it, but we signed a sale of one of the assets of Private Equity Fund 4, and we are on a very active agenda to sell assets of these three funds.

Investors as you know the UK went through a big Guild crisis in 'twenty, one 'twenty two.

Some of our institutional investors then had to redeem money from.

All of their liquid funds into the hours 23 things return to normal and they start investing again in funds like ours, including ours. So we see net inflows from the international investors expect in 'twenty, three and we see already good.

Good prospectus in 'twenty four.

Alec Seid: Net, uh, adding all of this, which is a lot of divestments, if not a few, there's over 15 companies being divested, Rodrigo, as we speak, because we're adding, you know, again, assets from Infrastructure Fund 3 and 4, assets from Private Equity Fund 4, 5, and 6, so adding all these assets, there are over 15 assets being sold from these funds. So again, I think it's very However, the $180 million that we guided in our back state at the end of 22, we feel comfortable that we'll deliver. We already delivered on 66. So we have to deliver another 110 and 114, which we are confident that we can do between this year and next year. Great, thank you very much, Alex.

So we have very good numbers for the first quarter to be honest.

So did I answer your questions, that's what I did I Miss anything here I'm sorry.

Yes.

On the first part of the question was what's very clear.

I'm not sure if you can discuss that but if you could get a sense in terms of the.

How close we are in terms of the hurdle for beef in five and four.

Fantastic.

Yes, I was going to answer the second part of it I just wanted to make sure that the first part was.

Great well the second part of your question, Yes, we are already in the catch up phase four of infrastructure funds III and we are far from being from from D. A.

Catch up fees for infrastructure fund for I know, we haven't started selling the assets yet.

As you know we have.

European carrier, so we have to give.

All the principal back plus a hurdle before we actually going to performance fee.

Modes, and we are we're far because we haven't started divesting.

Alec Seid: Thank you. Please stand by for our next question. Our next question comes from the line of Ricardo Buchbergel with DTG Paxil. Your line is open. Good morning, guys.

<unk> flung infrastructure from four I mentioned that we are on the process of selling but we have not signed and close any of those yields for private equity we are.

We sold a significant asset for private equity funds five.

Ricardo Buchbergel: I have two questions on my side. First, I wanted to get an update from your perspective in terms of net inflows near liquid strategies. I wanted to particularly get a sense of the interest from Chilean investors, particularly in equities and credit, already during the beginning of the year. If you guys have seen more demand given days in a cycle, which should progressively improve for the following quarters. And my second question is more for the previous one. I want you to get a sense in terms of how close PFAN-5 and PFAN-4 are to the herd rate, and after it hits the hole, it starts paying performance.

Food distribution company that push.

Our GPI.

Distributable fading capsule for private equity from five if we sell one of one or two assets.

That funds.

We will reach the performance level.

It's.

A health care company that has that loss on slide <unk> agricultural inputs companies have resisted the Nasdaq.

And all of our participation in a gym clubs smartphone as you know if we sell one of those three assets because of the significant size of these assets inside of our fund five it pushes us very close to an hour.

Giving back giving back the principal.

And so the performance fee level.

We are considering selling the SaaS, it's two of them already missed it so.

It's more consumer considering follow ons.

I think we still have a hard IPO market ahead of us.

Alec Seid: Thank you. Thank you very much again for your question. This is Alex again, and this team complements my answer.

At least for the next couple of quarters, maybe in the second half of this year, if things get better for Ipos, but we have a significant interest in market already going on for follow ups was at several follow ons for.

Alec Seid: On the public equity and public debt funds that you asked about, they had 2022 net outflows. I think we mentioned in previous quarters about 2022. As we went into 2023 and the perspective of, you know, better microconditions in the US, in Latin America, specifically in Chile.

Two of our portfolio companies in 23, one from infrastructure from three actually.

He is what are we as a company and we also did a follow on for our health care company, Jim The Chin chain Smart cities and 23. So we will continue doing that in 2004.

And we see an interesting markets for additional follow ons.

Hope I answered your question infrastructure is already there.

Infrastructure.

Alec Seid: We started seeing our redemptions dry out, and then in the second, third, and fourth quarter of 2023, we saw Pulse Net Enclosed, and as I think I mentioned in Yuri's call, each one of the families of strategy, public credit, public equity, each one of them with over $750 million of inflation, so we were extremely pleased. Of course, not only the macro situation improved, but the performance of the funds was extremely positive, beating benchmarks in most of them during 2023. I gave some of the numbers during the call, but I'm extremely pleased with this really groundbreaking performance. Our high-yield Latin fund with 14-15% net returns, our small-cap and large-cap flat-time strategy for public equities, between 20 and 30% returns, and small-cap Chile, the same are extremely positive returns. Of course, the macro situation, the benefit, the inflows plus the performance of the fund, both of them working together for this kind of inflows, which I mentioned over $750 million for each of these strategies. The whole portico of public equities... and, in addition, the whole work of public debt and public credit.

Far from there.

Private equity fund side.

Pending on the most like dice.

Divestments here, we can reach that.

The performance fee.

<unk>.

This year or next year, most probably next year, but we don't actually depend much.

The performance fee realization type that we have for this year.

On privacy compliant.

This is Paul.

