Good afternoon, everyone, and welcome to Vinci Compass Investor Day 2025. My name is Anna Kastrom, Shareholder Relations Manager for Vinci Compass. We're thrilled that you could join us today, both those present here with us in New York at Nasdaq's market sites, as well as those watching us online through the webcast. We'll start in just a moment. Before that, I just have to share some important disclaimers with you. Today's event may include for our looking statements, which are uncertain and outside of the firm's control, and may differ from actual results materially. Except as required by applicable law, we do not undertake any duty to update these statements. For discussion of some of the risks that could affect our results, please see the risk factor session of our 20th. We will also refer to certain non-gap measures, and you'll find reconciliations at the end of the presentation. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any venture compass fund. Moving on to our agenda for today, we'll have three blocks of presentations. We'll start off with a strategic overview covered by our CEO, Mr. Alessandro Horta, who then followed to discuss the Verde Asset Management Acquisition announced yesterday after market close. we'll then have a session presented by Mr. Jaime Marti head of our client relations group to cover our client relations team and the Latin American investment opportunities to finalize the first block we'll have a session dedicated to macro and Latin American opportunities presented by our chief strategist Mr. José Carlos Carvalho in the second block we'll cover our business units presented by the heads of each of our strategies starting with global IP&S, equities, real assets, private equity, and then credit. In the third and final block, Mr. Bruno Zaremba, President of Finance and Operations, will cover a dedicated session to IRE and a financial overview, followed by a Q&A session at the end. On a final note for those attending in person, I'd like to highlight that we'll not be taking questions during the presentation. We'll have a condensed Q&A session at the end. And for those watching us online, I welcome you to submit your questions for the platform, and we'll go through those as well in the Q&A at the end. With that said, I'd like to thank you all for your support and for your participation. And I'd like to welcome to the stage our CEO, Mr. Alessandro Horta, to begin our presentation.
Thank you, Anna. thank you all and welcome to our another investor day we hope that you enjoy the content that we present today we are very optimistic and keen about the prospects of the firm moving forward as I said earlier today this was an important year for us a year of toil and trial but yet rich and its rewards And I will cover this today, what we expect in the future, and I'll talk, of course, with our more recent developments like the Verdi transaction. So, what are the key messages that we aim to deliver to you today, and we will try our best to do it? First, we are the gateway to alternatives in LATAM. We have an unmatched platform, brand, and distribution across the whole region. Again, we would like to highlight our earnings power as a firm. Three complementaries earning streams, FRE, PRE, and IRE, shows a resilient and balanced business model. And we'll go this in further detail later. and the future growth of the platform of the firm. We have a very, very disciplined expansion to deliver very durable value creation to the shareholders. So, we believe that we are building an investment platform for Latin America's future. How? We are doing that. We today have a footprint in Latin America really a complete footprint to take advantage of any opportunity that could arise, especially on the alternative space. We have today more than 320 billion reais of AUM around and spread in 12 offices, 630 employees, eight countries and more than 60 partners that create this deep bench of talent that are really the key of our future. We have more than 50 active strategies across alternatives, liquids, and global solutions, diversified both from asset class, geography, and taking in consideration investor profile. We have more than 30 years providing investment solutions across Latin America, serving institutions, pensions, and family offices. The total addressable market that we aim to reach is an addressable market of $7 trillion, that today the alternative is just $87 billion. That has been growing, of course, since 2010 four times, but still not very important in terms of overall addressable market. The firm today has deep access to Latin American global oil peace. So we have here in this graph our country breakdown AOM by funding. will come back a few times for this specific chart that's very relevant today to show how we are diversified today, not just in terms of AUM, but I will show you later in terms of revenues. We have a big portion of our AUM coming from the main markets in Latin America, Chile, and Brazil, but also an important part of our AUM comes from international LPs, and then from the other countries in Latam. This is just the AOM volume, and we'll show you later about the revenues. This is important to show that we have scale distribution capabilities, local, on-the-ground coverage across the eight markets plus our global coverage. We have a direct relationship with more than 2,800 LPs and more than 80% through proprietary relationships. This is very, very strong and creates a relationship with each of these LPs that's long-term with a high-quality relationship, understanding the needs and the specific characteristics of each one of them. We have also a huge relationship with high-net-worth individual intermediaries, with more than 300 direct relationships with family office and ultra-high-net-worth individuals across the region. And, of course, more than 500 intermediaries distributing Vinci Compass strategies. So, in terms of institutional investors, we will come back to that a few times today, too. We are a very institutional investor, I would say, service