Q4 2024 Vinci Partners Investments Ltd Earnings Call
Good evening and welcome to Vince you called past fourth quarter and full year 2024 conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder, this call will be recorded.
Amit Castro: I would now like to turn the conference over to Amit Castro Investor Relations manager. Please go ahead Anna.
Anna: Thank you and good evening, everyone joining us today.
Amit Castro: <unk>.
Amit Castro: Sure.
Amit Castro: President of finance and operations.
Amit Castro: <unk> Chief Financial Officer.
Amit Castro: Our year today, we issued a press release slide presentation, and our financial statements for the quarter.
Amit Castro: On our website at IR.
Amit Castro: Dot com.
Amit Castro: I'd like to remind you that today's call may include forward looking statements.
Amit Castro: And outside of the firm's control and may differ from actual results materially.
Amit Castro: We do not undertake any duty to update these statements for a discussion of some of the risks that could affect results. Please see the risk factors section of our 20-F.
Amit Castro: We will also refer to certain non-GAAP measures and you'll find reconciliations in the release.
Amit Castro: Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in managing two comp aside.
Amit Castro: Our results beat you accomplished generate a fee related earnings of 79 million or one how and 23 cents per share.
Amit Castro: Adjusted distributable earnings of $73 9 million or one hour and 15 cents per share for the fourth quarter 'twenty 'twenty four for full year numbers speech accomplished posted fee related earnings of $248 4 million.
Amit Castro: <unk> 42 cents per share and adjusted distributable earnings up $239 1 million or four highs and 26 cents per share we declared a quarterly dividend of 15 cents on the dollar per common share payable on March 27th to shareholders.
Amit Castro: Records as of March 13th.
Speaker Change: With that I'll turn the call over to artisans.
Speaker Change: Thank you Anna good evening and thank you all for joining our call. We are delighted to be with you today as we announce results for the fourth quarter and full year 'twenty 'twenty four.
Speaker Change: As you all know 'twenty 'twenty four was a transformational year for our firm marking the beginning of a new chapter with the successful completion of our combination with campus alongside two other strategic acquisitions Mas and lockout.
Speaker Change: These milestones have significantly expanded our platform positioning <unk> as the Premier alternative investment and global solutions provider in Latin America.
Speaker Change: We are already seeing tangible benefits reflected in our financial performance with strong AUM growth F. R. E N P. Ari as well as the immediate scalability of our distribution capabilities and extension of our product offerings.
Speaker Change: Let's start with a brief overview of our results, which are complex ended the year with 327 billion in total assets under management and advisory driven by the combination with compass all of our acquisitions in the forestry and agribusiness sectors.
Speaker Change: But also with continued strong organic growth.
Speaker Change: Our fund raising momentum remains robust across private equity credit and real asset segments, contributing $3 4 billion Reais and kept us subscriptions over the year, including one 4 billion reais in the fourth quarter alone.
Speaker Change: These results represent exceptional accomplishments in the current fund raising environment.
Speaker Change: We achieved a strong first closing for Sps for our latest opportunistic credit solutions vintage defined secured close to 900 million reais and commitments almost matching in this initial closing the total capital commitment of its previous vintage.
Speaker Change: Driven mostly by re ups from Sps Brexit thing LP relationships across previous vintages showcasing the appetite investors have to increase exposure in this strategy in Brazil.
Speaker Change: We'll continue to fund raise for Sps for in 2025, now targeting other investor channels, such as institutional investors in Brazil, Latin America and globally.
Speaker Change: Another highlight was the final closing of VC before a remarkable achievement and a challenging scenario for private equity globally.
Speaker Change: Final closing off VC before was led by foreign institutional investors, which as we anticipated would come in stronger at the end of the fund raising process.
Speaker Change: With this final closing visit before Richard three 1 billion Reais in total commitments, making it the largest private equity vintage in our history.
Speaker Change: One key aspect of this fund raising process was the increase of our investor base across the local institutional community in Brazil.
Speaker Change: Mentally 50% of the Investor base for basic before he is now composed of domestic capital providers in comparison join Starkel average of 30%.
Speaker Change: I've been consistently since our IPO thriving from the gradual shift to alternatives, we've seen the local institutional community in Brazil, and we still have plenty of room to grow.
Speaker Change: We are able to differentiate ourselves and still be able to raise capital in an environment with high interest rates by demonstrating our ability to generate value invested companies and correlated to the local markets performance on top of this the current democracy in area has created very attractive deployed.
Opportunities that will likely position DCP for Yunnan advantages position as the Brazilian economy continues to grow.
Speaker Change: Another major achievement in 'twenty to 'twenty four was the exceptional performance observed across multiple segments.
Speaker Change: Bulfinch's preexisting funds and complex strategies have delivered significant results in the fourth quarter.
Speaker Change: Our strongest contribution to PRA came from dedicated special opportunities fund to invest in Argentina in our global Ips segment lounge at last year. It you've kept our lives on Argentina's economic resurgence.
Speaker Change: The country has undergone a dramatic economic turnaround driven by both fiscal adjustment a sharp reduction in country risk and an improving macroeconomic outlook.