Okay can I complement something he called it may be helpful for our for our for your question the way you're building up the model.

We have we have about 540 million of net unrealized performance fee and out of this amount 234 from private equity fund five.

169, four private equity fund four and 110 from infrastructure Fund III.

If you find that this is a member.

So the previous information that Alex gates.

66 million that have been already.

Hmm.

It returned.

And contrast that with the three year target of $1 80.

So if you do if you if you take from this one.

The 66.

The one thing that is visible on infrastructure three alone.

Would be enough for us to meet the targets for the three years, so as much as of course.

We're paying a lot of attention to private equity five a M.

In private equity six.

And all of the considerations at all exposed.

We still have to return the money before we got into the ketchup infrastructure three alone.

Which is already you know catch up phase.

That would be sufficient to satisfy.

The three year target that we set on our tax the 2022.

Alec Seid: We go into 2024, with the same view of 23. We continue seeing very small redemptions. As you know, these redemptions are programmed so we can actually see them ahead of time, as inspectors have to place their redemptions ahead of the redemption date.

Thank you Marco great great complement there.

Great. Thank you. Thank you both.

Thank you please standby for our next question.

Our next question comes from the line of Peter <unk> with Goldman Sachs. Your line is open.

Hi, Good morning, Thank you for the call and taking my question.

Question is on the management fee evolution in the quarter just.

Alec Seid: So we have a looking forward kind of view, and they are very small, some of the funds, close to none, and we have inflows coming in, and we see inflows coming in also from international investors, not only Chilean institutional investors and Colombian and Peruvian institutional investors that were the bulk of the investors in these two strategies. We see international ex-LATAM investors coming in also to this strategy. Some of them, as mentioned, they did redeem in 2022.

You had very strong growth in the fee, earning.

Although the management fees did not grow as fast just to understand if there was anything in particular why they didn't grow as fast as the fee, earning AUM in the quarter and also incentive fees were also a little bit lower so kind of led you to being slightly below your FRE guidance for the year, just to think going forward and any downside.

Risks on the guidance that you've given for the near the 170 for next year or 200 and FRE for 2025. Thank you.

Alec Seid: We had some specific issues with our UK investors. As you know, the UK went through a big credit crisis in 21-22, and some of our institutional investors then had to redeem money from all of their liquid funds, including ours. In 23, things returned to normal, and they started investing again in funds like ours, including ours. So we see net inflows from international investors ex-LATAM in 23, and we see them already. Good Perspectives in 24. So we have very good numbers for the first quarter, to be honest. So, did I answer your questions? Did I miss anything here? I'm sorry.

Oh, thank you so thanks.

Thanks for the question on participating here in our call.

Yeah.

They are sometimes from quarter to quarter movements on.

On expenses and I also can turn to one of our CFO to.

As we explained better so sometimes I think it's better to see the whole year.

No. We did some acquisitions, we had some synergies in place.

Sometimes we do run the synergies and one.

They appear in our numbers in one quarter versus the other because in one quarter, we had extra costs because we were running two teams and then we don't have to have some teams.

We synergize, the one team and that shows in the other quarter. So.

It might have a quarter to quarter kind of variances, but I'm very confident on the level of expenses that we're running.

Today looking forward, which is the second point of your question that we will be able to.

Alec Seid: This first part of the question was very clear. I'm not sure if you can discuss that, but if you could get a sense in terms of the... how close we are in terms of the hurdle for PFN 5 and 4? No, fantastic.

Deliver the $170 million of FRE and over 200 in FY 2024, and over $200 million of FRE for 2025.

In addition to the fee.

<unk> streams.

Got you and that you actually saw for 2023, the additional synergies coming into.

Alec Seid: No, I was, yeah, I was, I was gonna answer the second part. I just wanted to make sure that the first part was great. Well, the second part of your question, yeah, we are already in the catch-up phase for infrastructure fund three, and we are far from the, from the, catch-up phase for Infrastructure Fund 4. We haven't started selling the applets yet.

2024, even more so when we pull from yards to pending M&A.

Again, we are.

To give you an idea and some in some cases, we think that we can run the businesses.

With a lot higher.

FRE, we mentioned a couple of.

Earnings calls ago.

No.

That our real estate investment Trust business.

Through VDI or through.

Credit Suisse, they were running at 30%, 40% FRE margins.

Alec Seid: We, as you know, we have a European carry, so we have to give all the principal back plus the hurdle before we actually go into performance, modes and we are we're far because we haven't started by this, I mentioned that we are on the process of selling, but we have not signed and closed any of those deals. For Project XE, we are. We sold a significant asset from private equity fund five, a food distribution company that pushes our DPI, you know, distributable paid in capital for private equity fund five, where, you know, if we sell one of one or two assets of that fund, will reach the performance level, be it a healthcare company that is also Fund 5, be it the agricultural inputs companies that we listed in NASDAQ, and or our participation in a gym club market, as you know, if we sell one of those three assets because of the significant size of these assets inside our Fund 5, it pushes us very close to our you know, giving back the principle, getting into the performance level.

We can definitely push that up.

Two our kinds of margins.

Same for our Aberdeen carve outs global private market solutions business.

30% margin business I think we can push that up as well that will come over time. It doesn't happen again from one day to the next.