provider. The majority of our AWAM today comes from this type of investors, where we have deep access to Latin America pension funds, including 100% penetration. So 100% of the institutional investors, the main pension funds in Chile, Peru, Colombia, Argentina, and Uruguay are our clients. And we do have also a very important percentage and I would say the largest for independent asset manager in Brazil for the same type of investors. In Brazil, of course, the market is much more pulverized in terms of the number of institutional investors, but the majority of them are Vinci Compass clients. We have established distribution through global platforms and direct mandates, strong position within insurance companies, and a lot of relationship with the main sovereign wealth funds, endowments, and financial institutions in the world that want to have exposure to the region or at least have interest in understanding what's going on in Latin America. We like to say that our business, our service-providing asset management platform have a few different dimensions. The first one is local to local. So offering customized investment solutions and investment theses for local clients in the local markets. So, we have money raised from Brazilian clients investing in Brazil, Chilean clients investing in Chile, Mexico, and so on. So, the first dimension that's very important to us, since we have a very strong presence on the ground in all of these countries, is local to local. The other dimension is local to global. I would say, after our combination of Vinci and Compass, forming Vinci Compass, we are one of the main players in the region connecting the local markets to the global opportunities. Leverage long-standing relationships with top-tier global managers around the world. As you know, we manage allocation money through global solutions in the international markets, but also we have long-term partnerships with the top-tier global managers allocating money from local investors from all of these countries that we cover in the international markets. Then we attract global money in a global to local dimension where we serve international clients with deep local expertise, delivering access to opportunities in each of the countries that we are established. So we attract global money to local markets. And finally, the final dimension, the fourth one, is global to regional, where we provide to global investors access to pan-regional mandates, especially covering all Latin America for a different purpose or different strategies, like infrastructure, private equity, equities, credit. that once we are more advanced, others we are creating grounds to establish these global mandates. So we have been growing steadily since back in 2009 when we were founded. Of course, Compass was founded before, but we took this opportunity to show from 2009. We have been growing from the beginning of 2 billion reais to this 320 billion reais that where we are today. We have been doing so through, of course, a series of milestones where we have been able to grow organically, but also through partnerships with groups or other firms, like we did with SPS Capital, and then our partnership with Ares, Mav, Lacan, Compass, and finally, what we announced yesterday, Verdi. So we are, as I said in the beginning, one year almost since we did the combination with Compass, and it was really a strategic combination, integration that was seamless, and one of the, I would say, that corresponded a lot with what we thought when we decided to proceed both sides with this combination. We have been able to unlock value through a lot of complementary strengths. So it's really the foundation of a long-term value creation, really building this Latin America platform. We have a very strong Latin America distribution and relationship for both firms that we could leverage on the Brazilian investment manufacturing of products and strategies with cross-border know-how. So growing the asset management, deep asset management, especially in alternatives that we had in Brazil to the other countries. Channel global capital in Latin American opportunity, as I said, in a regional, pan-regional mandates. Proprietary research-led strategy with the local edge. So now we have analysts, PMs, relationship people in all the countries. So we have really a very strong deep knowledge focus on specifically alternatives and asset management. And the 30-party distribution at scale that we have been able to, that was the history, very strong feature of Compass that we have been able to build in this combined company that we can leverage in other countries. So two things are very important here, and we'll come back a lot to that, is we could really leverage from our expertise of asset management and alternatives in different strategies from Brazil in other Latin America countries, and at the same time, the success that we have been able to build, especially through Compass, in the other countries in exporting capital globally we can do in Brazil that's still very parochial market that is still in the early days of exporting capital globally. And finally, with all this, I would say, knowledge, all this knowledge, we have been able to use a lot of cross-border instructing capabilities from both sides. We have two strong legacies, for sure, and now we are building one integrated platform. One thing that since the beginning we noticed is that we have a huge geographic and product complementarity. So we have very, very limited geographic overlap starting from offices up to source of funding and capital allocation standpoint. So we didn't have much overlap even from offices. We have two offices in New York that we merged in one, two offices in Sao Paulo, but the rest of the other places, either one company was not or the other, so have been able to build this integrated platform seamlessly. Of course, the Latin America Geographic expansion is one of the most attractive and growing for the alternative asset classes. GDP of $7 trillion in the region with more than 660 million people