Speaker Change: The Argentine peso previously under heavy pressure has now stabilized and even appreciated due to a controller devaluation strategy and declining installation reinforcing investor confidence with growing optimist about structural reforms and strengthening economic front.
Speaker Change: Mantles, we benefited from strong asset repricing and capturing flows significantly boosting our pro forma revenues in this strategy.
Speaker Change: Turning to deployment activity, we had an active quarter for the private equity segment deploying significant capital across our different strategies and funds.
Speaker Change: In November we announced the acquisition of a controlling stake in Outback Steakhouse operations in Brazil through VC before Outback currently possess the most recognized that the casual dining brand in Brazil, and we are very excited to be partnering with looming brands and continue to develop the brand in the country.
Speaker Change: Disney investment builds on our proven track record in this sector. Following our successful investments in Burger King Domino's, Brazil, and come out either come out of them.
Speaker Change: Additionally, our impact in return fun, Yeah for security minority Stakes in two high potential Brazilian companies over a zone M. D. R. S. With these latest additions via our four has now invested in nine companies spanning critical sectors, such as water and sanitation.
Speaker Change: Healthcare and financial services, bringing the front store location to approximately 90% of it capital commitments.
Speaker Change: As we build on this momentum we are excited to start the fund raising for if you are five in China 25, further expanding our impact investment strategy and unlocking new opportunities for innovation growth and sustainable value creation in Latin Americas dynamic market.
Speaker Change: 'twenty 'twenty four was a landmark year for our company, marking one of the most significant milestones since our inception with the successful combination with compass since the signing of our combination in March of 'twenty 'twenty four we have been diligently working on they integrate.
Speaker Change: <unk> gross ensuring a seamless transition that stress, our operations and capabilities and reinforced our commitment to delivering value to investors and shareholders.
Speaker Change: With the integration well underway the teams from Vinci encompass and now working together as a unified Latin American company, leveraging our combined strengths to kept alive on the market opportunities.
Speaker Change: Our focus remains on identifying and seizing growth avenues that will drive long term value, while deepening our understanding of product demand from investors. So we can provide them with the best solutions always.
Speaker Change: As we move forward, it's essential to analyze the broader economic landscape, which continues to shape the dynamics of our industry and influence our strategic decisions.
Speaker Change: And two any 24 macroeconomic conditions underwent significant adjustments both globally and regionally. The U S. Economy has shown do remarkable resilience, leading the federal reserve to pause interest rate cuts. The current scenario for a strong growth bodes well for emerging markets in general.
Speaker Change: <unk> prices have been on the uptrend recently.
Speaker Change: Meanwhile, in Chile market sentiment has improved significantly driven by a combination of factors the implementation of a wide branch and reform the prospect of electing a more pro market presidential candidate and a decline in local interest rates.
Speaker Change: These developments have created a more favorable environment for alternative investments in many ways Chile's current momentum could serve as a reference for Brazil into added 26, as Brazil move closer to your presidential elections, and we anticipate a monetary easing cycle starting in late two.
Speaker Change: 25.
Speaker Change: For Vinci campus. This dynamics translated into higher demand for alternative investments and global solutions further reinforcing our strong market positions. We have reached a stage, where the strength of our brand and the attractiveness of our platform have set us apart from other local.
Speaker Change: Regional players this evolution mirrors trends observed in the U S and European alternative asset markets, where the industry has increasingly concentrated around leading firms. We are now seeing the same pattern emerge in Latin America position of Vinci campus is a key.
Speaker Change: Beneficiary of this shift.
Speaker Change: As we enter the new year, we are stepping into an environment full of opportunities to further expand our presence across Latin America any stress in our fund raising efforts, both cross border and our local to local basis.
Speaker Change: Our extensive footprint allow us to effectively drive cross selling opportunities across the region, while leveraging the unique advantages of global markets.
Speaker Change: <unk> geographical diversity enable us to offer tailored solutions to our clients addressing their investment needs on a local regional and global scale.
Speaker Change: Bruno will provide more insights into our exciting fund raising initiatives for 2020 five.
Speaker Change: To conclude distress and scalability of Vinci Compass platform will continue to propel us forward in 'twenty to 'twenty. Five we are very excited about the platform our market position and the opportunities we see to continue providing solutions to our clients that address their financial location.
Speaker Change: Any investment needs be locally regionally or on a global basis. Thank.
Bruno: Thank you again for joining our call with that I'll turn it over to Bruno.
Bruno: Thank you Alessandro and good evening everyone.
Bruno: We're answering 2025 with an exceptionally strong fundraising pipeline position in vitro compass for another year of robust capital formation and growth.
Bruno: We will have a number of products in the market. This year with notable initiatives such as the development of our UCITS platform for listed equities.
Bruno: Number of new structured products and credit real estate and I P. N S. They continue fund raising our flagship funds such as the ICC and Veatch, Sps and a complimentary host of high quality global strategies in third party distribution.
Bruno: One of our strategic focuses in 'twenty to 'twenty five is credits, which remains a cornerstone of our platform we.
Bruno: We see significant opportunities for expansion and market share growth and we are actively scaling multipoint initiatives across diverse strategies and geographies, ensuring robust capital deployment opportunities.
Bruno: Let's begin with our local to local credit fund raising activities.