Why during 'twenty four we call this more of a transition year, because we don't know when these big deals are going to close.

<unk> already signed.

So quarter over the next things might move a little bit.

We walk into 25, where they know very very strong numbers.

To show this earnings call.

With the inflows organic in terms of this year.

<unk> be no $5 million, we get into 'twenty five.

Oh no opinion.

Yeah.

So the math average management fee.

You've seen what kind of revenues you can win in 'twenty, five and depending on the margin.

You apply there.

You can see that.

Over the $200 million as possible the chances of us hitting that number.

Increased wood capped that so I think a good place.

Today of course, we have to continue to work very hard to deliver but I think we're in a good place I think the chances of us hitting the numbers went up over the last quarters.

Alec Seid: We are now considering selling these assets, two of them already listed, so it's more considering follow-ons. I think we still have a hard IPO market ahead of us, at least for the next couple of quarters, maybe in the second half of this year if things get better for IPOs, but we have a significant, interesting market already going on for follow-ons. We did several follow-ons for two of our portfolio companies in 2023, one from Infrastructure Fund 3, actually, VIAs, Waterways, the company, and we also did a follow-on for our healthcare company, the gym chain, SmartState in 2023, so we will continue doing that in 2024, and we see an interesting market for additional follow-ons. So I hope I answered your question. Infrastructure in three, already there. Infrastructure from four, far from there, and probably, likely from five.

You want to complement on that anything about the expenses.

Yes.

I think I think as I mentioned.

Okay.

During the first part I think it's a good.

No.

Our base for us to consider for at least for the first quarters of the year is our average that we have done.

And in the beginning of 2023 since the fourth quarter had.

Some catch up of one timers, so we've talked about.

Personnel expense be around $15 million and always expenses are.

Sure.

Preparing and doing synergies.

And I think the run rate that we have for between Q3 and Q4 are a base for when you look into 2024.

There is a consolidation.

Integration and next year.

That we expect to continue into <unk>.

Yes, Nick Tito This is Josh just one other quick point on your point around fee, earning AUM growing a little bit faster than management fees. There is a timing impact of that in some cases and just to give an example to take Alex's point just a bit further is that the.

The partnership that we closed with bank Columbia near the end of the quarter you had a realistic new real estate vehicle come in bringing about $1 $3 billion of fee, earning AUM, we did not get a full quarters worth of revenue impact for that Youll see that as we go into 2024. So some of that is a timing impact just based on how the fee earning AUM.

Alec Seid: Depending on the mosaic of divestments here, we can reach that performance C mode this year or next year, most probably next year, but we don't actually depend much on the performance utilization target that we have for this year on private. Thank you. This is Marco. Can I compliment you on something?

AUM flows in which is obviously in full versus the revenue not being fully loaded until the next quarter.

Alright Thats helpful. Thank you for clarifying that and just on the on the incentive fees that were also lower than they were last year any color you can provide on that.

Marco DiPaolo: Ricardo, it may be helpful for your question and the way you're building up the model, uh... we have uh... we have about five hundred and forty million of net unrealized performance fees, and out of this amount, two hundred thirty four from, 5. 169-4, on four and one ten from infrastructure. If you tie this number, previous information that Alex gave, of 66 million that have already been raised, and contrast that with the three-year target of 180, to take from this one page, www.patreon.com, The 110 that is visible on Infrastructure 3 alone would be enough for us to meet the target for the three years. So, of course, bringing a lot of attention to private equity five, private equity, and all the considerations that are exposed We still have to return the money before we get into the catch-up, Infrastructure 3 alone. She's a ready, catch-up face.

Well there are there I think it has to do with some of the benchmarks and the horse our funds performed very well as I mentioned last year. The benchmarks also did well of course, we beat the benchmarks that we have that's why we had incentive fees.

But that piece of it the benchmark I think 22 was a good year and slightly better yes, we came in from 'twenty to 'twenty one also with the.

No benchmarks and we did hit for some some accounts we have different Smes in some accounts.

That you can count the benchmark whatever.

In 2000, and 2022, we did a little better.

Not much difference there.

But.

It is an SMA by SMA.

And again in some estimates swing, even though the absolute numbers for the performance in 'twenty two that were a little lower or some of the estimates we were beating a benchmark more than we did this year and that generates them more incentive fees.

Please correct me here if I buy.

Theyre not mentioned anything of importance.

I think thats.

This concludes here an hour.

This year it was.

Really concentrated on our credit card.

That's not just one.

Highlight that.

Marco DiPaolo: I will satisfy the year target that we set. Thank you, Marco. Great, great compliment.

This concentration this year opposite from last year, which happened into two verticals credit in public debt.

Yeah.

Okay, great. Thank you Alexandra and Josh.

Tito Labrador: Great, thank you. Thank you both. Thank you. Please stand by for our next question. Our next question comes from the line of Tito Labrador with Goldman Sachs. Your line is open. Hi, good morning.

Thank you Tito.

Thank you.

Please standby for our next question.

Our next question comes from the line of Wham Barrett Jar with <unk>. Your line is open.

Good morning, Alex Mark Hello, everyone.

