Good day, and thank you for standing by. Welcome to the Patria Third Quarter Twenty Twenty-One Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Josh Wood, Head of Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone and welcome to Patria's third quarter twenty twenty-one earnings call. Joining on the call today are our Chief Executive Officer, Alex Saigh; and our Chief Financial Officer, Marco D'Ippolito. Earlier this morning, we issued a press release and earnings presentation detailing our third quarter twenty twenty-one results which you can find posted on our Investor Relations website. Any forward-looking statements made on this call are uncertain, do not guarantee future performance and undue reliance should not be placed on them. Patria assumes no obligation and does not intend to update any such forward-looking statements. Such statements are based on current management expectations and involve inherent risks, including those discussed in the Risk Factors section of our Form 20-F annual report filed earlier this year. As a foreign private issuer, Patria reports financial results using International Financial Reporting Standards or IFRS, as opposed to U.S. GAAP. Additionally, we will report and refer to certain non-GAAP industry measures which should not be considered in isolation from, or as a substitute for measures prepared in accordance with IFRS. Reconciliations of these measures to the most comparable measures calculated in accordance with IFRS are included in our earnings presentation. As a quick overview of the results, Patria generated twenty-one point five million dollars in IFRS net income in Q3 twenty-one. On key non-GAAP measures for the third quarter, we generated fee related earnings of twenty-one point eight million dollars and performance related earnings of one point five million dollars, resulting in distributable earnings of twenty-two point five million dollars or zero point one six five dollars per share. In alignment with our policy, we declared a dividend of zero point one four dollars per share, payable on December sixteenth to shareholders of record as of December two.

Thank you, Josh. Good morning to you all and thank you for joining us today. We now find ourselves nearing the end of twenty twenty-one, Patria’s first year as a public company, and it has been a privilege getting to know many of our shareholders in these past months. I want to reiterate upfront that we greatly value your support, and I think our results continue to demonstrate that we are delivering on the targets we put forward for this year and positioning ourselves well for strong growth in twenty twenty-two. We remain on track for last quarter's guidance of at least seventy-five million dollars of fee related earnings and one dollar per share of distributable earnings, which would generate a five percent dividend yield for an investor in our IPO. Year to date, we have generated zero point eight three dollars of distributable earnings per share, of which zero point one seven dollars was in this last quarter, the third quarter. This outcome would represent fee related earnings growth of thirty percent plus and distributable earnings growth of more than one hundred and forty percent compared to twenty twenty. Our twenty twenty-one results are purely organic, without the contribution of any acquisition which were diluted for the cash raised in our IPO. We see that momentum continuing in twenty twenty-two, where we expect, based on current factors, to see our fee related earnings increase by more than fifty percent compared to twenty twenty-one. Our flagship strategy timelines have accelerated with our next generation private equity fund in the market as we speak, putting us roughly one year ahead of schedule. Our strong investment performance is the backbone of everything we do, driving loyalty and larger capital flows from our limited partners, as well as a substantial performance fee of three hundred and fourteen million dollars which will benefit shareholders as distributable earnings in future periods. As notably in the third quarter, we took a major first step in our M&A growth strategy with the announcement of our combination with Moneda Asset Management, which will be further additive to earnings in twenty twenty-two as it provides the foundation for a leading alternative credit platform in the region.

Thank you, Alex. And good morning to everyone on the call. Our financial results for the quarter reflect our continued progress toward our prior guidance for the full year twenty twenty-one and demonstrate the top line impact from the heavy deployment we saw in the first half of the year. Fee related earnings were twenty-one point eight million dollars in the third quarter of twenty twenty-one, up twenty-four percent from seventeen point six million dollars in the second quarter. Fee revenue of thirty-seven point four million dollars rose sixteen percent from last quarter as we added nearly one billion dollars net of our fee earnings AUM through deployment. Our FRE margin for Q3 was fifty-eight percent, up from fifty-five percent in Q2 due to the jump in revenue, putting us on pace for a margin in the high fifties range for the full year. Compared to third quarter twenty, fee related earnings were actually similar as you see reported in our P&L, but that is not comparable due to the post IPO adjustment to the compensation structure. Adjusting the prior year quarter for an apples to apples compensation structure, fee related earnings were up twenty-five percent compared to third quarter twenty twenty. Fees earnings AUM of nine point two billion is up eleven percent from eight point three billion last quarter and up twenty-two percent from seven point five billion dollars one year ago. We landed slightly below the range of nine point four billion dollars to nine point six billion dollars we suggested last quarter, with private equity and infrastructure as expansion, but a slightly lower outcome in our company specific strategies, where we have lower visibility, in part due to FX and local equity markets volatility.

