Patria(PAX) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Patria generated fee related earnings of $32 million in Q1 2022, up 85% compared to Q1 2021, and distributable earnings of $35 million, or $0.24 per share, up 90% year-over-year [6][14] - Total AUM increased by 96% year-over-year to approximately $27.5 billion, with fee earning AUM up 136% to approximately $19 billion [6][16] - The FRE margin for Q1 2022 was 58%, slightly higher than the guidance for the year, which is expected to be in the low to mid-50s range [14] Business Line Data and Key Metrics Changes - In private equity, AUM inflows exceeded $1 billion, driven by the first closing of over $800 million for the new flagship fund and a SPAC listing that raised $230 million [11][12] - Infrastructure Fund III is generating a two times multiple and 13% net IRR, while Infrastructure Fund IV is generating a 1.7x multiple and 37% net IRR [12] - Credit AUM increased by 7% in the quarter, with Moneda's flagship credit strategies outperforming benchmarks significantly [13] Market Data and Key Metrics Changes - Latin American economies are net exporters of commodities, benefiting from high demand and resulting in stronger foreign investment inflows [9] - The S&P Goldman Sachs commodity price index was up 34% in US dollars year-to-date to the end of April, while the MSCI stock market index for Latin America rose by 9% [9] - The broader global MSCI index was down by 13.5% during the same period, highlighting the relative strength of Latin American markets [9] Company Strategy and Development Direction - The company aims to build a reputation as a trusted long-term investor, focusing on investment performance as the core of its business [20] - Key areas of focus include executing on FRE guidance, fundraising for new products, divestment progress, and platform expansion through M&A [20][21] - The company is well-positioned to capitalize on the favorable investment climate in Latin America, particularly in light of geopolitical risks elsewhere [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing strong fundraising activity and a favorable macroeconomic environment in Latin America [8][20] - The company anticipates raising more than $4 billion organically in 2022, with significant inflows already achieved in Q1 [7][20] - Management noted that the geopolitical landscape has made Latin America an attractive investment destination, with lower leverage and fiscal deficits compared to advanced nations [9][20] Other Important Information - The company declared a quarterly dividend of $0.20 per share, payable on June 16, 2022 [4] - The net accrued performance fee balance reached a record high of $503 million, up 45% from the previous quarter [8][16] Q&A Session Summary Question: Fundraising activity and its impact - The CEO confirmed that fundraising for Private Equity VII is on track, with the first close aligning with expectations and a favorable market for Latin America [25][26] Question: Divestment opportunities in the current M&A environment - Management indicated that the active M&A environment facilitates divestments, with over 15 companies currently in the sale process [30] Question: Capital deployment outlook - The company maintains a $2 billion deployment guideline for the year, focusing on sectors like agribusiness, healthcare, logistics, and food [34][38] Question: Update on Infrastructure V and growth equity strategy - Management reported strong interest in Infrastructure V fundraising, with several divestments planned to enhance returns [45][47]