Alec Seid: Thank you for the call and taking my question. Questions on the management fee evolution in the quarter. Just so you know, we had a very strong growth in the fee-earning AUM, although the management fees did not grow as fast. Just to understand if there was anything in particular why they didn't grow as fast as the fee-earning AUM in the quarter and also incentive fees were also a little bit lower. So, you know, kind of led you to being slightly below your FRE guidance for the year. Just to think going forward and any downside risks on the guidance that you've given for, you know, the 170 for next year, 200, and FRE for 2025. Thank you. Oh, thank you, Tito.

Thanks for the presentation in the space for questions.

First one you commented briefly regarding the possibility to reach the 35 billion.

One year earlier, so end of 2020 for my question here is regarding overall management fee rates do.

Do you expect any changes here.

Maintain at the one 2% that we see currently.

And my second question is related to expenses. So could you go through the dynamics of personal expenses and the new share based compensation programs in this quarter.

I guess I would like to understand how much of the $12 million in equity compensation.

That would be translated into personal expenses. This program was not embrace.

Alec Seid: And thanks for the question and for participating here in our call. There are sometimes some quarter to quarter movements on expenses, and I can also turn to one of our CFOs to explain better. So sometimes I think it's better to look at the whole year.

And I mentioned during the call that 60% of cash bonus could be converted into shares.

I guess is this the only adjustment then or is there any other thought even a mix here.

Oh, okay, well on the.

On the the program itself.

Alec Seid: As we know, we did some acquisitions, and we had some synergies in place. Sometimes we run the synergies in one quarter, and they appear in our numbers in one quarter versus the other. So, for example, in one quarter, we had extra costs because we were running two teams, and then we don't have to have two teams. We synergize with one team, and that shows in the other quarter.

I just want to say a couple of words, and then turn over the floor to one out here.

Can expand more detail it is.

Okay.

Compensation program that is.

In addition to other programs that we had and what we wanted to do here is.

Put up a program that is voluntary.

Its not an obligation.

Any of our partners and managing directors, they can opt to this program or not.

If they after the program whatever up to 50% of the bonus.

This person.

Commits to the program.

We will match the.

The same number of dollars in.

<unk> shares.

In order for this person in order to be eligible to the program. This person has to vest these shares and its fast a year three or year on year for you and your clients.

Alec Seid: So it might have quarter to quarter kind of variances, but I'm very confident at the level of expenses that we are running today and looking forward, which is the second point of your question, that we will be able to deliver the $170 million of FRE for 2024 and over $200 million of FRE for 2025. In addition to the expense streams that you actually saw for 2023, there are additional synergies coming into 2024, even more so when we hopefully add the two pending M&As, to give you an idea. In some cases, we think that we can run businesses with a lot higher FRE.

First of all it's in addition to everything that we have.

Secondly, it has a lot to do with the retention.

I think we are a people business and retaining people.

And this business is extremely important we already have significant carry programs right, which is normal of our business distributing.

Part of the performance fees to employees.

We call this.

Our carry program I also wanted to give the senior executives shares of the listed company.

We will.

We really haven't done that since the IPO.

We introduced this program now.

Solar senior employee senior executive ataxia will have.

Kerry and now this program that I just mentioned of course, it's a retention because the person has sustained.

In order to be.

To be able to obtain the program.

We have the we have this program already going on even as a private company.

Alec Seid: We mentioned a couple of earnings calls ago that our real estate investment trust business through VDI or Credit Suisse was running a 30-40% FRE margin. We can definitely push that up to our kind of market. The same for our Aberdeen Carveouts global private market solutions business. 30% Margin Business. I think we can push that up as well. That will come over time. It doesn't happen again from one day to the next.

Of course, we will readdress the program as a public company and we had annual valuations that we would buy and sell shares from partners and managing directors more or less the same.

Mechanical I just described with instead of having a public valuation we had the private evaluation someone come in.

And actually do the valuation once a year for us and that was a valuation that we traded shares between Austin and paid bonuses in shares.

Senior executive so similar mechanics of course different now that we are in this company.

And it works a lot in retention.

Do you want to give some more detail on the program itself. Please.

Yeah, Let me just.

Alec Seid: That's why doing 24 we call this more of a transition year because we don't know when these big deals are going to close. Again, they were already signed. And so a quarter over the next, things might move a little bit, but we walk into 25 with very, very strong numbers of a fight to show during this earnings call with the inflows of organic inflows this year that are projected to be no $5 billion. We get into 25 with no $38 billion in earning AUM. You do the math there with our average management fee. Siegenthaler, Patria Inv., Erna, do you want to comment on anything about the expenses?

Give me a currency.

So over to you about that and I think first of all I think we are going to come from Barry.

Really have before the launch of that and the acceptance that we have across the company.

I think this program is consistent with our industrial peers and as Alex mentioned is return, but also attract the talent.

The company has to be.

No.

And this program was launched in 2023 is.

To support our engagement and long term commitment for the team and we are able to spend as we grow as we have we eliminated. So this is actually could be spendable.

And they vary.

Strong program.

As Glenn said this is a voluntary that includes our partners mainly partners of MBS and this just gives us the opportunity.