Yeah.
Bruno: In Brazil, you are advancing fund raising for a month three vintage in our open ended credit products, including as you see one of our flagship funds across our Brazilian private credit offering.
Bruno: In Peru in Chile, we are raising capital for additional funds in existing strategies, such as closed in senior secured Lindsay and public and private credit funds.
Bruno: Why in Colombia, and Mexico, we are preparing to launch new strategies and credits in the former we're currently structured copco won our first close in senior secured lending fund in the country.
Bruno: In Mexico, we are currently setting up a structure private credit funds with an anchor local L. P. As our first confirm me in factoring firm in the country with Goose product, we will officially launch our credits vertical locally.
Bruno: On the cross border fund raising front, we continued to gain traction.
Bruno: Our opportunistic credit solution strategy Sps as fourth vintage secured nearly 1 billion in the fourth quarter of 'twenty 'twenty four and we anticipate continued capital raising across Latin America until early 'twenty 'twenty six.
Bruno: We are also actively fund raising for two open ended funds Andre Latin America corporate that's flagship.
Bruno: Offering diversified exposure to high quality credit assets in the region.
Bruno: Additionally, we're exploring new frontiers in private credit, including semi liquid strategies and additional private credit opportunities. In total. We currently have over 20 credit products to be raised in 2025 and more are in the works for future years.
Bruno: Our credit platform with the region, which originated from four distinct groups Vinci campus mobs and Sps has evolved into a highly complementary diversified one stop shop for credit solutions, we're committed to deepening information synergies and fast.
Bruno: <unk> knowledge sharing across our all of our strategies, ensuring greater efficiency enhanced execution and stronger investment outcomes.
Bruno: One of our key medium term strategic agenda is the development of more local to local strategies across all our asset classes.
Bruno: The development of each of Corpus credit group has shown how to combine organic and inorganic efforts to develop a strong market position.
Bruno: As we continue to grow our presence regionally, we will remain open to opportunities to partner with leading regional leaders or to develop do require a capability in house, depending on the situation.
Bruno: We also have an ambitious agenda for our global IP N S. In 2025 with conviction that our third party distribution strategy will drive strong inflows through a diversified and dynamic product offering.
Bruno: Our roadmap includes a comprehensive schedule of on site meetings events sponsorships and Roadshows across key markets in Latin America, and the U S and three deep engagement with investors and reinforce our commitment to expanding best in class solutions to our clients.
Bruno: In terms of net flows we anticipate substantially in flows across all asset classes partnering with world class <unk> bees and talk to your asset managers, our offering spans traditional assets alternative drawdown funds and semi liquid alternatives each contributing to a well balanced diversified.
Bruno: Mix of third party distribution products.
Bruno: These solutions allow our clients to complement our preparatory best in class local and regional products with exposure to the best global managing their respective strategies, creating a true one stop shop for capital providers in Latin America.
Bruno: Still within global IP N S. We are preparing to launch two new proprietary funds in the VSP family.
Bruno: Building on the strong momentum are very inaugural VSP funds.
Bruno: Following its success will introduce VSP to a fund of funds focusing on primary and secondary opportunities as well as co investments in Brazil.
Bruno: Additionally, we will allow the VSP semiliquid funds, our first alternative semiliquid funds designed to capture primary and secondary opportunities in developed markets.
Bruno: This innovative structure aligns with the growing global trends offering enhanced liquidity, while maintaining exposure to high quality alternative assets.
Bruno: Rather we believe will be highly attractive to clients.
Bruno: We plan to kickoff fund raising for both funds in the first half of the year further strengthening our global Lpns platform by leveraging cross selling opportunities with our proprietary funds.
Bruno: In the private equity segment as Alexandre mentioned, we are thrilled to announce the final closing off as you said before marking a significant milestone for our platform.
Bruno: With a strong pipeline of opportunities. The team is fully focused on deploying our dry powder strategically ensuring we capitalize on high quality investment opportunities.
Bruno: At the same time, we're currently actively structuring cir five our next vintage impact private equity fund with a targeted fund raising period spanning from the second quarter of 2025 to the latter half of 'twenty or 'twenty six.
Bruno: Shifting to the real asset segment, which encompasses our infrastructure real estate and forests through strategies, we continue to make significant strides across all verticals.
Bruno: On the infrastructure side, we are approaching the final close of our climate change infrastructure Fund V ICC too.
Bruno: To date, we have already raised approximately 70% of the total targets and continue to see strong interest from international investors.
Bruno: The ability to combine strong investment returns with strict investment guidelines across climate transition strategies has allowed us to garner substantial LP interest.
Bruno: We continue to be optimistic about reaching the target size of the funds.
Bruno: Turning to real estate, we're preparing to raise capital for two new products in the first half of the year in the industrial warehouse and residential sectors in Brazil.
Bruno: We're also lewke into opportunistic investment opportunities in the real estate sector in general through clubs use while public markets in Brazil are not favorable for fundraising across our listed Reits.
Bruno: Additionally, our Brazilian and require real estate teams are now fully integrated working seamlessly to strength for our footprints and looking into opportunities to expand the real estate practice outside of Brazil.
Bruno: We continue to research new investment themes, including data centers, a rapidly growing sector that is drawing global attention from alternative asset managers.
