Q2 2026 Vinci Compass Investments Ltd. Earnings Call
Speaker #2: Good afternoon and welcome to Vinci Compass, second quarter, 2026, earnings 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 the time.
Speaker #2: As a reminder, this call will be recorded. I would now like to turn the conference over to Anna Castro, Investor Relations Manager. Please go ahead, Anna.
Speaker #3: Thank you, and good evening, everyone. Joining you today are Alessandro Horta, Chief Executive Officer; Bruno Zaremba, President of Finance and Operations; and Sergio Passas.
Speaker #3: Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and our financial statements for the second quarter of 2026, which are available on our website at ir.vincicompass.com.
Speaker #3: I'd like to remind you that today's call may include forward-looking statements, which are uncertain and outside of the firm's control and may differ from actual results materially.
Speaker #3: 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.
Speaker #3: We will also refer to certain non-GAAP measures, and you can find reconciliations in the release. Also note that nothing on this call constitutes an offer to sell, or solicitation of an offer to purchase, an interest in any Vinci Compass fund.
Speaker #3: On results for the second quarter 2026, Vinci Compass generated a fee-related earnings of $88.7 million or $1.35 per share. With an FRE margin of 32.5%.
Speaker #3: In adjusted distributable earnings of $63.3 million or $96 per share. To declare a quarterly dividend of $17 on the dollar per common share, payable on September 9 to shareholders of record as of August 25.
Speaker #3: With that, I'll turn the call over to Alessandro.
Speaker #4: Thank you, Anna. And good evening, everyone. Thank you for joining us today. The second quarter marked another important step in Vinci Compass' journey as the leading full-service alternative asset manager in Latin America.
Speaker #4: Over the past few years, we have consistently executed on a strategy built around three pillars: expanding our investment capabilities, increasing the scale of our platform, and building a more diversified and resilient business.
Speaker #4: This quarter reflects tangible progress across each of these fronts, and I am particularly pleased to announce today the signing of an agreement to acquire Navis Real Estate Funds.
Speaker #4: Navis Real Estate Platform spends 6 months across multi-strategy and residential strategies with 4 vehicles listed on the Brazilian stock exchange and/or the CTIP. After closing, which we expect to happen during the fourth quarter, the transaction will add approximately $800 million in assets under management, concentrated primarily in perpetual and long-term lock-up vehicles.
Speaker #4: Strategically, the FIT couldn't be better. The transaction deepens our presence in the multi-strategy real estate segment by adding scale to one of our smaller strategies across the REIT business spanning across real estate and credit.
Speaker #4: This is significantly important in the REIT market, as larger funds tend to benefit when it comes to follow-on offerings on markets that are supported, when compared to smaller funds.
Speaker #4: The transaction also broadens the range of solutions we can offer our clients and strengthens our ability to compete in a market where scale, distribution, and specialized investment expertise carry increasing weight.
Speaker #4: Together with our existing funds, this brings our pro forma real estate AOM for the second quarter of 2026 to approximately $7 billion, of which $750 million is now within multi-strategy, giving us a stronger foundation from which to grow the business over time.
Speaker #4: It also reinforces Vinci Compass' role as a consolidator of high-quality investment franchises across Latin America, and it reflects the discipline we bring to every opportunity we pursue, seeking those that are strategically compelling, financially attractive, and highly complementary to what we already do.
Speaker #4: Moreover, this transaction speaks to a defining characteristic of our model. Over the years, we have invested in building a scalable organization underpinned by deep investment expertise and a robust corporate infrastructure.
Speaker #4: That foundation allows us to absorb a meaningful volume of additional assets while leveraging the resources we already have in place. Another important milestone was the successful closing of our combination with Bax Asset Management in early June, adding $4 billion in AOM across credit and equities.
Speaker #4: By combining our asset management capabilities with BAX’s extensive corporate and retail distribution network, we took an important step towards building a scaled and increasingly relevant asset management platform in Argentina—one that's well positioned to benefit from the ongoing transformation of the country's financial system and the growing demand for more sophisticated investment solutions.
Speaker #4: We remain constructive on the long-term outlook for Argentina supported by the evolving savings dynamics in the region, rising financial penetration, and a growing need for scale and efficiency.
Speaker #4: Against this backdrop, the combination enhances our ability to capture attractive growth opportunities across mutual funds, money market products, dollar-based strategies, and alternative investments, while strengthening our position in a market that is still in the early stages of consolidation.
Speaker #4: Since announcing the transaction, we have been very pleased with the reception from clients and partners, and we are already seeing early signs of that enthusiasm beginning to translate into inflows.
Speaker #4: Which we expect to build over the second half of the year. Taken together, Bax and Navi capture something we have consistently emphasized to investors: the strategic benefits of our platform compound as we grow, becoming more powerful with scale.
Speaker #4: Alongside this development, our existing businesses continue to perform well, reinforcing the strength of the platform we have built over many years. In the quarter we had 13 billion in capital formation and appreciation, with close to $1 billion in new commitments across our newest vintages, currently in the fundraising phase.
Speaker #4: SPS4, MAV4, LACAN4, and VSP2. Looking ahead, we are very excited about a strong and well-diversified set of flagship strategies in the market during the second half of 2026, such as COPCO, VRI5, Credit Infra, and further commitments in VSP2, SPS4, and LACAN4, spanning our Credit, Real Assets, Private Equity, and Global IP&S segments.
Speaker #4: The breadth and quality of this pipeline reinforce our confidence in the growth ahead. And Bruno, we will walk you through it in more detail shortly.
Speaker #4: Supporting this extensive product suite, the macro-environment across Latin America remains constructive in general, though still marked by volatility. Political uncertainty has started to ease in some markets, with recent market-friendly elections outcomes in Peru and Colombia.
Speaker #4: Mexico, in particular, remains an important growth lever for Vinci Compass. During the quarter, we saw strong momentum in our short-duration strategies, with over $440 million in inflows into our Mexican credit funds.
