Patria(PAX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Patria reported organic fundraising of $1.7 billion in Q4 2025 and a record $7.7 billion for the full year, exceeding the revised target of $6.6 billion by over $1 billion [5][34] - Fee-related earnings reached $203 million in 2025, up 19% year-over-year, with distributable earnings per share at $1.27 [6][23] - Total fee revenue for Q4 was $101 million, an increase of 8% year-over-year, while full-year total fee revenue reached $344 million, up 14% [39] Business Line Data and Key Metrics Changes - Infrastructure strategies raised approximately $2.3 billion in 2025, significantly higher than the previous year, driven by strong global interest [11] - The credit platform raised a record $1.8 billion in 2025, surpassing the previous record of $1.4 billion in 2024 [12] - Real estate strategies raised over $520 million in Q4 2025, contributing to Patria becoming the largest manager of REITs in Brazil [14] Market Data and Key Metrics Changes - The Brazilian credit market reached $1.7 trillion in 2024, with an estimated $800 billion addressable market for asset-backed, non-bank private credit [13] - Approximately 90% of Patria's fee-earning AUM is in vehicles with no or limited redemptions, indicating a stable asset base [15][21] Company Strategy and Development Direction - Patria aims to achieve a fee-earning AUM target of $70 billion by year-end 2027, with recent acquisitions expected to enhance capabilities in private credit and real estate [8][10] - The company is expanding its investment strategies, including infrastructure development, private equity buyout, and venture capital, to diversify its performance fee earnings stream [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting 2026 and 2027 fundraising targets of $7 billion and $8 billion, respectively, due to strong demand for their investment strategies [10][34] - The macroeconomic environment is seen as favorable, with financial deepening and deregulation in Latin America driving increased investor interest [28][30] Other Important Information - Patria announced a share buyback program of up to 7 million shares to return capital to shareholders [9] - The company is undergoing leadership changes, with a new CFO set to take over in April 2026 [31][32] Q&A Session Questions and Answers Question: Can you discuss the private equity valuation process? - The company uses an independent appraiser annually to value funds, employing a discounted cash flow model and comparing results with industry multiples [56][58] Question: How do unrealized performance fees affect your financials? - Unrealized performance fees do not impact revenues as management fees are charged based on invested capital, not valuations [62][64] Question: What is the outlook for fundraising in 2026? - The company is optimistic about exceeding the $7 billion fundraising target for 2026, given the strong performance in 2025 [70]