Alec Seid: I think, as I mentioned during the first part, I think it's a good base for us to consider for at least the first quarters of the year, our average that we did in the beginning of 2023 since the fourth quarter had some catch-up or one-timers. So we talk about our personal expenses being around $15 million, and all expenses are. We are preparing, doing synergies, and I think the run rate that we have for between Q3 and Q4 is a base for when we look into 2020. There is consolidation and integration, and next year that we expect to continue into, Yeah, and Tito, this is Josh. Just one other quick point on your point about fee-earning AUM growing a little bit faster than management fees. There's a timing impact on that in some cases.

There's people to direct part of their cash or 50% of the cash bonuses.

As mentioned before into this program and to have a merchant component at that.

This is a program that it will be offered going forward. Because this is part of it now.

Our normal program.

As a as it goes actually when you launch in Q3 as mentioned in previous quarter.

Has actually had a really great acceptance across and that's why you'll see that in Q4, there wasn't much.

Complete catch up of that in terms of of the program and how we accounted for it.

When you mentioned about the $12 4 million and I could say that.

When you look into that in terms of this matching program.

Complete account for this line in the fourth quarter.

About 70%.

All of that is related to this matching program that we are considering okay. So I didn't know if that.

Josh Wood: And just to give an example to take Alex's point just a bit further is that, you know, the partnership that we closed with Bank Columbia near the end of the quarter, you had a new real estate vehicle come in bringing about $1.3 billion of fee-earning AUM, but we did not get a full quarter's worth of revenue impact for that. You'll see that as we go into 2024. So some of that is a timing impact just based on how the fee-earning AUM flows in, which is obviously in full versus the revenue not being fully loaded until the next quarter. All right, that's helpful. Thank you for clarifying that. And just on the incentive fees, they were also lower than they were last year. Can you provide any color on that?

Help you to understand.

If I can also complement this with design this at the IPO to be honest.

And.

We already have embedded that we weren't going to give this out.

Over the last three years after the IPO. So it's a program that was already.

Rich and weakness was already there in our perspective.

No that we weren't going to give out up to two.

The prospectus sets up to 5% that we cannot give out an employee compensation, we haven't even reached the.

Half of that number you add whatever it was very very small number that we have but and but yes. It's something that we have already incorporated in our numbers since 'twenty one 'twenty two 'twenty three.

And we knew that we were going to actually effectively do this in the end of 'twenty three.

So it was already planned thing.

Alec Seid: Well, there I think it has to do with some of the benchmarks, and of course, our funds performed very well, as I mentioned last year, the benchmarks also did well. Of course, we beat the benchmarks that we had. That's why we had incentives. But vis-a-vis the benchmarks, I think, 22 was a good year and slightly better years before that.

And although you talk to our.

Partners for a while now for us over the last.

Two three years that we have been designing and talking to them about this program.

What was the second part of your question again I'm sorry.

The first part.

Yes, the second part it was very clear. Thank you for the answers and the first part was just regarding the management fee rates as you reach your target.

Alec Seid: We came in from 2021 also with low benchmarks, and we did hit for some accounts. We had different SMAs. And for some accounts, the way that you count the benchmark, whatever, in 2022, we did a little better. It's not a big difference there, but it is SMA by SMA.

Julien.

Yeah, I'm, sorry about that I should have answered that.

Well, it's as you can see in one of the pages in the presentation. It's one point to the number that you just mentioned.

We do close on the two M&A is I think it's.

They have a slightly lower effective management season, a 1.2 I think the number going forward is between one one and 115.

Can you correct me if that number is correct.

Yeah, Alex this is Josh.

Matt We gave some basic economics on the effective fee rates in the fee, earning AUM that we're bringing in on the two pending M&A and I think if you. If you do just a simple math based on our current blended rate and the blended rates implied by the economics that we gave youll get to a number that's between 1.0 and $1 one.

Alec Seid: And again, in some SMAs, even though the absolute numbers for the performance in 2022 were a little lower, for some of the SMAs, we were beating the benchmark more than we did this year. And that generates more, and Anna, please connect me here if I... Sorry, I did not mention anything. I think that's completely clear in our, you know, any sanctity this year was really concentrated on our credit burden. I just want to highlight that this concentration this year, opposite from last year, which happened in the two verticals, credit and public. Okay, great. Thank you, Alex, Anna, and Josh.

Alright.

Great. Thank you for the answers.

And I'd just add.

When you do your assessment of course, I'm building up into the model.

The new acquisitions are bringing permanent capital.

And our fee paying AUM that is actually charge on any piece of this is in terms of quality visibility and resilience.

Very high quality and just consider that when you think about the model.

Of course, we will do.

Anna Russo: Thank you. Please stand by for our next question. Our next question comes from the line of Wim Barajard with ITIBBA. Your line is open. Good morning, Alex, Marco, everyone.

Thank you.

Please standby for our next question.

We have a follow up question from the line of Craig cited followed with Bank of America. Your line is open.

Our genre Marco hope, you're both doing well.

Wim Barajard: Thanks for the presentation and the space for questions. So the first one, you commented briefly regarding the possibility to reach the $35 billion CAUM one year earlier, so the end of 2024. My question here is regarding the overall management fee rates. Do you expect any changes here, or should it remain at the 1.2% that we see currently? And my second question is related to expenses.

This is Craig so thanks for taking a follow up.

Hey, Craig how are you Brad darkening.

I'm good good to hear from you guys.

My follow up is on M&A.