Bruno: As part of our ongoing market analysis, we're studying the evolving demand for digital infrastructure and cloud services, while still in the early stages, we're evaluating how feature culpas could potentially position itself in this space in the future.
Bruno: As was the case with our residential development and logistic infrastructure strategy within real estate. We believe this could potentially be another strategy to our real estate vertical.
To round out our fund raising pipeline.
Bruno: We're also raising a lot comes fourth vintage funds within our forestry strategy.
Bruno: With the final closing expected by the end of the year.
Bruno: Two pretty perspective, Lacker, III was approximately 500 million reais and commitments and we are targeting a bigger number for fund four.
Bruno: In the fourth vintage we're going to be able to incorporate carbon credits returns into the funds, which should not only boost underlying returns for the fund, but also potentially attract more climate transition capital into the strategy.
Bruno: With all of these initiatives in motion, we are poised for an outstanding year.
Bruno: We are confident that 20 to 25 will be a landmark year further solidifying our leadership in alternative investments across Latin America.
Bruno: The breadth and multitude of opportunities that meet your campus from a geographic and investment strategy standpoint means that we have flexibility to grow our business, while also bringing outstanding investment solutions to our clients.
Bruno: Our commitment to innovation disciplined capital deployment and thoughtful expansion should continue to drive our success, creating long term value for all of our stakeholders with that I'll turn it over to Sarah to go through our results.
Speaker Change: Thank you Bruno let's just start by covering our revenues fee related revenues totaled $218 million has in the fourth quarter, reflecting a <unk>.
Bruno: 84% year over year increase.
Bruno: Focusing first on management fees.
Bruno: <unk> totaled 117, and ice representing a 7% increase year over year. The private equity segment was the largest contributor accounting for 27% of total management fees.
Bruno: Primarily driven by the successful final closing of visit before.
Bruno: And the retroactive fees associated if it is final commitments.
Bruno: Excluding catch up fees from the last quarters of 2023 and spent 24 management fees do you grew by six 5% year over year underscoring the strong revenue generation for our from our latest acquisitions and.
Bruno: The continued momentum in securing new commitments for our close it and funds.
Bruno: Turning to advisory fees, we reported 40 million has in this quarter.
Bruno: With a particularly strong contribution of 19 million and he is thrown our corporate advisory segment.
Bruno: For the full year. This segment posted 43 million has no advisory fees exceeding our annual target by 43%.
Bruno: Despite the challenge IPO environment, our corporate advisory business has continued to deliver exceptional results.
Bruno: Demonstrating its resilience and the strength.
Bruno: SKU within advisory fees, the third party distribution for alternative products.
Bruno: Part of our global Ips segment contributed with 18 million highs in juice. The last two months of the year. After the campus closing at the end of October.
Bruno: It's important to highlight that the majority of our global IP N S advisory fees.
Bruno: Come from one time upfront fees charged.
Bruno: On third party alternative commitments.
Speaker Change: We anticipate that further upfront fees could materialize throughout 2025 directly associated with the fund raising pipeline for alternative a dropdown and same in liquid funds, which you Bruno mentioned earlier and it continues to probe.
Bruno: Yes.
Bruno: You're starting this quarter, we have introduced a new revenue line other revenues, which includes brokers fees in the U S and Chile and fund service fees in Mexico.
Bruno: On the brokerage front, we serve both high net worth individuals and institutional clients.
Bruno: Our retail clients, we offer a comprehensive service not only executing trades on their behalf, but also assisted in the construction investment portfolio still holds true.
Bruno: Their financial objectives.
Bruno: For institutional clients. Our rule is primarily is the crucial foreclosed, providing food trading as it goes in service or meaning prime accounts, depending on their needs.
Bruno: Meanwhile, funds service fees related to the operational service, we provide for funds in Mexico.
Bruno: Unlike brokerage fee Wechat someone is excellent based funds service fees are recurring though they are subject to foreign exchange fluctuation this quarter funds service fees totaled.
Bruno: $4 7 million houses.
Bruno: Another important aspect to highlight is the composition of our fee related revenues by currency approximately 30% of our revenue was received in U S dollars in the fourth quarter underscoring the global reach and natural currency diversification of.
Bruno: Our business.
Bruno: Turning to fee related earnings fourth quarter fee related earnings totaled 70 to 90 million of highs, reflecting a 38% year over year increase supported by higher management and advisory fee.
Bruno: For the full year 2024 F R E reach it.
Bruno: 248 million highs or four point 42 per share up <unk>.
Bruno: 15% on that Bush share basis, we anticipate continued momentum FRE growth for 2025.
Bruno: Is it by strong fund raising pipeline and the full contribution of campus and LEC revenues and therefore I E.
Bruno: Which are now fully consolidated into our results.
Bruno: From a margin standpoint, the fourth quarter was a stronger quarter as both our corporate advisory and third party distribution business had strong revenues. In addition to strong catch up fees from visit before helping us.
Bruno: Dilute more efficiently our fixed cost.
Bruno: We believe a more normalized FRE margin run rate at the current time would be in the low 30%.
Bruno: We continue to work diligently to leverage the combined business and drive margins higher over time.