and very, very underpenetrated in alternatives with overall under 5%. We can really take advantage of that, expanding in regional funds management and distribution. And we have a unified long-term vision, becoming the leading one-stop-shop platform for alternative investments in Latin America, establishing a local presence both in local-to-local markets and import and export capitals into and out of Latin America. We are aiming for an optimized operating model for scalable growth. What have we achieved so far? Office footprint optimization, we already did it, so we optimized our office and physical presence, so overlapping office structure streamlined. The shared infrastructure since the beginning, we integrated our front and support functions, so now we have just one firm on that sense. And we have an unified leadership structure. It's important to say that since the beginning, we did not have separate units or silos. We integrated completely. So some of my partners that we will be talking today, either they were part from Vinci or from Compass, but now they have roles for the whole institution. This is very important that, in a way, forces us since the beginning to integrate completely the leadership and the firm by consequence. What do we want to achieve moving forward? A Latin-wide product development. So we need and we are doing as we speak. We have developed new regional and local alternative content across Latam. So from the places that we didn't have specific products like private credit, real estate, infrastructure, right now we are aiming to build capabilities in the places that we didn't have before. So this is something that we'll develop and you'll be seeing us implementing as we speak. Now we are already discussing that. But moving forward, we will occupy this space for sure. Expanded fee capture. Higher tech rates through discretionary mandates in global IPNS. This is very important. We are seeing an important opportunity to not just export capital from Latin America for specific products in our TPD business, third-party distribution, but creating really discretionary mandates for different types of clients, from institutions, high net worth, intermediaries, where we are the engine of this asset allocation, being a discretionary manager of these mandates moving forward where we can attract higher fees through this strategy. And finally, scaling our international distribution. Broader capital formation through Compass Latin America footprint. So this is immediate because we do have a possibility to bring all this distribution effort to really scale our international distribution footprint and, of course, as a consequence, more AUM coming in our own products. So we are one firm, one culture, and we have a governance that scales. Culture, shared values. Since the beginning, we noticed that. So we have cultural alignment, long-term thinking, and strong fiduciary mindset. This is not very common in the region. but we have been able to attract two firms that converge on this specifically thinking. Of course, meritocracy and ownership, it's part of our ethos. So a partnership model was preserved. Ownership mindset reinforced, so we have equity exposure to all the main people within the firm. We have been able to achieve a seamless integration team substantially integrated from day one, collaboration across distribution, investments, and structuring, as I said before. Talent, that's key for us since our business is based in talent. So we strengthen the leadership with the senior leaders with global experience. Now we have really a very senior team that's hard to compare with other Latin America asset managers. Leading distribution strategy and expansion. Elevated seniority, of course, have people with different backgrounds with a lot of seniority. And a lot of complementary strengths from the talent. Vinci leveraged on Compass institutional reach. Compass had, as I said, in all these countries, 100%, I would say, access to institutional investors. And Compass, of course, enhances Vinci's structural expertise. So we have been able to bring the best from the two worlds. We have, of course, a very, very senior team with reforced governance bodies, institutional governance for scale, streamlined decision-making, and a board and executive committee integration with people from both firms, from the board to each of the committees. So it's important since the beginning that the senior leadership of the company are integrated in the same governance bodies. Earnings power, that's really very important. So we have a very resilient and balanced business model. We have basically three complementary streams or pillars. FRE, PRE, and IRE. Few related earnings are earnings coming from recurring management and advisory fees, a durable fee base, diversified, and scaling. This is the core of our business that creates the stability and the growth that keep us moving forward. The PRE, so the performance-related earnings, that earnings coming from performance fees realized from our managed funds. Since IPO, of course, PRE from liquid funds has been predominant, But PRE from private funds set to kick in in the next cycle, of course, have been raising money on the private funds. And now we are beginning to see that we'll be materializing PRE moving forward. And the final, it's very important, is the investment-related earnings. So earnings coming from GP capital gains, an embedded engine, not full price in our current valuation, because the majority of these investments were made in our drawdown of private market funds where that would translate in earnings moving forward in a current basis, but of course we have a time this to mature. So we have these three main complementary streams that recurring cash flow today, significant gains coming from performance moving forward, and also the GP commitments creating a driving shareholder value creation moving forward and through different cycles. In terms of FRE, the high-quality fee engine, as we said, is very diversified, as you can see in this graph, with