And you've been very active over the last couple of years with expansions in different geographies and products.

Monday at our JV with Banco Columbia.

Hi.

But how do you think about existing capacity on the balance sheet and with your currency the stock today to do more deals.

I think you'd benign Mexico for a while maybe provide us a quick update on your thoughts on expanding into Mexico.

Mark do you want to start that.

Do you want to.

Alec Seid: So could you go through the dynamics of personal expenses and the new shared base compensation programs in this quarter? I guess I would like to understand how much of the $12 million in equity compensation would be translated into personal expenses if this program was not in place. Anna mentioned during the call that 60% of the cash bonus could be converted into shares, so I guess is this the only adjustment then, or is there any other dynamics here? Okay, well, on the program itself, I just want to say a couple of words and then turn over the floor to Lana here to explain in more detail a compensation program that is in addition to other programs that we have. And what we wanted to do here is put up a program that is voluntary. It's not an obligation.

Corporate development there.

Yeah, Okay I'll kick off here in your complement so.

Remember, what we always say when we think about acquisitions, we're buying products channel and distribution every time I start my answers.

With that we did because it's really part of our strategy.

Im proud of doing six acquisitions and adding credit.

Real estate meaningfully now G. P M S.

The second piece of your question Mexico. It continues to be our priority continues to be a target.

So the explanation is mostly on execution, we were not able to find the right asset to start but we continue to be very excited we think it's a it's not only a very important geography and very complementary to the platform, but also a great opportunity with everything that's going on.

Alec Seid: Any of our partners and managing directors can opt into this program or not. If they opt in, whatever, you know, up to 50% of the bonus that this person commits to the program, we will match the same number of dollars in Patria's shares. In order for this person, in order to be eligible for the program, this person has to vest these shares, and it's best a year in year three, a year in year four, a year in year five. So, first of all, it's in addition to everything that we have. Secondly, it has a lot to do with retention.

Regarding the first piece of your the first part of your question how are we going to fund our our expansion.

What we've been doing with our with our physicians it's funding.

Mix between cash and equity.

Retaining a couple of our flexibility is there so there's flexibility relative to when this cash is coming out both of the acquisitions have been.

Alec Seid: I think, you know, we are a people business, and retaining people in this business is extremely important. We already had significant carry programs, right, which is normal for our business to distribute part of the performance fees to employees. As you know, we call this our Cary program. I also wanted to give the senior executives shares of the listed company.

Structured with seller financing, so, giving us time to generate the cash to pay for the acquisition and in certain circumstances, we can off between paying in cash or in equity.

Our favorite of course with all of that to give flexibility for us to be nimble. When we would make that would make we designed the strategy was designed the payments we do have.

Alec Seid: We really haven't done that since the IPO; we introduced this program now. So a senior employee, a senior executive at Patria, will have to carry and now this program that I just mentioned, of course, it's a retention program because the person has to stay in order to be able to obtain the program. We have the We have this program already going on, even as a private company. Of course, we readdress the program as a public company. And we had annual valuations where we would buy and sell shares from partners and managing directors, more or less the same mechanics that I just described. But instead of having a public valuation, we had a private evaluation, someone come in, and actually do the valuation once a year for us.

In the late later a quarter of our last.

Last quarter, we announced the one ways to fund our acquisition, which is retaining part of the performance fees I think we will.

That's very clear and I'll repeat here and just for the sake of clarity we're not touching on the FRE. We may selectively retain part of the performance fee in order to fund any cash.

Cash necessities on the short term.

So these are these are tactical movements familiar correct.

Two in order to address the funding needs.

The best way possible and I'll defer to earn up to talk a little bit more about our cash flow we.

Alec Seid: And that was a valuation that we traded shares between us, and paid bonuses in shares to the senior executives. So similar mechanics, of course, different now that we are this company, and it works a lot in retention. Ana, do you want to give some more detail on the program itself, please?

We do remain active in acquisitions.

We mentioned in this call that this is gonna be unimportant to you of consolidation because we have two large pending M&A has to be closed the Aberdeen business by end of the first half.

Credit Suisse business, most likely by the end of this year.

Anna Russo: Yeah, let me just give you a first overview of that. And I think, first of all, I think we are all in the company very, really happy for the launch of that and the acceptance that we have across the company. I think this program is consistent with our industry and peers. And, as Alex mentioned, we can but also attract the talent to the company as we do, and this program was launched in 2023. We work to support engagement and long-term commitment from the team. And we are able to expand that as we grow, as we have new M&As, so this actually could be expanded and is a very strong program. As Alec mentioned, this is a volunteer program that includes our partners, mainly partners of MDs, and this gives the opportunity for these people to direct part of their cash or 50% of the cash bonds, as mentioned before, into this program and to have a matching component at that.

Given the complexities of particularity is all of them.

The closing of this transaction so not a lot of FRE coming through this year, but very solid FRE coming for next year.

As a reminder.

When we announce.

The geography and transaction and the credit Suisse transaction, we gave some guidance for you to work on a how much how much this will bring into the platform.

For the operating business is what we announced is the seven 8 billion.

When deal where.

We're the <unk>.

Average fee.

Is between <unk>.

50, and 60 bps for the average management fee.

Each will equate to a margin between 30 and 40% and for the produce with deal. What we announced is the $2 4 billion at the time of the closing with a 50.

