Summary of Patria Investments (NasdaqGS:PAX) Update / Briefing Company Overview - **Company**: Patria Investments - **Event**: Third edition of Pax Talks, focusing on Global Private Markets Solutions (GPMS) business - **Date**: September 18, 2025 - **Key Speakers**: Andrea Medina (Shareholder Relations), Merrick McKay (Partner and Head of Private Equity for GPMS), Charles Keenan (Portfolio Manager at Long Light Capital) Key Points Industry and Business Model - **Industry**: Private Equity, specifically focusing on middle-market investments - **Business Model**: GPMS invests in middle-market private equity primaries, secondaries, and co-investments primarily in Europe and to a lesser extent in the U.S. [3][4] Financial Metrics - **Assets Under Management (AUM)**: As of Q2, GPMS had $13.9 billion in AUM, with $11.4 billion being fee-earning AUM, $1.4 billion pending fee-earning AUM, and $3 billion uncalled capital [3] - **Patria Private Equity Trust (PPET)**: Represents over $1.6 billion of permanent capital fee-earning AUM and has raised over $3.5 billion since the acquisition of Aberdeen's middle-market private equity solutions business [4] Growth Strategy - **Growth Target**: Patria aims to double GPMS fee-earning AUM within the next three years [4][53] - **Focus Areas**: - Maintain and grow the separate managed account (SMA) client base - Expand successful secondaries strategy (SOF) - Develop new pooled products and explore opportunities in LATAM [54][55] Market Dynamics - **Middle-Market Focus**: The mid-market has historically generated superior returns compared to large-cap investments due to lower pricing, more growth opportunities, and lower correlation with public markets [23][24] - **Investor Sentiment**: There has been a shift in focus from large mega-cap investments to mid-market opportunities as private equity returns have begun to decline [26][27] Client Relationships - **Client Base**: Predominantly consists of separate managed accounts (SMAs) and pooled products, with a strong emphasis on maintaining close relationships with clients [12][41] - **Investor Preferences**: Clients prefer tailored strategies that leverage Patria's expertise in specific market segments, particularly in Europe [17][18] Competitive Advantage - **Relationship-Driven**: The success of GPMS is heavily reliant on long-term relationships with both limited partners (LPs) and general partners (GPs), which are crucial for co-investment opportunities and secondary market transactions [40][42] - **Operational Efficiency**: Patria's ability to move quickly and adapt to market changes is highlighted as a significant advantage over larger, more bureaucratic institutions [70] Future Outlook - **Expansion Plans**: Patria aims to broaden its private market solutions beyond private equity to include venture capital, infrastructure, private credit, and real estate [62][63] - **LATAM Market Potential**: There is a significant opportunity for growth in the LATAM market, which is currently under-allocated to private equity compared to developed markets [55][66] Challenges and Considerations - **Market Conditions**: The dynamics in different LATAM countries vary significantly, affecting the pace of growth and investment opportunities [67] - **Investment Performance**: Maintaining strong performance is critical for client retention and attracting new investments [53] Additional Insights - **Historical Context**: The discussion reflects on the evolution of private equity, noting that the last decade has seen significant tailwinds that have now shifted, necessitating a focus on alpha generation rather than beta [36][38] - **Investment Philosophy**: Patria emphasizes the importance of sector specialization and operational value-add in mid-market investments, which differentiates them from larger players [24][25]