Speaker #4: It also remains one of the most compelling structural opportunities in the region. Following the pension reform, mandatory contribution rates are set to rise towards 15% by 2030, and we expect the authority system to keep growing meaningfully over the coming years.
Speaker #4: In addition, the structural nearshoring trend reflected in recent record foreign direct investment reinforces our long-term conviction in the market. In Brazil, the current interest rate environment continues to create attractive conditions for disciplined capital deployment in private markets.
Speaker #4: As elevated rates support more compelling entry valuations and allow us to negotiate downside protection structures, including hybrid debt and equity solutions that enhance risk-adjusted return potential.
Speaker #4: At the same time, still elevated real interest rates, a more cautious monetarizing cycle, and election-related fiscal uncertainty continue to impact risk appetite, broader M&A activity, and liquidity events, which may affect the timing of certain realizations and deals.
Speaker #4: In private equity, we had some important liquidity initiatives in early 2026 through the listing of AGIE, a reverse IPO of CBO into Ocean Pact, and the sale of Mundo do Cabeleireiro.
Speaker #4: We continue to maintain a meaningful pipeline of potential divestment opportunities for the second half of the year. In corporate advisory, a constructive environment could gradually translate into higher deal activity.
Speaker #4: Against this backdrop, the team is working on an extensive pipeline of opportunities for the second half of 2026, which we expect to materialize as market conditions improve.
Speaker #4: At this point, we expect that the second half of the year will be better than the first half revenue-wise, with some mandates expected to close in the next six months.
Speaker #4: Moreover, external fundamentals remain supportive, with strong trade flows, resilient commodity exports, and a stable current backdrop. The Brazilian real and regional currencies continue to benefit from these external fundamentals. We could see room reopen for an improvement in domestic assets.
Speaker #4: A relevant factor during the quarter was the strong supply of IPOs and follow-on offerings tied to artificial intelligence and the broader technology sector in the US.
Speaker #4: Enthusiasts around AI remain one of the main drivers of the U.S. market, but the sheer size of these transactions requires meaningful capital absorption. As a result, some investors have reduced positions in other markets to participate in these deals, putting pressure on assets outside the technology sector.
Speaker #4: Encouragingly, this dynamic appears less intense going forward. The most recent AI and technology-related offerings do not seem to carry the same extraordinary volumes observed earlier, suggesting that the technical pressure from capital rotating out of other markets may begin to ease.
Speaker #4: In this context, our equity segment could be a beneficiary of this rotation. Turning to a brief snapshot of our financial performance, this quarter we posted higher management fees, with an initial one-month contribution for BAX as well as organic growth across credit and global IP&S.
Speaker #4: Fee-related earnings reached $89 million in the second quarter 2026, up 36% year over year, with an FRE margin of 33%, up 450 basis points year over year.
Speaker #4: In the second quarter of 2026, year to date, FRE margin reached 34%, up 580 basis points year over year. This profitability expansion reflects the operating leverage of our platform, as revenue growth from both recent acquisitions and organic fundraising continues to outpace the growth in our cost base.
Speaker #4: We remain firmly on track toward the 38% FRE margin target by 2028 that we laid out at our Investor Day. As we have been highlighting over the past communications, distributor earnings naturally carry more volatility, and this is particularly true at this stage of our cycle, as we accelerate capital calls into our proprietary funds, which will impact our short-term financial income.
Speaker #4: During the quarter, we called approximately $56 million, bringing total capital called from our IRE commitments to over $960 million, or roughly 65% of our $1.5 billion in total commitments.
Speaker #4: As this capital is deployed, it temporarily reduced the short-term financial income we earn on our cash, which weighs on distributor earnings in the near term.
Speaker #4: This, however, is a natural and intended feature of our model. Capital invested today into our own funds is designed to generate management fees, carry, and capital gains as these funds mature and begin returning capital.
Speaker #4: In that sense, once again I would like to highlight the long-term value embedded in our balance sheet. We currently hold approximately $890 million in long-term proprietary funds on our balance sheet.
Speaker #4: Which is not fully reflected in our distributor earnings and, by consequence, at this stage constitutes a hidden asset in our business. We expect this value to translate into meaningful distributor earnings in the coming years as capital begins to flow back to us.
Speaker #4: That same focus on building durable, long-term value is evident across our funds. In infrastructure, the ICC closed the acquisition of a stake in Faro Energy, one of Brazil's leading distributor generation solar platforms.
Speaker #4: The transaction gives the fund exposure to a scaled and highly contracted portfolio with operations across multiple Brazilian states, while also providing a meaningful pipeline for future expansion.
Speaker #4: Importantly, the investment aligns well with the ICC's strategy of building exposure to essential infrastructure assets supported by long-term contracted cash flows and secular trends linked to the energy transition.
Speaker #4: We believe this deal further reinforces our team's ability to deploy capital in sectors where operational expertise and active asset management can create substantial long-term value.
Speaker #4: Another important development we see in our infrastructure platform relates to the international airport of Rio de Janeiro, Galeão. As previously disclosed, Vinci Compass expects to receive between $90 and $100 million net of taxes and associated expenses, from the identification associated with the airport's concession process.
Speaker #4: This amount should be recognized during the second half of 2026 and will impact our distributor earnings. Beyond its financial contribution, this outcome reflects the value generated by our infrastructure team prior to the auction, including involvement in the negotiation and structuring of the new regulatory model.
Speaker #4: To conclude, what we find most compelling is the alignment between where our platform is today and where the structural opportunity is heading. The demand for alternatives across Latin America is accelerating the region's standout as a stable and diversified destination for global capital, and we have spent years building the platform the talent and the execution capabilities required to capture it.
Speaker #4: Each transaction we complete adds scale, deepens our capabilities, broadens the solutions we can offer our clients, and reinforces our ability to compound value. Vinci Compass enters the second half of 2026 from a clear position of strength.