this FRE by segment being very well diversified, coming from private equity, global P&S, real assets, and credit almost with the same size, of the pine. This is very important. So we can really be very, very stable during cycles. And Latin America, of course, is cyclical. So with this, we believe that we can really show how we can continue to grow in any environment, like we have been growing in the last few years, with tough times, more benign times. But we have keep growing. And of course, the speed will vary. but we'll keep growing with a very diversified FRE base. So the key takeaways of this is we are balanced across strategies and clients. We have this contracted and recurring fee, so the majority of the money is locked up for AUM for a long time. Private equity, we do have a sticky AUM, and we just have a fresh flagship vintage extent fee duration moving forward, and a very low concentration of risk, and no single vertical dominates our FRE. We have been able to deliver sustainable growth and resilient growth since our IPO. As you can see, we multiply assets under management with this combination of Compass that was very important to that six times. Field-related revenues, we grew three times, and field-related earnings two times. So since the IPO has been growing, all these metrics are related to free-related earnings as the market develops and the firm continues to deliver. We have a proven capacity to scale revenue. As you can see, it's a 20% CAGR, and you can see through the callers that we have been able to do that in a very diversified way. Again, we do not depend on a specific streamline much, so this creates a really, really stable platform. We have been able to compound FRI since the IPO with this 13% CAGR of nominal FRI. Again, being resilient, predictable cash flow, we have been able to distribute a lot of dividends along the way and reinvest part of the capital, and we have a broader platform distribution to support a margin expansion moving forward. Again, we have everything that we mentioned that we think what FRA can deliver to us, so recurring cash flows through fund dividends, self-funded growth, low concentration risk, and resilient through cycles and a lot of visibility on cash flow. We have some proof points to really have a proof of what I'm trying to say. It's FRA CAGR of 13% since the IPO, FRA per share growing since the IPO, and recurring fees around 84% of total fee EWAM. What comes next? We have a cross-selling to compass long-term LP relationships across Latin America and abroad, product expansion, scale existing vintages, and expand regional asset allocation, as we said before, and the global IP&S mix due to higher return on assets strategy to lift field through discretionary mandates of asset allocation. Another important point that, to today, hasn't been the main driver but key for us is the PRE. So we have two value drivers, liquids delivered in a tough cycle and privates next. So having been resilient through the cycles, liquid strategy sustains the PRE in a high-rate backdrop that we had, especially in Brazil. So private vehicles early in harvest that, as I said before, building a second driver of PRE. So we have the liquids while we had these high interest rates and building the next wave of PRE from the privates moving forward. So till now, PRE has been 80% liquid and 20% around that private. But moving forward, as you can see, the performance earning AOM is almost 50-50. So we should expect that the next cycle will be moving for more performance coming from the privates. And what is in the pipeline? As you can see, performance eligible AOM is highly diversified between different asset classes. And we have a gross accrued performance fees as the second quarter of 25. That's, of course, the majority of them coming from private equity. But as you can see, they have already accrued an expected performance moving forward of more than $340 million. The portfolio is seasoning. It's come core assets maturing to realization phase. So we are seeing closer realization events that will translate in this performance that I mentioned to you, coming from privates in the diversified performance-eligible AUM across all the strategies. So today we are introducing this concept, and Bruno later will go into this very further detail that's very important to you to understand our business, is the investment-related earnings, our hidden growth engine. As you know, we have been making commitments and recommitments as a GP of our fund that it's very crucial. And one of the reasons that we did our IPO is really to have the balance sheet power to do it, where we are anchored in the fundraising process of especially the privates, where we bring LP commitments alongside our anchor fundraising, and we put through capital calls this capital to work in these funds that will translate in returns. We'll harvest these returns moving forward. So what IRE is, it's earning from our GP commitments invested alongside LPs. White matters is anchor fundraising, first of all, so we raise more money, so we create more FRE by doing that, aligns interest with RLPs, completes the distributable earnings flywheel, FRE, PRE, and IRE. And how value is created? Management fees, carry through PRE, and finally, GP capital gains. So our business model is really built for resilience and long-term shareholder value creation through all the main asset classes and with these three engines in streamlines of results, FRAE, IRE, PRAE, and IRE. So we do have this broader platform, a stronger foundation for growth. So we have this pan-regional presence with diversified exposure and product offer funding and currency. So we have this highly diversified, As you can see, global P&S in terms of AUM is by far the largest vertical through AUM. But when we translate this, of course, it carries lower fees. When we translate this for fee-related revenues, you'll see that it's very, very diversified. Client break bonds, the same. As I said, the institutional part of our business is the main one. But, of