Bruno: As part of our income state the presentation this quarter.
Bruno: You will notice a new line item.
Bruno: Placement fee amortization and rebates.
Bruno: These reflect fees paid to distributors that due to accounting procedures are not deducted from net management fees. Unlike certain other distributor fees that's directly back to the line.
We introduced this change following our nation with campus, where these expenses are more significant.
Bruno: Particularly in the credit and that BNS segments.
Bruno: Prior to the merger our exposure to placement fee amortization was minimal primarily within the private equity segment.
Bruno: Why is this adjustment has only a slight effect on our consolidated FRE margin and segment lie in segments like credit DNI BNS, where these costs are material relative to revenue.
Bruno: It can significantly impact segment margins.
Bruno: As a result, the reported FRE margins for these segments may not fully reflect the underlying operational performance of the business.
Bruno: Sure.
Bruno: Although realized financial income delivered the strong investment returns during the quarter. It was generated from a smaller investment portfolio as cash was allocated towards capital calls from closed end funds and payments related to acquisitions as a result.
Bruno: Observed a decline compared to the previous quarter, reflecting our active.
Bruno: Capital deployment strategy.
Bruno: Regarding the other items line this quarter, we experienced a FX impact on Vince com cause net debt position in U S dollars, which impacts our debt position in dollars from the convertible preferred is stricter with iris.
Bruno: The Brazilian real suffered from a 14% depreciation against the dollar.
Bruno: During the fourth quarter resulted in a negative impact of approximately $16 million of ice on adjusted distributable earnings. However.
Bruno: It's important to highlight that.
Bruno: As of the third week of February.
Bruno: As you know Hal had already appreciated by 9% compared to its exchange rates at the year and therefore, if the Brazilian how continuous is appreciation trend, we expect to gradually offset this impact in the coming quarters with most of these effect coming.
Bruno: In the first quarter of 2025.
Bruno: Yeah.
Bruno: Regarding non operation expense SPV loose anticipated, we incurred expenses related to the close of the complex combination along with associated transaction expense and costs from the acquisition of <unk>.
Bruno: We remain committed to transparency and <unk>.
I want to assure our investors that this line includes only design teams reinforcing the nonrecurring nature of these expenses.
Speaker Change: Turning to performance related earnings as Alessandro mentioned, we delivered strong results this quarter with $16 5 million has in theory.
Bruno: Marking a 478% year over year increase.
Bruno: This strong performance was driven by recognitions across our global IP N S real assets and credit segments.
Bruno: Forcing the strength and diversification of our platform.
Bruno: And globally, BNS, which was the laggards contributory to PRA Squadder. Our results were driven by third party distribution liquid global solutions and co Mingled fund has just started.
Bruno: With some notable highlights to they've been charged anything that fund in real assets. The language contribution came from real estate in Peru, reflecting the robust performance of our real estate investments in the region.
Bruno: Finally in gravity.
Bruno: Highlights included it.
V H G fund, which benefits from our Cove, confirming and destructive credit strategy.
Bruno: And compas you'd 30.
Bruno: Which delivered.
Bruno: Strong results, we are in the local currency high grade credit strategy.
Bruno: Further strengthening the resilience and brief of our graduate the vertical.
Bruno: Speaking of performance I'd like to highlight the grass accrued performance fees inclusive and fans totaled 437 million highs by the fourth quarter.
Bruno: 17% quarter over quarter, driven by the mark to market appreciation the samba.
Bruno: Onshore offshore, Brazil and France.
Bruno: Our offshore funds, however experienced a delay in mock up recognition as the quarterly revaluations follows.
Bruno: A 60 day disclosure timeline set by the fund administrator.
Bruno: Looking ahead, given the FX depreciation of the full year of 'twenty four we anticipate that our offshore funds may face a temporary negative impact.
Bruno: Home garage accrued performance fees in the next quarter.
Bruno: To wrap up I'd like to cover our distributable earnings.
Bruno: Adjusted distributable earnings totaled $73 9 million highs in the fourth quarter off.
Bruno: One point 50 has for sure.
Bruno: Representing a 16% year over year increase on a nominal basis.
Bruno: On a per share basis, adjusted the showed a slight super cent decline.
Bruno: That would be driven by the impact of FX depreciation due to the acquiring.
Bruno: Excluding the 16, many highs of FX exchange rate impact.
Bruno: Adjusted distributable earnings would have totaled 90 million highs.
Bruno: With adjusted <unk> per share, reaching one point 40, <unk> per share, reflecting a 19% year over year increase on a per share basis.
Bruno: It is important to emphasize that without the FX effect, both our nominal and per share figures would have shown significant growth.
Bruno: Further enforcing accretion.
Bruno: So on our organic and inorganic growth initiatives to our shareholders.
Bruno: In closing I'd like to once again.
Bruno: Size of the strong momentum continue to experience as a firm.
Bruno: We remain fully committed to generating long term shareholder value leveraging both organic growth initiatives and strategic inorganic opportunities to further expand our platform.
Bruno: With that I would.
Bruno: Would you like to close our remarks and open the call for questions once again with <unk>.
Bruno: We'd like to thank you for joining our call.
Bruno: Please operator, you can proceed with the questions. Thank you.