Speaker #4: We are executing with discipline against the priorities we laid out on our investor day, strengthening our regional presence, scaling our highest growth strategies, and allocating capital with rigor.
Speaker #4: Above all, our focus remains on creating long-term value for our clients, shareholders, and partners. I have never been more confident in our ability to deliver it.
Speaker #4: Thank you all for joining us today. I will turn the call over to Bruno.
Speaker #1: Thank you, Alessandro, and good evening, everyone. We are very encouraged by the extensive fundraising pipeline we have in place for the second half of the year, supported by the combination of an expanded distribution footprint and a more comprehensive product suite following our recent acquisitions and fund launches.
Speaker #1: Starting with credits, the strategic combination with BAX is a great example of this. What excites me the most is the highly complementary nature of the two platforms.
Speaker #1: Together, we now manage over $8 billion in Argentine funds, mostly across credits, with a smaller portion in equities. Through this transaction, Vinci Compass gained access to the extensive corporate and retail distribution networks of BAX and Banco Hipotecario, meaningfully strengthening our local capabilities in Argentina.
Speaker #1: We expect this to translate into inflows over the coming quarters, supported by the positive feedback and momentum we are seeing from local investors, whose profiles are gradually shifting from defensive wealth preservation strategies towards more active investment positioning.
Speaker #1: The Navi Real Estate Fund's acquisition reinforces our full-service platform from a different angle. By expanding our footprint into the multi-strategy real estate segments, we unlock a new fundraising channel for Vinci Compass through an already sizable vehicle that gains immediate relevance in that market.
Speaker #1: Following closely, expected in the fourth quarter of 2026, our multi-strategy real estate vertical will hold approximately $750 million in AOM. As we often say, smaller funds without scale struggle to grow and lose relevance with distribution platforms.
Speaker #1: By building vehicles with sufficient critical mass for organic growth, we gain relevance in the short term, accessing new pockets of capital and positioning ourselves to scale further as market conditions for REITs become more favorable.
Speaker #1: On that note, we remain attentive to the potential reopening of market windows as the Brazilian easing cycle advances. Which could create a more favorable environment to raise capital for REITs.
Speaker #1: As a reference, during the last easing cycle, we successfully raised $1.2 billion in a single quarter. As you know, REITs remain vehicles for individual investors.
Speaker #1: Turning now to AOM and our fundraising efforts during the quarter. We reached the milestone of $70 billion of AOM, an increase of 5% quarter over quarter on a dollar basis.
Speaker #1: In Brazilian reais, it represents R$361 billion of AUM, with R$13 billion of capital formation and appreciation, including close to R$1 billion in capital subscriptions across closed-end funds.
Speaker #1: The second quarter reinforced the strength and resiliency of our diversified platform, with $17 billion in appreciation. This is a clear demonstration that we have reached the scale and product quality that allow the platform to compound and perform consistently on its own.
Speaker #1: In real assets, we continue to see capital subscriptions during the quarter, across LACAN4 and our opportunistic fund targeting the warehouse sector in Brazil. In LACAN4, we continue to see strong engagement ahead of the fund's final closing by the end of the year.
Speaker #1: Commitments in this type of strategy tend to build at a more measured pace, reflecting the nature of the institutional investor profile, the recent European summer period, and the time required to finalize legal documentation.
Speaker #1: Encouragingly, the fund has already attracted strong interest from new investors, many of which have advanced in their internal processes and are now moving towards signing.
Speaker #1: This is exactly the kind of momentum we have been signaling over the past quarters. European institutional demand, in particular, has stood out. Interest has been strong enough that a group of European development financial institutions named themselves a DFI consortium and chose to advance in a coordinated manner.
Speaker #1: Sharing due diligence efforts as they progress towards their approvals, which we see as clear evidence of their conviction in the strategy. At this point, and with this overwhelmingly international support, there is a high probability that LACAN4 will hit its hard cap.
Speaker #1: Moving on, let's turn to our global IP&S segment. It is worth taking a step back to recall that the largest portion of our AOM comes from the third-party distribution business, which is comprised of our TPD liquid and TPD alternative sub-strategies.
Speaker #1: While funds in TPD alternatives are structured as long-term closed-end vehicles under the capital subscription model, we classify them as inflows in our AOM roll forward, which is rarer than under the capital subscription.
Speaker #1: As a result, the net inflow lines reflect a combination of capital subscription and capital returns from TPD alternative funds, together with inflows and outflows from other sub-segments, such as TPD Liquid, Global Solutions, and multi-strategy.
Speaker #1: During the quarter, we saw continued inflows into TPD Alternative, with approximately 70% coming from Chilean institutional and high-net-worth investors, and the remainder distributed across other geographies, including Brazil and Mexico.
Speaker #1: These inflows reflect our ongoing efforts to provide local investors with access to top-tier global GPs in the alternative space, with most of the capital allocated into global private equity secondaries and technology-focused growth equity strategies.
Speaker #1: These inflows were offset by capital return from TPD alternative funds and by some rebalancing within TPD Liquid. The capital return was meaningful and represents a positive outcome for our clients, which we would expect to be reinvested and recycled into other products over time.
Speaker #1: On the liquid side, the movements this quarter reflect two main drivers: part came from our Chilean pension fund clients and related to local regulatory limits on offshore exposure, which required them to rebalance when strong appreciation pushes their holdings above permitted thresholds.
Speaker #1: And part was related to a specific external asset manager that underperformed during the quarter. We therefore see these flows as a natural part of the business, rather than a cause for concern, and we would expect this dynamic to be increasingly mitigated over time as we continue to broaden our client base and diversify our fundraising geographies within the TPD business.
Speaker #1: Looking at TPD alternative going forward, the fundraising environment remains quieter, with capital raising periods for global funds extending beyond historical patterns. Which naturally leads to investors to defer commitments to our later closings.
