Patria(US:PAX)2023-02-14 20:15Financial Data and Key Metrics Changes - Patria generated fee-related earnings of $35.3 million in Q4 2022, up 20% compared to Q4 2021, and $130 million for the full year 2022, up 51% from 2021, achieving the annual growth target of 50% [30][13][9] - Distributable earnings were $53.3 million or $0.36 per share for Q4 2022, compared to $27.7 million or $0.19 per share in Q4 2021, with full year distributable earnings of $147 million equating to $1 per share [38][9] - Total AUM reached $27.2 billion, up 14% year-over-year, driven by $4.5 billion of organic and inorganic inflows [40] Business Line Data and Key Metrics Changes - In private equity, AUM increased by 21% year-over-year, with flagship funds generating net IRR of 21% and 15% respectively [25] - Infrastructure AUM grew by 15%, primarily due to strong portfolio appreciation, with Fund III achieving a net IRR of 13% [28][40] - Real estate AUM increased by nearly $1 billion through the acquisition of VBI, with VBI generating over $20 million of inflows in Q4 [34][40] Market Data and Key Metrics Changes - Latin America saw a large trade surplus of $62 billion and robust foreign direct investment of $90 billion, approximately 4.8% of Brazil's GDP [21] - The region's exchange rates generally strengthened in 2022, while equities outperformed peers in emerging markets [21] - Despite challenges, the macro outlook for Latin America in 2023 is positive, with expectations of larger capital flows [23] Company Strategy and Development Direction - Patria aims to grow AUM to $50 billion and fee-earning AUM to $35 billion by the end of 2025, targeting $20 billion of total new capital formation from 2022 through 2025 [17] - The company plans to continue expanding through M&A, having made several acquisitions in 2022, including Kamaroopin and VBI [16] - Patria is focusing on diversifying its product offerings, particularly in infrastructure and real estate, to capture growth opportunities [34][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a target of $150 million in fee-related earnings for 2023, with expectations of ramping revenue throughout the year [44] - The company anticipates meaningful contributions from new drawdown fund products and aims for $5 billion to $6 billion of organic inflows in 2023 [19][50] - Management highlighted the resilience of their business model amid global economic challenges and emphasized the importance of attracting top talent [24][49] Other Important Information - Operating expenses increased by 61% year-over-year, primarily due to the addition of Moneda and VBI [36] - The company declared a quarterly dividend of $0.308 per share, payable on March 22, 2023 [9] - Net accrued performance fees stood at $462 million, up 33% from the previous year, with expectations of realizing a significant portion by the end of 2025 [45] Q&A Session Summary Question: What are the main drivers for the targeted $5 billion to $6 billion inflows for 2023? - Management indicated that infrastructure and credit-related products are easier to fundraise, while equity-related products are more challenging due to the current interest rate environment [53][56] Question: Can you provide more detail on the infrastructure strategies and how they differ from global peers? - Patria differentiates itself by taking on development risk, focusing on creating value through the development of assets rather than purchasing mature assets [58][59] Question: How much of the expected FRE growth for 2023 is organic versus inorganic? - Management did not provide a specific breakdown but noted that the $5 billion to $6 billion target is based on organic growth, with previous inorganic growth contributing to overall AUM [75] Question: What is the outlook for the real estate segment in 2023? - Management expressed optimism about the real estate segment, particularly in Brazil, Chile, and Colombia, highlighting opportunities for consolidation and growth in the REIT market [77]