Bruno: We're going to start the question and answer session for investors and analysts if you wish to ask a question. Please press the button right hand.
Bruno: Wait while we pool for questions.
Speaker Change: Our first question comes from he Caribou Bush Spiegel with BTG you can open your microphone.
Speaker Change: Hi, everyone and thank you for the questions I have two here on my side so far.
Speaker Change: First I wanted to hear your thoughts on why should we expect about the evolution of FRE margin for all this year right. So.
You guys do you like a very big M&A here with call, but so just to understand a little bit better.
Speaker Change: The devolution of all think Brooklyn as you.
Speaker Change: Tackle the synergies of this transaction.
Speaker Change: And secondly, if.
Speaker Change: If you could also talk about.
Speaker Change: Uh huh.
Speaker Change: What what should we expect in terms of dividend payout 445.
Speaker Change: You should expect somebody close to 90% or 95% is a loss would be helpful. Thank you.
Okay.
Speaker Change: Thank you for a question Thats Alessandro good.
Good evening everybody.
Speaker Change: I always start with the first question about the evolution of their five margin, we expect the to regain.
Speaker Change: Margin F. R E moving forward basically with two main actions that's quite simple and we are ready.
Speaker Change: To fight that we can deploy them over time.
Speaker Change: First would be efficiencies in terms of costs and structure, we already didn't fly during our previous work.
Speaker Change: With Bang, where when we are.
Speaker Change: Define the integration process, but moving forward, we already saw after a few months of integration that we really have a lot of opportunities to really gain a lot of efficiencies in our cost structure.
Speaker Change: And second.
Speaker Change: One of the main pillars of this deal.
Speaker Change: Was where.
Speaker Change: The complementarity of the two companies and.
Speaker Change: We have this too.
Speaker Change: And this complementarity that we'll explore that will translate the higher March 1st.
Speaker Change: Larger amount of 35 distribution in Brazil, where <unk> was in Vinci of course was very.
Speaker Change: Not very relevant.
Speaker Change: And the second would be to introduce still higher margin products in other countries in Latin America initiatives that are already.
Speaker Change: Starting to happen, especially in private credit and other alternative asset classes.
Speaker Change: In other countries in Latin America take advantage of the off the track record of Vinci.
Speaker Change: Where we are tapping local markets in other Latin America countries, where campus had a very good presence and of course, a very good LP base.
Bruno: Oh this is bruno.
Bruno: Just to add on the first FRE margin question.
Amit Castro: Ah says you made a comment in his prepared remarks talking about the expected level going forward. So we had a number of about 36% in the fourth quarter and a four four a recurring basis we were at.
Amit Castro: <unk> mentioned in the call we mentioned a number in the low 30, percents, which I think is what we expect to do at least for the first ear of the of the new entity over the new combined entity. So I think that's a good level to shoot for in terms of the expectations for <unk>.
Amit Castro: For 2025 and in regards to the payout.
Amit Castro: At this point, we don't we.
Amit Castro: We don't see any change in what we have been doing so the target has been historically too.
Amit Castro: To pay something around 80% of distributable earnings.
Amit Castro: At this point in time, we're going to we're going to keep the same target which was approximately what we did in this quarter.
Looking forward I think group at least for the time being we're going to keep this are the same percentage targets. So nothing changes from that side.
Amit Castro: Very clear and just another question that I have I was looking at a lab operation.
Amit Castro: For more than one acquired to another and there was a big a relevant effect related to.
Amit Castro: Affecting bags right.
Amit Castro: That goalpost have there a lab, mostly in USD and given the depressed.
Amit Castro: Depreciation had a positive effect on there.
Amit Castro: But why would have beat the number that I think there was a graph it goes right.
Amit Castro: There has been a little bit the effect on the P&L of this currency fluctuation.
Amit Castro: Yeah.
Amit Castro: <unk> says, we mentioned that as well right today, we have about a 30% of the overall revenue and the others and then in the other breakdowns into other currencies rise is about 40% 30% in dollars.
Amit Castro: And the balance of our of the results are in Chilean bids as Argentinian business and so on and so forth. So I mean has that depreciation impact on AUM now.
Amit Castro: We would like I mean, we would see the from the dollar standpoint, the impact on that 30% revenue that we have in dollars.
Amit Castro: And depending on relative terms for the other currency the the rest of the of the impacts.
Amit Castro: As the other courses move against the the real but in this quarter. The most significant impact was from the dollar variation.
Amit Castro: Which is that 30%.
Amit Castro: That's clear thank you.
Speaker Change: Our next question comes from Gilead <unk> with J P. Morgan you can open your microphone.
Thank you Allison and team congratulations on the results and good luck on the new chapter.
Speaker Change: Two questions on my side, one sorry to insist on the FX, but now the 60 million that you guys mentioned in the release this.
As the impact from U S debt.
Speaker Change: Just remind us a little bit what exactly is that and is this on a hedged and is expected to continue to be unhedged in the P&L.
Speaker Change: And then my second question is related to performance fees. It seems that Oh correctly correct me, if I'm wrong here, but it seems that a large portion of the largest.
Speaker Change: Was Ah Ips right. The contribution from this segment just remind us if it should be recurring or not.