Speaker #1: As a result, we would not expect meaningful alternative flows in the third quarter. Within multi-strategy, our Verges flagship fund is seeing meaningful engagement from a broad base of clients, including pension funds and multi-family offices, which could translate into positive inflows in the second half of the year. In fact, in July, the strategy already received an inflow from a multi-family office we had been engaging with since the beginning of the year.
Speaker #1: And we are in final discussions on the first commitment from pension funds into the flagship. This remains a key priority for the third and fourth quarters.
Speaker #1: Shifting to equities, we saw inflows into a LATAM UCITS vehicle from clients across the region, reflecting the impact of our sustained efforts and improved performance being recognized by the market.
Speaker #1: These were offset by outflows in our Brazilian products, primarily reflecting the more cautious domestic backdrop of still-elevated real interest rates and election-related uncertainty.
Speaker #1: In addition, this was compounded by strong global demand for AI and technology-related offerings, as Alessandro detailed, which temporarily drew capital towards that sector. We believe our Brazilian equities funds tend to benefit as local flows return. Specifically, one of our current fundraising efforts is directed towards local pension funds—the RPPSs—to raise capital for our Verge Equities strategy.
Speaker #1: We expect inflows to begin to materialize by the fourth quarter. Switching gears to credit, we continue to be one of our fastest-growing AUM franchises. AUM surpassed R$42 billion, up 15% quarter over quarter and 40% year over year, supported by R$4 billion from the BACS acquisition and R$2 billion from capital formation and appreciation.
Speaker #1: This performance reflects the continued diversification of our platform across local-to-local and cross-border strategies, reinforcing our position as a one-stop shop across Latin America.
Speaker #1: Since closing in June, we have been consolidating BACS results into our FRE, and we expect a tailwind on margins in the second half, as our Argentina operations carry a higher margin than that of the entire company. This translates into a positive mix impact to consolidated numbers. We continue to see full-year FRE margins in the mid-30s range.
Speaker #1: Within our closed-end funds, we raised close to R$550 million across SPS4 in opportunistic capital solutions, MAVI Foreign Agribusiness, and FIVE Peru, our private credit strategy focused on confirming, factoring, and trade receivable financing.
Speaker #1: SPS4 secured commitments from investors in the United States and Uruguay, further validating the strategy's differentiated proposition and capitalizing on its strong track record. We continue to see encouraging fundraising momentum and expect additional commitments ahead of the fund's final closing later this year.
Speaker #1: In agribusiness, we successfully launched MAV4 and achieved the fund's fundraising target through local Brazilian intermediaries, highlighting the strength of our distribution capabilities and the continued investor demand for agribusiness products.
Speaker #1: In Peru, fundraising activities remain solid. During the quarter, FIVE Peru secured additional commitments, reflecting the continued demand for private credit solutions and further reinforcing our position in the market.
Speaker #1: Building on this momentum, we expect to launch FIVE2 by year-end, while continuing to advance fundraising efforts for PEPCO2, our flagship senior-secured lending strategy, which has been generating strong interest among institutional investors.
Speaker #1: In parallel, we are broadening access to our credit platform through new fund formats. In Chile, we have just launched VCCL, our first proprietary semi-liquid credit fund—an important milestone that brings our institutional credit capability to a wider client base in a very accessible format, with higher liquidity.
Speaker #1: Consistent with what we have discussed in previous quarters, this launch is aligned with our strategy of expanding into semi-liquid structures, a segment that has been growing demand globally, and that we believe represents an attractive long-term opportunity across the region.
Speaker #1: We are pleased to see this thesis validated almost immediately, with the fund securing its first commitments in July, a strong early signal of the appetite we expect this format to unlock across the region.
Speaker #1: In Brazil, our co-managed credit fund with Verde continues to attract growing interest from a diversified investor base, and we expect fundraising activity to accelerate in the third quarter.
Speaker #1: More broadly, infrastructure credit remains one of the most competitive opportunities in the market, supported by resilient fundamentals, sustained demand for incentivized ventures, and increasing investor interest in long-duration real asset strategies.
Speaker #1: In this context, Credit Infra, our flagship infrastructure credit strategy, remains well-positioned, with a portfolio focused on high-quality infrastructure assets across sectors such as renewable energy, transmission, and sanitation, supported by an ESG framework.
Speaker #1: We continue to see positive investor engagement and expect additional commitments over the coming quarters. Turning to Colombia, COPCO, our first private credit strategy in the country focused on senior-secured lending, is also advancing very well. At this point, we expect a closing to happen in the second half, with a few hundred million dollars in commitments, a sound fundraising performance given its first-time fund nature.
Speaker #1: Our next generation of private credit strategies in Peru has also been generating constructive discussions with local investors. We believe this momentum reflects the strength of our regional franchise, built over many years of local presence and relationships, and is further evidenced by our ongoing engagement with development finance institutions.
Speaker #1: Going back to COPCO, this product underlines exactly the rationale behind the Compass combination. The combination of leading commercial penetration across Latin America, with Vinci's know-how and track record of structuring alternative products, led to the development of a strategy that should be a meaningful contributor to the economics of our Colombian office.
Speaker #1: We expect to lean on this experience to develop additional Vinci Compass alternative offerings across the region. Taken together, these efforts highlight the breadth and increasing relevance of our credit platform across Latin America.
Speaker #1: With fundraising progressing across liquid, semi-liquid, and closed-end strategies, a growing regional footprint, and multiple products gaining traction simultaneously, we believe credit continues to stand out as one of the most attractive, scalable growth drivers within Vinci Compass.
Speaker #1: Stepping back, what this extensive pipeline truly reflects is the strength and ambition of the franchise we have built over the years. Across private equity, real assets, equities, credit, and global solutions, we have created a uniquely diversified, integrated, and connected platform—one that allows us to seize differentiated opportunities and to be a true partner to our clients across the full investment cycle.