Our big news from the third quarter is, of course, Moneda. And we are well on track to close the transaction before the end of the year as we previously noted. Moneda has an outstanding brand and track record across both credit and equities over the last few decades. And first and foremost, they are an attractive addition to our platform based solely on their existing business today. But the vision here is not just bolting-on adjacent business, this is about complementary expertise that enables us to build much bigger things together. Bigger picture, you should expect to see product development on the private credit front. Moneda’s current private credit portfolio is roughly four hundred fifty million dollars, with the two hundred million dollars that Patria manages already, together we expect to develop distinct private credit offerings with structures similar to our current flagship products. In addition, we continue to be active in pursuing other inorganic opportunities and there is more activity on the horizon.

The third quarter was mostly uneventful in terms of new reported fundraising deployment and realization activity, but you should certainly not mistake that for a lack of activity on the fundraising trail or in the portfolio and our pipelines. As a reminder, we report our deployment figures based on incremental capital that is deployed or reserved. In other words, binding commitments to a portfolio company or investment thesis, since that is typically what drives fee earning AUM and revenue in our flagship funds. In the first half of the year, our deployment pace was well above average at nearly one point eight billion higher in six months than in all twenty twenty.

Good morning, Alex and Marco. I hope you both are doing well?

This is Alex here. I hope you are well. I’m well as well.

Thank you. And thanks for all the guidance and targets for twenty twenty-two. My first question is on the M&A outlook after Moneda. So, how do you quantify deal capacity after Moneda? And also, do you have an appetite to pursue additional transactions after this one?

The answer is yes. We still have appetite. We did consume around one hundred million dollars from the three hundred million dollars that we raised with the primary issuance of shares in the IPO, indeed Moneda deal. With that, we have two hundred million dollars still in cash from the issuance of primary shares at the IPO to direct for additional acquisitions and we want to do that. If we do translate that two hundred million dollars of cash, if we buy something also using stock, fifty percent cash, fifty percent stock, we can still have another four hundred million dollars of dry powder to buy other asset managers. We feel the credit space quite nicely with the Moneda acquisition. I think there's a space for us to launch a core private equity strategy in listed formats. Also, there’s a lot of interest from international investors in investing in products in the growth equity space. So, a lot of things to do, very exciting.

Following acquisitions may bring the three of them, but may not be the case as well. So, as Alex alluded to, there's a lot of opportunity in infrastructure and credit, real estate, and we will continue with this effort.

Thanks for that very comprehensive response. My second question is on the macroeconomic front. COVID conditions are getting better in Brazil, but inflation is starting to rise. Low interest rates are generally beneficial for many private market asset classes, but how do you see higher interest rates impacting your business?

The answer is, we have always been able to offer products that are linked to market rates, so we are not stuck to any low interest rates that we lent money in the past. All of our products, actually, are variable rates linked to inflation. If the infrastructure space, the same applies. All of the investments in our infrastructure fund have revenues corrected by inflation contractually. Our core infrastructure fund is the same. Given our past experience, we are well-prepared to navigate the different shifts in the market.

And to underscore that, we have seen that the underlying quality of our portfolio remains strong across different economic conditions and have been able to deliver solid returns as well. On the fundraising front, we maintain a pipeline that is healthy and poised for growth.

Thanks. Good morning, everyone. I have a couple of questions around the fundraising. With the funds you've raised now, are you seeing any change in the LP base?

Yes, the majority are re-ups, as you mentioned, about eighty percent. What we're trying to do is to expand our LP base to other regions and other types of clients. We would really enjoy having more money from ultra-high net worth individuals through private banking. There's a lot of opportunity to expand our LP base and tap into new markets.

Thanks for the complete answer. I appreciate it.

As I noted, we have a solid investment strategy focused on healthcare, agriculture, and logistics which continues to show potential for growth. This positions us well for both capital deployment and realizations.

And we will carefully evaluate all divestment opportunities to capitalize on our portfolio's strength while considering market conditions as we proceed.

Hi, Alex. Hi, Marco. Thank you for the time. I have two questions. First, how do you foresee capital deployment next year? And second, with regard to your guidance for twenty twenty-two, should we expect perhaps like double-digit growth from Moneda in twenty twenty-two?

Yes, I expect to see a similar level of investment activity next year as we had this year. On the Moneda side, we see very strong growth potential, though it is early to quantify specific numbers, we are optimistic.

We anticipate that the dynamics in the region will provide favorable conditions for our funds, and we foresee double-digit growth for Moneda in twenty twenty-two.

Thank you very much again for your support. I think we're extremely proud of what we've been able to accomplish this year. Looking into twenty twenty-two, we expect to continue this momentum in both fundraising and deployment efforts.

This concludes today's conference call. Thank you for participating. You may now disconnect.