course, some institutional carries lower fees. So when it translates to fee-related revenues, still institutional clients are the most important in terms of revenues, but it's a little bit more diversified between other sources of funding. And here you can see the breakdown in terms of geography and our presence in terms of profit offering funding and currency. As you can see, the AUM by country, it's really diversified, but with the Chilean portion of the business being the largest and then Brazil and then global. But when we see in terms of fee-related revenues, due to the exposure for self-managed alternatives in the Brazilian portion, Brazil changes with Chile in terms of revenues. And you have also the global portion of the business that where we are, I would say, benchmark in alternatives for the region, again, being very relevant in terms of exposure and how we generate revenues from this pool of capital. And in terms of asset allocation, so the first portion is the liability side, and the second graph is the asset side, where we are investing this money. The majority by far, a part of our AUM, are invested from Latin America outside, of course, because of the size of the markets. But in terms of revenues, again, Brazil is very relevant, but highly diversified with 46%, and then we have the international market, and then the other markets. It's important to say that it's interesting because this creates a really diversified and a shock absorption of any specific countries or even the region because we have exposure to the international markets too, and this is highly diversified. Of course, the US being the main market, but we have Europe, Asia, and so for Latin America money and the other way around. So really today, we have a highly diversified platform, both in terms of funding and where we invest in the money, in terms of AUM and in terms of revenues. And this is the complete graph. I always say that I love this graph here. I know my presentations. This shows you really how we are diversified in terms of both revenues and AUM. Each of the graphs goes from AUM and free-related revenues to show how we are diversified both in terms of where we're investing, from where the money is coming from, in terms of clients, in terms of geography. So we are really diversified through Latin America and globally since we are locating the majority of the AUM that we manage and we advise globally. Private credit specifically, and we'll have a session later, it's one of the fast-growing allocation markets. We have in Latin America a little bit late, but like what happened in the international markets, the private credit market growing, and we'll see the same in Latin America. Today, corporate lending, it's 70% to 80% bank-driven versus 40% to 50% in developed markets. So it's a huge opportunity. And we cover this through structural credit, infrastructure credit, agribusiness, high-grade, real estate credit, diversified private credit, and opportunistic capital solutions. Of course, we'll talk in more detail about this later, but this is a huge opportunity that we are adding $13 billion in AUM. by June 2025 just focus on the private credit opportunity and we want to be a one-stop shop of private credit becoming more and more relevant providing this credit so people are creating an important deal flow for us since we have been growing on that sense and of course we are very creative and versatile on providing structure opportunities. So we have a fast-growing allocation market, as I said. The investor appetite is big and the majority of the LPs, both global and Latin, aim to allocate over 50% of private credit moving forward. Of course, still today this is a spread market over very high interest rates, but we are seeing and and we'll listen from Zé Carlos later, that we are seeing a possibility of all the markets moving interest rates down, Brazil and other Latin American countries already started this movement, but with that, the spread of credit will be more relevant in the composition of the total return of the investor on credit as a whole, and private credit is already on the radar of the majority of these investors. We have the track record is important, so it prevails where you have this track record. So our proven track record will help us to move ahead of the rest of the pack. We have unmatched pan-regional distribution capability to really access this capital and deploy it. And the proprietary LP relationships, we understand very well what the investors want, even in this private credit space. So we have been leveraging revenue stream, as I said, channeling flows to higher free discretionary strategy. So a lot of products have been able to help us to deploy it. So on credit SPS4, credit infra, cop code, and chip code 2, infrastructure, infra LATAM, VICC 2 that we're planning to launch, Forest Philatam 45, private equity VRI5 and VCP5, real estate through the REITs, since the interest rates will go down, will be able to raise more money from the REITs, and also other opportunistic funds in real estate. So we are seeing ways to move our higher fee through these discretionary strategies, and we will cope with this with the demand from global alternatives and locally through our capabilities in terms of distribution, both coming from Penn Regional, the relationship with the pension funds, and global investors. We, of course, see across self-products, convert relationships in multi-strategic mandates and allocations, higher discretionary AOM mix with higher return on assets, and more recurring, stickier management fees due to these higher fee products, normally draw down funds with a longer horizon and longer lock-up periods. So here we'll cover this more in detail, but our two-year targets at a glance. From the last 12-month number, we intend to move our fee-related revenues from 800 million reais, where we are today, with a 22% CAGR, moving forward to 1.6 billion reais of fee-related earnings. Revenue, sorry, until 2028, full year. 26% CAGR infirulated earnings from $264 million the last 12 