Speaker #1: We therefore entered the second half of the year with a remarkable pipeline and multiple initiatives already translated into results. And what excites us the most is that this is just the start.
Speaker #1: The opportunities ahead of us are the direct result of years of investment in our people, capabilities, products, and distribution. As these investments continue to mature, we see an exceptionally attractive runway for growth.
Speaker #1: The last point I would like to touch on is our GP commitments. At this point, we are starting to have visibility on initial capital returns from this first cycle of investments.
Speaker #1: We expect some of our closed-end funds to start returning capital this year. This will not only allow the balance sheet to receive this capital back, restart earning short-term returns, and recycle it into new GP commitments, but also has the potential to impact favorably our realized IRE line.
Speaker #1: We are very bullish on our prospects for the second half. With a strong product lineup, tailwinds from recent acquisitions, strong distributable earnings contribution from the Galeón transaction, and the beginning of a more meaningful GP commitment capital return cycle, we have a strong outlook for the remainder of the year.
Speaker #1: With that, I will hand it over to Sergio to discuss the financial results. Thank you, Bruno. And good evening to everyone. The second quarter of 2026 reflected continued progress in our business.
Speaker #1: With management fees growing and our FRE margin expanding year over year, let me start with our AUM. We ended June with R$361 billion in AUM, up 19% year over year and 4% quarter over quarter.
Speaker #1: The quarterly growth was driven by portfolio appreciation across global IPNs and credit, and by the combination with BACs, partially offset by negative FX variation and by net outflows in our third-party distribution business.
Speaker #1: On this point, it's worth highlighting that, as Bruno detailed, a significant portion of the net outflows in Global IPNS corresponds to returned capital within our third-party distribution alternative strategy.
Speaker #1: Where fees had been charged upfront, as a result, this AUM no longer carries recurring fees, and the segment's management fee revenues should not be affected by these movements.
Speaker #1: In the second quarter, management fees totaled R$252 million, up 29% year over year. The increase was driven by inorganic growth from the Verge and BACs acquisitions, contributing a full quarter and one month, respectively.
Speaker #1: As well as by continued organic growth, reflecting our successful fundraising efforts over the last 12 months. Advisory fees totaled R$9 million in the quarter, a decrease of 65% year over year.
Speaker #1: As we have highlighted in prior calls, upfront fees in our third-party distribution alternative business can vary significantly depending on the timing of commitments. As Bruno mentioned, the current environment for global alternatives is characterized by longer capital raising periods, which naturally lead investors to defer commitments toward later closings.
Speaker #1: As a result, we do not expect meaningful alternative flows in the third quarter. Our Corporate Advisory segment also continued to reflect a slower environment for deal activity in the second quarter, amid still elevated interest rates and election-related uncertainty in Brazil.
Speaker #1: Looking ahead, we have a meaningful pipeline of opportunities for the second half of the year, and we expect a gradual pickup in deal activity by year-end.
Speaker #1: At this point, we expect a stronger second half of the year than the first half for the corporate advisor business. Altogether, fee-related revenues reached R$272 million in the quarter, up 17% year over year, and R$544 million in the first half of 2026, also up 17% year over year.
Speaker #1: Turning to fee-related earnings reaching 89 million reais in the quarter, or 1 real and 35 cents per share, up 36% year over year on a nominal basis, and 31% per share.
Speaker #1: Our FRE margin expanded to 33%, an improvement of approximately 450 basis points compared to the second quarter of 2025. This progression was driven by the acquisition of Verge, one month of BACs, and the operating leverage embedded in our platform, as revenue grows faster than costs.
Speaker #1: As well as the cost-efficiency initiatives we implemented over the past year. As we mentioned last quarter, the second quarter tends to carry high seasonal costs, particularly related to third-party service.
Speaker #1: Such as legal and consulting fees. As a result, the fluctuation in our FRE margin compared to the first quarter of 2026 was expected, as this seasonal cost materialized.
Speaker #1: It's also worth noting that BACs contributed only one month of results this quarter. Beginning in the third quarter, we will benefit from its full-period contribution, which should further support management fee growth and reinforce the operating leverage of the business going forward.
Speaker #1: Moving to performance-related earnings, our PRE will recognize R$4 million in the second quarter, primarily across credit, equities, and global IPNS. In line with seasonality, both the second quarters of 2026 and 2025 benefit from performance fees generated by liquid funds across these strategies.
Speaker #1: Though performance fees in equities were slightly higher in the second quarter of 2025, reflecting stronger local stock market performance. Realized GP investment income totaled R$9 million in the quarter, supported by REIT dividends and a real estate closed-end fund realization.
Speaker #1: This was partially offset by mark-to-market adjustments in real estate funds, which weighed on unrealized GP investment income and brought in R$1 million reais for the period.
Speaker #1: While IRH can fluctuate from quarter to quarter, we continue to view our proprietary commitments as an important long-term driver of value creation for Vinci Compass.
Speaker #1: Turning to realized financial income, and consistent with the capital call dynamic we have been emphasizing around our IRE commitments, this line declined 63% year over year in the quarter, as capital costs reduced our cash positions.
Speaker #1: We expect it to keep trending lower as our proprietary funds mature towards the realization cycle. The minority interest line, introduced for the following divergent transactions to reflect the portion of Verge's earnings attributable to the remaining 49.9% non-controlling interest, now also comprises the minority interest related to BACs.
Speaker #1: Before turning to adjusted distributable earnings, a quick word on our operational expenses. This quarter included some costs related to our M&A activities, mainly attributable to BACs.
Speaker #1: As a reminder, these are added back in our Adjusted Distributable Earnings, which provide a cleaner view of the recurring earnings power of the business.
Speaker #1: On that basis, Vinci Compass generated 63 million reais in adjusted distributable earnings for the quarter, or 96% per share, bringing our first half total to 126 million reais, or 1 real and 92 cents per share.