With the 70 did.

<expletive>.

As a management fee and around 50.

<unk> of our FRE contribution.

Anna Russo: This is a program that will be offered going forward because this is now part of our normal program. And as it evolved, actually, when we launched in Q3, as mentioned in the previous quarter, it actually had a really great acceptance across, and that's why you see that in Q4 there was a much complete catch-up of that in terms of the program and how we accounted for it. So when you mentioned the $12.4 million, and I could say that when you look into that in terms of this matching program, that we completely account for this line in the fourth quarter, about 70% of that is related to this matching program that we are considering. So I don't know if that helped you to understand the program. Yeah, if I can also complement this, we designed this at the IPO, to be honest, and we already had Bebit in mind that we were going to gift this out over three years after the ITO. So it's a program that was already written.

Hopefully I answered your question.

If I can complement Marco I think.

Going back now.

2019 2020.

One of the main reasons of why the IPO or your 2021, Greg I think we saw this.

Consolidation coming into place.

I think we were kind of first movers with.

Somewhat some few of our peers and then we see some of our peers moving into this no consolidation mode.

The names of the <unk>.

Major players.

Players in the industry buying as Michael said product by channel by geographic.

Expertise.

So I think we know little homeowners here, but if we were a.

A little bit ahead of them.

The peer group in that sense.

Very importantly, it's consolidating the Latin American market.

A key element to our matching clients and also according to our international clients don't want to come into la.

So we have a very interesting menu sets today of over 30 products that give us since the ability to continue growing the platform very healthy and actually very comfortable today that we can actually deliver on the guidance that we gave the 22.

Alec Seid: It was already there in our perspective. No, we were going to give out up to two. The prospectus says up to 5% of what we can actually give out in employee compensation. We haven't even reached half of that number yet, whatever. It's a very, very small number that we have.

So this is Noah was snow by strategy is not by chance know that right now we're here today, Thank God and I think we've now well position here and we will.

We need to do more I think we have a bigger balance sheet today on that.

Earnings stream.

And what I saw happening as well Michael leading this effort.

Alec Seid: But yes, it's something that we have already incorporated in our numbers since 21, 22, 23, and we knew that we were going to actually effectively do this at the end of 23. So it was already a planned thing and we had already talked to our partners for a while now, for the last two, three years that we have been designing and talking to them about this program. What was the second part of your question again? I'm sorry.

I think no.

Lot of general partners approaching us.

Now more than four years ago.

Convinced that the consolidation is thought to play in our industry.

And willing to join forces.

With Patria because no no everything that we can do for them on the fund raising side.

Having a listed.

<unk>.

As a tool to attract talent and retain talent and to give them. The senior executives of this respective general partner liquidity in the future. So things that we saw a couple four or five years ago. They are actually happening and we're getting phone calls now.

Alec Seid: That was the first part. Yes, the second part was very clear. Thank you for the answers. And the first part was just regarding the management fee rates as you reach your target of $35 billion. Yeah, I'm sorry about that.

Contrary to three or four years ago that we had some call people and explain what we were trying to do it.

Pretty interesting to see that happening I think we're not the only ones getting calls in the industry because the consolidation is at play.

But we're definitely getting calls in our part of the World, which is really nice to go through this process. Thank you.

Alec Seid: I should have answered it. Well, as you can see on one of the pages of the presentation, 1.2, the number that you just mentioned. As we do close on the two M&As, I think, that have slightly lower effective management fees than the 1.2, I think the number going forward will be between 1.1 and 1.15. Anna, can you correct me if that number is correct? Yeah, Alex, this is Josh.

Thank you Alexandra.

Thank you.

Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back over to Alex for closing remarks.

Well again thank.

Thank you very much for your patience here and it's a low end of the year call since a little.

Longer than usual, so thanks, really really for your patience and dedication to come.

Comps for the call participating on the call with your questions were so happy to take your questions.

Josh Wood: I think if you do the math, we gave some basic economics on the effective fee rates and the fee-earning AUM that we're bringing in on the two pending M&As. And I think if you do just a simple math based on our current blended rate and the blended rates implied by the economics that we gave, you'll get to a number that's between 1.0 and 1.1. All right. That is great. Thank you for the answer. Can I just add, when you do your assessment, of course, and build it up into the model, the new acquisitions are bringing permanent capital? and a fee-paying AOM that is actually charged on NAV.

In order to take your questions again.

We feel very good beginning 2024, and a strong pace.

No the guidance that we already mentioned on the call here a couple of times, so feel free to contact us.

Any further questions and hope you will know we will see each other in person in your conferences.

And actually use it sooner than later and we're going to have in the next 60 days on their earnings call and hopefully coming up with a good strong views on 2024. Thanks again for our patients. Thanks for collaborations and see you guys in person soon.

Thank you team as well and thank you operator.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Marco DiPaolo: So this, in terms of quality, visibility, and resilience, is a very high quality; just consider that. Of course, will do. Thank you. We have a follow-up question from the line of Craig Siegenthaler with Bank of America. Your line is open. Alexandre Marco.

Okay.

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Craig Siegenthaler: Hope you're both doing well. This is Craig, so thanks for taking our follow-up call. Hey Craig, how are you?