Speaker Change: The contribution to performance from this.
Speaker Change: This side of the business I understand there has also been charging Tina and and the resort in Peru.
Speaker Change: But I think the largest chunky of peripheral most was <unk> and just wanted to understand if we're going to see this every quarter. Thank you.
Speaker Change: Ah Okay.
Speaker Change: Again, thanks for the questions in regards to the exchange rates the exposure that we have on the on.
Speaker Change: On the debt side as the preferred the convertible preferred with various Reits that that's the exposure that we have.
Speaker Change: We have put a target.
Speaker Change: Target of having a small exposure to.
Speaker Change: 222 debt fluctuation over time.
Speaker Change: And obviously this this quarter was a significant exposure on.
The income statement.
Speaker Change: Because we have a little bit of the exports that is unhedged and will continue to be unhedged.
Speaker Change: We have not hedged it fully but this quarter with the devaluation of the currency impact was was higher the reason why we don't have a full hedge is because our business is already partially in dollars. So the we're going to recover over the next few quarters the cash flow from this loss.
Speaker Change: But on a moment Daniels basis, given that the devaluation was very strong in the fourth quarter. We have this mismatch, but if it if the currency stayed at 615, which was the I think around the currency around the level, where it finished 2024, we would earn this this result.
Speaker Change: Back on.
Speaker Change: On the FRE, you're giving them the net exposure that we have to $2. So that's that's the rationale that we did.
Speaker Change: We look at the cash flow profile of the dollar revenue that we have in the business.
And look at that on an ongoing basis to see what kind of exposure, we're comfortable having and nowadays we figured that the exposure is between four and six quarters off of FRE.
Speaker Change: To fully offset the impact that we have are on the on the mark to market of the of the debt position.
Speaker Change: In regards to Pee our year.
Speaker Change: The the fear I actually it was quite diversified I was reading through the notes here in 2024, we had more or less 20 different products paint theory.
Speaker Change: So it was a quite diversified our the impact on most of those obviously in the fourth quarter.
Speaker Change: There were two there was one.
Speaker Change: Bigger benefit beneficiary to that line, which was which was Argentina.
Speaker Change: Peru was also unimportant impact, but Argentina, I think was the the one that really stood out a little bit.
Speaker Change: It's difficult to say I mean.
Speaker Change: Obviously, Argentina will not be a search we don't expect there didn't seem to be such a contributor.
Speaker Change: In future quarters.
Speaker Change: But hopefully that will go to another funds right given that we have 20 different funds contributing to P. R. You hopefully that that ROE that Argentina had in 'twenty four for us will be taken over by another funding in 'twenty five and we're able to repeat the level of theory that we had in.
Speaker Change: In 2020 four but it it's it's difficult to anticipate so I wouldn't I wouldn't want to commit to repeating this number going forward. It depends on markets. The performance of the funds, but hopefully we're going to get the same same good results in 'twenty five.
Speaker Change: That's clear and just one follow up but just to confirm.
Speaker Change: <unk> is 100% in the quarter right, it's food trademarks.
Speaker Change: No. It's just November and December so we had a two months ophthalmologist sweater, yes, although.
Speaker Change: The contribution from campus was.
Speaker Change: It was good because of the Upfronts that we collected in this quarter were strong.
Speaker Change: So they were stronger than I would expect like in a normal normalized basis. The fourth quarter. These two months that we had they were strong because of a binding of the upfront collection. So they they had a good impact to the numbers in the fourth quarter.
Despite the Ranger two months yeah.
Speaker Change: Okay Super clear thank you.
Speaker Change: Our next question comes from William <unk> with <unk>.
Speaker Change: You can open your microphone.
Speaker Change: Thank you. Thank you everyone. Good night. My question here is regarding the consolidated business and if there is any new seasonality effects that we should be aware of BD in terms of fund raising.
Speaker Change: Fees even performance.
Speaker Change: Expenses.
Speaker Change: There is something here, we should be aware of so.
Speaker Change: We could put into our models would be very very helpful.
Speaker Change: Okay. We didn't this is rune again, I think I think the main susana attitude that the that I would expect for us to have is that we are.
Speaker Change: More than doubling our advisory fee line right. So.
Speaker Change: We had as a Standalone company, the corporate advisory segments, which was difficult to forecast on a quarter to quarter basis, because it depends on when the deals close and when our advisory fees would would come in.
Speaker Change: With the incorporation of campus. This exposure now is is more than double of what we had on a standalone basis.
Speaker Change: The advisory fees from campus they depend on the timing of the closings of the funds that we are distributing our third party distribution business. So they also vary from quarter to quarter. So I would expect on a go forward basis. This these this line specifically the advisory fee line.
Speaker Change: To view the line that we would have more seasonality throughout the year, depending on the timing of the closing of the transactions the caves of corporate advisory, which we already had and now depending on the timing of the closing of the of the funds that were raised on third party.
Speaker Change: Distribution also affect you on the on a quarter to quarter basis right. Those are the two main aspects I would expect to have some.
Speaker Change: Bigger seasonality.
Speaker Change: Going forward.
Speaker Change: And there is clear.
Speaker Change: Our next question comes from people about that with Goldman Sachs. You can open your microphone.