Speaker #1: As anticipated, the year-over-year comparison was primarily impacted by lower realized financial income and softer Advisory and PRE contributions, even as FRE continued to grow meaningfully.
Speaker #1: The growth seen in our FRE reinforced the scalability of our platform, while the successful closing of the BACs combinations and the recently announced NAVI acquisition underscored the selective inorganic expansion. Debt, together with organic growth and operating leverage, remains central to how we compound earnings over time.
Speaker #1: As we look ahead to the second half of the year, we do so with fundraising visibility and additional earnings contribution expected from the acquisitions and initiatives already underway, leaving us well positioned to continue creating value for our shareholders.
Speaker #1: With that, I would like to open the call for questions. Once again, thank you for joining us this evening. Operator, please proceed. We are going to start the question-and-answer session for investors and analysts.
Speaker #1: If you wish to ask a question, please click on "Raise Hand." Please wait while we poll for questions. The first question comes from Ricardo Buchpigo with BTG Pactual.
Speaker #2: Hi everyone, and thanks for the opportunity to ask questions. I have two here on my side. So first, could you comment on what drove the acceleration in fee-related expenses this quarter, which grew around 5%?
Speaker #2: And could you help us understand how much of this is related to a one-off investment specific to this quarter? And what should drive the recovery in FRE margins to get to the mid-30s that you guys reiterated?
Speaker #2: And for my second question, how much of the $5.7 billion in net outflow from IPNS was related to the capital returns you mentioned? And do you have a sense of how much of these capital returns are usually recirculated and should translate into future inflows in situations like this?
Speaker #2: I just want to understand if there should already be a pickup in fundraising for the next quarter or the second half of the year, or should it be a longer cycle?
Speaker #2: Thank you.
Speaker #3: Okay, Ricardo. Thank you for the question. This is Bruno. So, in your first question, the second quarter tends to be seasonally stronger for us in terms of expenses.
Speaker #3: We have some of the payments that fall into the second quarter—some of the service payments, mainly, so service providers. And in the second quarter this time, we had, as we continue to improve the productivity of the platform.
Speaker #3: And try to see where there is opportunity for us to improve productivity. We had some cost reduction regarding people as well this quarter, which we do not adjust.
Speaker #3: As we had not adjusted in '25. So in the second quarter, I would say probably those were the two most significant impacts. This severance cost that we had in the second quarter related to some cost reductions that we did in people.
Speaker #3: And also the seasonality nature of expenses. When we look at the forecast for the second half, as we said in the prepared remarks, we continue to see FRE margins in the mid-30s range.
Speaker #3: I think now, as we also mentioned, there is this tailwind from BACs consolidation, which will add to FRE margins as well.
Speaker #3: So, at this point, we see the numbers solidly in the mid-30s, right? Could be actually a little bit better. But that's the number that we're sticking to at this time.
Speaker #3: Regarding your second question on the outflows, I would say approximately one-third of the outflows were due to capital returns from the alternative TPD funds.
Speaker #3: What we see in the industry, in this case, is that our main clients for this line of products are actually in Mexico, right? Although we do also have some exposure in Colombia.
Speaker #3: But the TPD markets mainly to institutional investors in Chile and Mexico. These investors are almost always fully allocated, right? They don't carry cash positions on their balance sheets.
Speaker #3: They're usually fully allocated. So, although we might have some fluctuation from quarter to quarter—as we did have, if you remember—I think we did have some fluctuation in the first quarter of '25.
Speaker #3: We had some redemptions also in the first quarter of '25 in the TPD liquid side. We are seeing those redemption flows in the second quarter now of '26.
Speaker #3: But given that they are fully allocated by nature, and the growth rates of both the Chilean AFPs and the Mexican authorities are quite high, they're growing in the low-to-mid teens now, given the contribution factors.
Speaker #3: Over time, the TPD line will be very positive for us. If you look at the organic growth that we had in TPD in AOM on a year-to-year basis, if you add inflows and appreciation, that organic growth is close to 20%.
Speaker #3: So we expect that to continue to be the case as these institutional investors continue to grow their bases. And we might have these fluctuations from one quarter to the other.
Speaker #3: But the fundamentals for these two asset lines, both the TPD Liquids and the alternatives, continue to be quite favorable for us.
Speaker #4: And Ricardo, that's Alessandro. Just to add on top of what Bruno said, just to complement these outflows—this is very normal, as Bruno said. Like the AFPs and the authorities, we balance the portfolio.
Speaker #4: Especially after the growth, because of the markets going in the right direction. And the majority of these outflows that we saw came from the liquid side.
Speaker #4: Of course, we have some capital returns, as Bruno mentioned, on the alternative side. But in terms of the outflows, they came from the liquid side.
Speaker #4: That is like some of these investors, in a way—if you may—they can profit off very benign markets. And to Bruno's point, they will come back to rebalance the portfolios, and then you'll see this fluctuation when the markets go in one direction or the other.
Speaker #2: That's super clear. Thank you.
Speaker #1: The next question comes from Fernanda Sayon with JP Morgan.
Speaker #5: Good evening, Alessandro, Bruno, Sergio. My question is on the recent acquisition of BACs and AVI. I was wondering if you could discuss how these should impact management fee revenues, FRE margins, expenses—anything you can share would be very helpful.
Speaker #5: And you specifically mentioned that BACs have a higher margin. Would it be possible to quantify that? Thank you.
Speaker #3: Okay, Sana. This is Bruno. So, BACs—to give you some sense—in June, the impact was about $4 million in revenue in the month of June.
Speaker #3: So, as we consolidate the numbers going forward, I think that's a good run rate in terms of the revenue base. The margin for BACs is higher than the average of the company.
Speaker #3: It's closer to 50%. So, if you do the math between the two and the FRA that we have, the positive impact to us should be around 50 basis points, more or less.