Alec Seid: Hey Craig, good. Good to hear from you guys. So my follow-up is on M&A, and you've been very active over the last couple of years, product. I'm on the Columbia, VBI, but how do you think about having on the Fallon, doc, more at the Fallon and I, you know, I think you've been eyeing Mexico for a while, maybe provide us... Barker, do you want to start that? Do you want to ask you as you're running corporate development there? Yeah, okay, I'll kick off your new compliment.

Marco DiPaolo: So remember what we always say when we think about acquisitions, we're buying products, channels, and distribution. So every time I start my answer with this because it's really part of our strategy. So proud of doing six acquisitions and adding credit. Real estate, meaningfully, now GPMS. I'll start with your second piece of your question. Mexico, it continues to be a priority, continues to be a target. So the explanation is mostly about

Yes.

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Marco DiPaolo: We were not able to find the right asset to start, but we continue to be very excited. We think it's not only a very important geography and very complementary to the platform, but also a great opportunity with everything that's going on down there. Regarding the first part of your question, how are we going to fund our expansion? What we've been doing with our acquisitions is funding in a mix between cash and equity, retaining a couple of flexibility. So there's flexibility relative to when this cash is coming out. Most of the acquisitions have been structured with sellers financing, so giving us time to generate the cash for the acquisition. And in certain circumstances, there, we can opt between paying in cash or in equity at our discretion.

Marco DiPaolo: Of course, with all that to give us flexibility for us to be nimble when we make the, we'll make, we'll design the strategy. We'll design the, the, the, the, the, the, the, the, the. We do have, um... In the last quarter, we announced one way to fund our acquisition, which is retaining part of the performance fee. I think we've made that very clear, and I'll repeat here, for the sake of clarity: we're not touching on the FRE.

Marco DiPaolo: We may selectively retain part of the performance fee in order to fund any... cash necessities on the short. So these tactical movements may occur in order to address the funding needs, the large pending M&As to be closed, the Aberdeen business by the end of the first half, and Credit Suisse Business, likely by the end of this year, given the complexities and the particularities of the closing of this transaction. So not a lot of FRE coming through this year, but very solid FRE coming for next. As a reminder, And we announced the Aberdeen transaction and the Credit Suisse transaction. Transaction, we gave some guidance for you to work on how much this will bring into the platform. For the Aberdeen business, what we announced is $7.8 billion. TPN A1 deal where the average is between 50 and 60 bits, so the average management fee, which will equate to a margin between 30 and 40%.

Yes.

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Alec Seid: And for the pretty Swiss deal, what we announced, 0.4 billion at the time of the closing, with a 50, with a 70, bit. Now, if I can compliment Marco, I think, you know, going back, you know, to 2019 2020. And one of the main reasons why the IPO or the 2021 Greg, I think we saw consolidation coming into place. I think we were kind of first movers with some of some few of our peers. And then we see some of our peers moving into this consolidation mode. You know the names of the major players in the industry buying, as Marco said, products, buying channels, buying geographic expertise.

Yes.

[music].

Alec Seid: So I think we, a little humble here, but we were a little bit ahead of the peer group in that sense, very important for consolidating the Latin American market and catering to our Latin clients and also catering to our international clients that want to come into LACAM. So we have a very interesting menu set today of over 30 products that give us this ability to continue growing the platform very healthily and actually very comfortable today that we can actually deliver on the guidance that we gave late last 22. So this is no, it was not by strategy, not by chance, not that we're here today. Thank God! And I think we're now well positioned here, and we want to continue to do more.

Sure.

Okay.

Yes.

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Alec Seid: I think we have a bigger balance sheet today and a bigger earning stream. And what I saw happening as well, and Marco leading this effort, I think that, you know, a lot of general partners approaching us now more than three, four years ago were convinced that consolidation is at play in our industry and willing to join forces with Patria because of everything that we could do for them on the fundraising side, on having a listed stock as a tool to attract talent and retain talent, and to give the senior executives of this respective general partner liquidity in So, you know, things that we saw a couple, you know, four or five years ago are actually happening. And we are getting phone calls now, contrary to three, four years ago when we had to call people and explain what we were trying to do. So it's pretty interesting to see that happening.

Alec Seid: I think we're not the only ones getting calls in the industry because consolidation is at play, but we're definitely getting calls in our part of the world, which is pretty nice to go through this process. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Alex for closing remarks. Well, again, we thank you very much for your patience here. And it's not an end of the year call.

Okay.

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Alec Seid: So it's a little longer than usual. So thanks really, really for your patience and dedication to come to the call and participate in the call with your questions. We're so happy to take your questions. It's an honor to take your questions. And again, we feel very good about beginning 2024 now at a strong pace, now with the guidance that we have already mentioned on this call here a couple of times. So feel free to contact us with any further questions, and hopefully, we'll know we'll see each other in person at your conferences. And actually, sooner than later, we're gonna have another earnings call in the next 60 days, and hopefully, we'll come up with good, strong news in 2024. Thanks again for your patience.

Okay.

Okay.

Okay.

Operator: Thanks for your collaboration and see you guys in person soon. Thank you, team, as well, and thank you, operator. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Patria Inv, In the name of the Father, and of the Son, and of the Holy Spirit. Amen.

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