Patria(PAX) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fundraising in Q1 2025 totaled a record $3.2 billion, contributing to a target of $6 billion for the year [6][13] - Fee related earnings (FRE) were $42.6 million or $0.27 per share, representing a 2116% year-over-year growth [6][9] - Assets under management (AUM) grew to $46 billion, a 43% increase year-over-year and over 9% sequentially [11][26] - Distributable earnings were $37 million or $0.23 per share, up 12% year-over-year [9][33] Business Line Data and Key Metrics Changes - Fee earning AUM reached $35 billion, up 46% year-over-year and 6% sequentially [11][26] - Organic net inflows into fee earning AUM were over $700 million, reflecting an annualized growth rate of 8.6% [7][28] - Management fee revenue for Q1 was $77.3 million, up 28% year-over-year, driven by acquisitions [28] Market Data and Key Metrics Changes - Approximately 20% of fee earning AUM were in permanent capital vehicles, a key long-term objective [14][22] - Strong demand from Asian sovereign wealth funds resulted in $1 billion of commitments in customized investment accounts [14][20] - Local investors accounted for about 17% of fundraising in Q1 2025, indicating growing interest in alternative strategies [22] Company Strategy and Development Direction - The company aims to diversify and grow both organically and inorganically, enhancing resilience amid global uncertainty [23][24] - Focus on local consumption markets and resilient sectors such as healthcare and agribusiness [19][40] - The strategy includes increasing the proportion of assets that earn fees based on net asset value, which supports long-term compounding [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to weather economic uncertainty and potential global recession, highlighting Latin America's attractiveness for investment [17][18] - The company anticipates that geopolitical tensions may lead to increased foreign direct investment in Latin America [18][20] - Management remains cautious about extrapolating Q1 fundraising success across the entire year due to the unpredictable nature of large customized accounts [16][53] Other Important Information - The company expects FRE margins to fall within the range of 58% to 60% for the full year [32][72] - The effective tax rate for Q1 was 9.2%, with expectations to trend towards 10% by 2027 [33] - A quarterly dividend of $0.15 per share was approved for 2025 [34] Q&A Session Summary Question: How are portfolios positioned from higher tariffs in the U.S.? - Management indicated that most investments are Latin America-oriented, with minimal exposure to Mexico, and sectors are resilient and locally driven [40][42] Question: Could Chinese institutions divert allocations from U.S. to LatAm? - Management confirmed that conversations with Chinese investors have intensified, reflecting a shift away from U.S. exposure [45][48] Question: Is there potential upside to the $6 billion fundraising target? - Management maintained the $6 billion target but acknowledged the strong start with $3.2 billion raised in Q1 [52][53] Question: Update on integration of M&A completed last year? - Management reported that 2025 is focused on integration, with no major issues encountered and synergies expected to improve margins [67][72] Question: Overview of the $3.5 billion pending fee AUM? - Management indicated that most of the pending fee AUM will be allocated to infrastructure and GPMS, with deployment expected over the next four to six quarters [78][80]