Speaker #3: In terms of the tailwind for the second half, I think the other thing that is important to mention is, even pre-BACs, Argentina was about 40% above budget for us.
Speaker #3: So the flows are very strong in the business in Argentina. Hopefully, with BACs, we have even more of that impact. But that's also another interesting piece of information: we're seeing Argentina be very strong.
Speaker #3: In the case of NAVI, we calculated that it's a much smaller business, right? So we're talking about $750 million AUM. Although the fees are good—they're around 1%.
Speaker #3: And we, as we mentioned in the press release, are not bringing anyone from the original team. So, the real estate team is going to manage this money.
Speaker #3: So it's fully incremental to us, so this margin is going to be very high—probably on the FRA line, probably, I mean, in the 60–70% range, right?
Speaker #3: After taxes and some bonus provision, this should also be interesting for the platform. But the size is not very big, so it shouldn't move the needle as BACs will.
Speaker #3: But it's going to help. It's going to be incremental to us as well.
Speaker #5: clear. Thank you so much.
Speaker #1: The next question comes from William Barranjart with Itaú BBA.
Speaker #4: Good evening, everybody. Thank you for the presentation. Also, a follow-up on BACs acquisition, and Argentina operation as a whole, right? On a more qualitative view, what are the integration milestones you expect for BACs?
Speaker #4: Your operation in Argentina—specifically in terms of products, cross-selling opportunities, and the KPIs you think are relevant there. Overall, I wanted to grasp your view for Vinci Compass in Argentina.
Speaker #4: And the second one, maybe quicker. On inorganic growth, if beyond BACs, NAVI, how active is the M&A pipeline if M&A continues—if inorganic growth continues being one of the priorities ahead?
Speaker #4: Or are you shifting your focus to organic growth and working with all the suite of products you've already built in the past year since you've been listed?
Speaker #4: But that's it. Thank you.
Speaker #3: Thank you for your question. That's Alessandro. So, talking about BACs in a more qualitative way, as you mentioned, you know that the Argentine market is still in the early days of gaining more traction on the asset management side.
Speaker #3: Our combination of BACs was a very, I would say, good one in terms of not just about the products, but also about the channel of distribution.
Speaker #3: Our activity was more on the institutional side and BACs because of the relationship with the Hipotecario. The liability side comes more from the retail/wealth management side.
Speaker #3: So, having said that, that was very, very synergistic. We have been able to integrate smoothly. Of course, this is a merit of our team in Argentina, that knew the partners of BACs for a long time.
Speaker #3: And also, our new partners, the Hipotecario Group, have been a very good surprise in terms of the way that we have been integrating with them.
Speaker #3: The market today is very concentrated. It’s more like private—sorry, public credit and fixed income in general. But we see a lot of opportunities to introduce more sophisticated and more specific and structured products through the Argentine market.
Speaker #3: So, we are really very optimistic with the setup that we have—a very strong base from our Argentine operation, also together with Toronto BACs.
Speaker #3: But we think there is a huge opportunity for asset management in Argentina, as the market continues to improve and to require more structured products.
Speaker #3: So, we think that's a market where we are very well positioned, and in a very good situation to take advantage of the trends that we believe will happen there.
Speaker #3: Speaking a little bit more to your second question about the M&A activity, or inorganic versus organic growth, we continue to have a very strong pipeline of inorganic possibilities.
Speaker #3: As we have been repeating here, our main focus would be to grow inorganically if the opportunity arises outside Brazil. It's more on the other countries in Latin America, to reinforce our capabilities in the local markets.
Speaker #3: But there are not so many opportunities, and it's very difficult to structure these deals. But we have a very strong pipeline on them. And talking more about Brazilian opportunities, like in the case of NAVI, we would be a little bit more opportunistic in that sense and look for more creative approaches in terms of acquisitions.
Speaker #3: As you know, the asset management market in Brazil is undergoing an adjustment. For us, this has been very positive because we have been consolidators in this market and continue to grow organically, while also taking advantage of some opportunities.
Speaker #3: But we should be very careful to understand the drivers for each of the opportunities that we have in our pipeline. So, we will continue to focus on organic growth, but be very selective in the inorganic opportunities.
Speaker #3: I don't know if Bruno would like to add on top of that.
Speaker #2: Yeah, I think it's a good question from William to touch on a few additional points, which I think makes sense. As Alessandro said, right, M&A outside of Brazil—we're looking at those options to grow the alternative asset management base.
Speaker #2: And in Brazil, options that complement the platform, right? So, I think the Galeão inflow is going to increase our flexibility. I think it's a point that I would like to make, because we're going to receive a virtual equity injection of about R$90 to R$100 million in the second half, most likely in the fourth quarter.
Speaker #2: This will add flexibility when we analyze these opportunities. We're going to have dry powder to perhaps pursue things that we feel make sense and that add value to the platform.
Speaker #2: And the other thing that I would like to mention—I mean, even with all of the deals that we did, I think the base that we have created over these last few years, with the movements that we did, is already yielding a lot of positive momentum in the business, right?
Speaker #2: So, if you look at the organic growth rates in some of our verticals—if you look at, I had mentioned already, Global IPNS with almost 20% growth in AOM.
Speaker #2: Real assets—the organic growth in AUM year over year in the second quarter was about 40%. Credit was about 30%. And when you look at our FRE performance, with no acquisitions, we had high single-digit revenue growth, about flat expenses, and FRE growth of 35%.
Speaker #2: So the FRE growth of the platform, without M&A, in the second quarter was more or less the same growth that we had with M&A.
Speaker #2: So I think to that end, M&A continues to be a way for us to branch out and complement the platform. But I think the presence that we have across the region is already strong enough to sustain organic growth for us and to be meaningful value creators to the business on a go-forward basis.
Speaker #2: So I think those points are points that I think are important that we make: that the platform is already, in itself—without any additional M&A—generating a lot of value and growing quite handsomely in the second quarter.
