Vinci Partners(VINP) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Venture Compass generated fee related earnings of R65.7 million or R1.04 per share and adjusted distributable earnings of R62.3 million or $0.98 per share for Q1 2025, representing a 22% year-over-year increase in FRE and a 266% increase in adjusted distributable earnings [3][4][8] - The company declared a quarterly dividend of $0.15 per common share, payable on June 10 to shareholders of record as of May 27 [4] - Fee related revenues totaled R million, reflecting a 117% increase year-over-year and a 6% growth quarter-over-quarter [38] Business Line Data and Key Metrics Changes - The credit segment was a highlight, with successful fundraising across various funds, including PEPCO II raising over million dollars and SPS four raising approximately BRL200 million [7][21] - The agribusiness credit fund, Mavi three, also marked its first closing this quarter, indicating strong activity across credit strategies [7] - The equities segment is seeing compelling opportunities, with Latin American equities trading at attractive valuations compared to peers [15][16] Market Data and Key Metrics Changes - The Brazilian Central Bank signaled nearing the end of its interest rate hikes, which may lead to a more supportive credit market environment [11] - Foreign investors returned as net buyers of BRL3.8 billion in Q1 2025, compared to a net sell-off of BRL6 billion in Q4 2024, indicating a shift in market sentiment [25] - The geopolitical backdrop is expected to attract capital inflows into Latin America, seen as a stable region with strong diplomatic ties [12] Company Strategy and Development Direction - The company is focused on integrating its platforms to foster collaboration and drive sustainable growth across various time horizons [5][6] - There is a strong emphasis on credit strategies, with expectations for growth in this segment to continue in 2025 [8][9] - The company plans to leverage technology, particularly AI, to enhance operational efficiency and decision-making [33][34] Management's Comments on Operating Environment and Future Outlook - Management views the current macroeconomic environment as an opportunity rather than a challenge, particularly in the credit segment [9][10] - The company is optimistic about capturing value for investors amid global trade dynamics and evolving geopolitical conditions [11][12] - There is confidence in the strength of the platform and a strong pipeline of products expected to drive growth in 2025 [18] Other Important Information - The company hosted annual global investment conferences across multiple Latin American countries, reinforcing its position as a trusted partner for capital allocators [13] - The Climate Infrastructure Fund, VICC, is set for its final closing in Q2 2025, focusing on high-impact projects aligned with sustainable infrastructure [17][27] Q&A Session Summary Question: Expectations for FRE margin growth and impact of BRL appreciation - Management expects FRE costs to remain disciplined, with potential for mid-double digit revenue growth, which would allow for substantial cost leverage [47][48] - The impact of BRL appreciation on distributable earnings was minimal, with a positive impact of $2 million noted [50][51] Question: Drivers behind IP and S segment performance - The decline in the IP and S segment was attributed to currency fluctuations and net outflows, particularly in liquid TPV [57][66] - Accrued performance markdowns were mainly due to currency impacts, with expectations for recovery in the second quarter [60][63] Question: Interest in Latin America and potential benefits - There is increasing real interest from global investors in Latin America, particularly in equities, infrastructure, and credit [78][79] - The company is seeing commitments from Asian investors and discussions for sustainable infrastructure investments [79] Question: FRE margin outlook for the year - Management maintains a target for FRE margins in the low 30s, with expectations for recovery in corporate advisory revenues [80][82]