Speaker Change: Hi, good evening Alessandro.
Speaker Change: Thank you for taking my question Mike.
Speaker Change: My question following up a little bit on the advisory fee.
Speaker Change: <unk> you mentioned some of those are one time just to understand how much of the advisory fees should we consider as one time and I think.
Speaker Change: You mentioned that you may have some other one time advisory fees just to think about what's recurring I understand there's some seasonality there that you just mentioned Bruno.
Speaker Change: What's recurring and what's one time and then somewhat related to that.
Speaker Change: If you look at the E.
Speaker Change: The management fee as a percentage of the fee, earning EUM.
Speaker Change: We expect that to come down given the incorporation of comp base, but at the level. We saw this quarter is that the right level to think about going forward and I understand you're only included two months of bits right. So it would probably be a little bit higher but just to think about the management fee as a percentage of AUM, particularly for Ikea NASA, how do we think about that.
Speaker Change: Going forward. Thank you.
Speaker Change: Yes, Tito <unk>.
Speaker Change: Sounded will take the last question yes.
Speaker Change: Yes of course, taking consideration that we just incorporated two months' of cold but.
Speaker Change: We expect this C level will be at the stable level. If you take out the one times debt I'm more upfront are related to a more drawdown funds that we distribute through a third party distribution fees.
Speaker Change: So this.
Speaker Change: This is the level of recovery.
Speaker Change: So this is taking a cluster Asia again, there two months not three months that to be around.
Bruner: The percentage level that we should expect moving forward live bruner to talk a little bit more in detail about.
Speaker Change: The one times yeah.
Speaker Change: Yeah, Oh, good good to talk to you I think I think what saturation is it in his remarks, the nonrecurring nature.
Speaker Change: The advisory fees that we paid.
As costs regarding the close of the transaction. So we had a call with them and like kind of this quarter and there were fees associated with those two transactions a due diligence fees and also advisor fees for those deals, which we have separated in orange.
Speaker Change: Some statements.
Speaker Change: And are those are nonrecurring in nature, because they're at 100% M&A related right. So those fees are paid and we will no longer happen in the case of the revenues from advisory fees in in global IP N S.
Speaker Change: They are in the air recur I mean, there are parts of the business right. So the the business and in third party distribution. We have two we have two options that sales are receiving revenues in that business for the leap with third party distribution abuses, we receive a fee on the average a wham where average revenue over.
Speaker Change: Time.
Speaker Change: So it's a more normalized level fees because it depends on the AUM and revenue that we have in the in a certain quarter. There are measured and we received those those revenues.
Speaker Change: And they they enter into our management fee number. So they are not carved out into a into advisory fees, what we book into the advisory fees.
Speaker Change: The other type of revenue that we receive from third party distribution.
Speaker Change: Which is related to the closed end funds that we markets. So when we market the fund, which is not liquid and people have commitments for our long term like a private equity fund or a real estate fund that has a typical drawdown structure.
Speaker Change: We charge a fee on the placement of these funds that depend on the amount of capital that we raise and each fund has a different percentage rent negotiated with the with.
Speaker Change: With the partner.
Speaker Change: These fees are there or not.
Speaker Change: They are recurring so there are parts of the business as long as we have a drawdown funds being distributed.
Speaker Change: We're going to charge these fees, but.
Speaker Change: But they are less there are less stable right because it depends on the timing of the close of the products. So usually we charge at the time of the close.
Speaker Change: It's a percentage of the AUM that we raise depending on the funds.
But it's a recurring revenue stream, it's it's not stable quarter to quarter, because it's a little bit lumpier because it depends on when the fund disclosed.
Speaker Change: But it's a part of the business. So we expect it to continue.
Speaker Change: Going forward as part of our third party distribution.
Speaker Change: <unk> business.
Okay, Great I think that's clear thanks for that.
Speaker Change: So we should consider those advisory revenue fees.
Speaker Change: There will be and it's not necessarily seasonality it depends more when the funds close not because you'll get more in <unk> versus <unk>.
Speaker Change: When the final close exactly so we had a good fourth quarter I think fourth quarter was a good number like from a.
Speaker Change: Our sustainable level basis, I would say probably towards the upper end.
Speaker Change: But we expect the advisory contribution from third party distribution as I made a comment in the prior answer.
Speaker Change: Two more than double the advisory fees for us on a combined basis. If you add the corporate advisory what we had before and added advisory Crummy from third party distribution, that's going to be a more than two X. What we had before obviously the it will fall in different quarters, but is gonna be a much bigger number going forward.
Speaker Change: For sure.
Speaker Change: Okay very clear thanks.
Alessandro: I would now like to turn the floor back to Mr. Alessandro what that's for the closing remarks. Please me stood out that you can proceed.
Speaker Change: So we'd like to thank you again for continuous interest and support and to let you know that we are very optimistic and upbeat with the prospects of our business moving.
Speaker Change: Moving forward. This is the first call of the combined numbers and we are certain that we have a very good future for eventual campus.
Speaker Change: You again and good night.
Speaker Change: This does conclude today's presentation. We thank you all say participation and when he was very good evening.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Uh huh.
Speaker Change: [music] Goodbye.