Speaker #1: All right. Thank you, very clear. Thanks, Bruno, Alessandro.
Speaker #4: The next question comes from Tito Labarta with Goldman Sachs.
Speaker #5: Hi, good evening. Alessandro, Bruno, Sergio, thanks for the call. A couple of questions also, just I guess on the AUM, right? Very good growth in credit at IP&S.
Speaker #5: I mean, probably, considering the rate environment, it makes a lot of sense. Do you think that, sort of, is where the growth is going to continue?
Speaker #5: What about some of the other lines that are not growing? Do you think, I mean, private equity—that should continue to be fairly muted?
Speaker #5: Is there anything that could change that outlook? And how much does the mix also impact your margin to some extent? And also, because advisory was weak, did that also have a negative impact on the FRE margin?
Speaker #5: Thank you.
Speaker #2: Thank you, Tito, for the question. So, yeah. I mean, we have been talking about credit a lot, and I think, obviously, the rate environment helps in Brazil mostly.
Speaker #2: That's not the case for the other countries. In the other countries, the rates are already much lower than here. But I think there is a lot of product momentum.
Speaker #2: I think the rates help in Brazil, but we have a lot of product momentum outside of Brazil. I think COPCO, in that sense, is a good example, right?
Speaker #2: We had the visibility from Carla, who is the lead person on Colombia for us, about demand from institutional investors on the private debt side.
Speaker #2: We went after the capability to run a private credit product in Colombia, which we obviously didn't have at the time. And we are in line to have a closing of this fund in the third quarter, of a few hundred million dollars.
Speaker #2: So, as in the case of COPCO, we have similar developments in other credit products outside of Brazil, and also in Brazil, right? So in Brazil, we continue to see demand for new products.
Speaker #2: We actually approved a new product today in our product committee, which is a partnership with a bank where we'll distribute a product that is a mix of two products that we have.
Speaker #2: And it could be a billion-reais product, I mean, in terms of the size of the distribution channel and what we see as potential. So I think not only is the rates environment in Brazil obviously providing a tailwind for this segment, but also really product proliferation and the ability to launch new strategies across other countries in Latin America.
Speaker #2: Regarding the private equity business, I think we are in a hiatus now in terms of fundraising. VCP4 is still within the investment cycle, so we are not in a position now to raise another VCP fund.
Speaker #2: We need to fully invest VCP4 before coming back to markets. And we are in the final, let's say, pre-launch stages of VIR5. VIR5 is a fund that we expect to have a first close in the next several—I would say, at this point in time, probably next several weeks. We already have aligned the anchor investors for that fund.
Speaker #2: So, either in the third quarter or very early in the fourth quarter, we would have a first close for that fund. And then, depending on how the VCP4 strategy performs in the next few quarters, we could have VCP5 coming back to market later next year.
Speaker #2: So, it's more of a life cycle issue in private equity. It doesn't necessarily have to do with demand. But we do have a private equity product coming online in the short term.
Speaker #2: When you look at the growth components, I would say probably, given that private equity is less strong at this time, you have the growth coming from real assets, real estate, and IP&S.
Speaker #2: I would say probably it would be net positive, very marginally net positive for us. I wouldn't say it's a relevant—it's a relevant impact.
Speaker #2: And obviously, your last question—corporate advisory is very important for us for the FRE margin because when we have results and revenues coming from corporate advisory, the leverage of that revenue is very high.
Speaker #2: So it really helps us dilute the fixed cost base of the company. So the first half, in that sense, we had—I think it was something around 540 or 550 basis points of margin expansion in the first half.
Speaker #2: And that was without corporate advisory, because the first-half corporate advisory number was very small. For the second half, we expect that number to improve.
Speaker #2: What we have now in terms of visibility is for low teens million reais of revenue for the second half. So that also goes into, I think, what was Ricardo's earlier question regarding the visibility of the FRE margin.
Speaker #2: If we do have that corporate advisory revenue kicking in the second half, and I would say the visibility at this point that we have for a big chunk of that revenue is quite high, that would also help us to drive that margin comfortably into the mid-30s or eventually a little bit higher, as we are seeing when we look at the models for the second half.
Speaker #2: But certainly, not having Corporate Advisory is something that hurts the cost dilution of the platform.
Speaker #1: Just to add on top of what Bruno said, just to add a very quick comment. Summarizing what Bruno said, I see, to your question, two main products that we'll probably see developing in the short term on the credit side: that's the COPCO in Colombia and also a final close until the end of the year, probably, or further development—that's SPS4.
Speaker #1: Okay? And also we probably will see a final closing of the Lacan4. So we have been able at the same time that we see the growth coming from IPNS and the TPD side and et cetera, we are seeing very interesting spots of capital falling into our strategies both in credit, more structured ones, and also in real assets.
Speaker #1: As Bruno said, what we see next for Private Equity is VIR5—that we'll see a first closing very soon. And wait a little bit more for the flagship VCP5, when, of course, the fourth vintages are already invested.
Speaker #3: Closing remarks. Please, Mr. Horta, you can proceed.
Speaker #1: Thank you very much again for your support and your interest. We are very, very optimistic that we have been able to deliver, even against a backdrop of high interest rates, especially in Brazil.
Speaker #1: We think that soon we'll have part of the, I would say, volatility coming from the political side, as we already got results from Chile, Colombia, and Peru recently.
Speaker #1: We will, probably in our next meeting here for the third quarter results, already define it. The election in Brazil too. So, even against this last month's political expectations and volatility from all of these countries, we have been able to continue to deliver growth, and even with the high interest rates environment, especially in Brazil.
Speaker #1: We are very optimistic moving forward. We are very comfortable within our platform. So I'd like to thank you all again, and have a good night.
Speaker #1: Thank you.
Speaker #3: Please, this concludes today's presentation. We thank you all for your participation, and wish you a very good evening.