months to $600 million. Second quarter numbers of 28% margin up to 38% margin, moving 10 percentage points of the FRI margin. and a fundraising target of this period of time from a second half of 25 to a full year of 28 of 100 billion reais. So, summarizing, I would say, my points here, we have three main growth drivers as being the gateway to alternative investments in Latin America. First, regional expansion, penetrate existing Latin America relationships to distribute managed alternative investments. Second, private credit is, in all my presentations, I come back to this because it's a huge opportunity and we are seeing this kicking in. So capture the asset class secular growth in filling Latin America financing gap through a full service private credit platform. Finally, leverage, revenue stream, increase the percentage of AUM allocated to discretionary products with higher return on assets. So this is the three main growth drivers to really deliver the main metrics that I showed to you in the former slide. With that, I'll be quick here to talk about our most recent, I'd say, partnership that we just announced yesterday. Of course, we'll come back in more details later about this, but I would like to give you the rationale and the main, I'd say, characteristics of the transaction with Verge Asset Management that we announced yesterday after the market. We really, as I said before, we really want to build the region's leader in global and local asset allocation that we believe we are on the way to doing that. This strategic acquisition will provide that will scale performance, distribution, and profitability. So Verde will move us to $320 billion of AUM. Verde is really an outstanding brand, very recognized with an amazing reputation, one of the most recognized brands in the asset management industry space in Brazil. We are partnering with one of the most respectable and sort of teams for multi-strategy funds in the region, and we'll complement a lot an important asset gap across our multi-strategy allocation product offering, bringing an outstanding track record, long, I'll go in more detail, and a stellar management team. And I'm saying that with all these adjectives because it's true, and it's really recognized as so in the country. We'll create a scale immediately and an AOM mix upgrade. The transaction adds scale to our multi-strategy funds immediately and pension plan strategy, this is very important, within Global IPNS by bringing $16 billion of AOM with attractive HOAs and of our AOM mix, reinforcing earnings quality and deepening the share of discretionary mandates in Global IPNS. That will accelerate Vinci Compass with the leading multi-strategy player in the region. This creates a new avenue of growth and put us in a very, very enviable situation. We'll combine for us to create new strategies, so the Verdi brand will help us to develop new products moving forward, combining origination and presence in the alternative markets from Vichy Compass with Verdi's brand power across high net worth individuals and intermediaries, and unlock distribution across Latam. I was just commenting before with my partner Jaime de la Barra and my partners, Jaime de la Bahia and Marty, how we can really scale the Verde brand. It's not just a brand in Brazil, but we need to really show to our international clients, especially in the other regions of Latin America, how we can introduce these products and these allocation capabilities to them. So really, since till now, it was not the focus of Verde so far. We'll be building the region leaders in global localization again. The transaction structure was, I would say, done to take into consideration the characteristics of Verdi and was structured in two phases with 20 companies acquiring 100% of Verdi in five years and follows a price-to-fee-related revenues multiple to protect against AOM oscillations. We expect the transaction to be immediately accretive on a double-digit basis to FRIE per share. The management team will be aligned completely, and we create a retention model. They will be responsible to continue managing a change in the management of the Verdi's fund. but they will have preserved independent investment management and risk management governance. And Luis Tuberga will join Vinci Compa as a partner and the other partners of VH2 alongside our own roster of partners. The share received that part of the payment will be subjected to lock-ups, like traditional lock-ups, and the transaction, as I said, will be structured in two phases, one now and another one in five years from now. We acquire 50.1%, and then the remaining 49.9% in the end of five years. Even the first payment, this 50.1%, will be done one part now, another part in two years from now, and the rest of the 49.9 will be acquired in five years in a kind of earn-out type of arrangement linked to the revenues of the business. So Verdi is an asset management of $16 billion. The team has been working together for more than 25 years. The origin of the fund is from 1997, so it's a very long track record, very well-known in Brazil. Fifty-four professionals. The majority of the U.M. is Brazil multi-strategy. We have a portion of global multi-strategy, pension funds. They are the main, I would say, strategies of Verde. It's very well-known, a very strong brand. A lot of media are mentioning for the brand, so it's very interesting for our clients too to have access to this type of product. The core strategies are, like I described it, multi-strategy 7.2 billion reais with an astonishing track record. Global multi-strategy 2, 4.4 billion in AUM. And finally, the pension plans at $2.9 billion. That follows, in a way, the Brazil-mood strategy, I would say, as the location, but, of course, adapted for pension plans. So just to summarize the key transaction terms, as I said, we're structuring two phases and follows a price-to-fee-related revenues in a way to amortize any AUM fluctuations. So the phase one, we are acquiring 50.1% of Verdi with total estimated consideration composed of 2.1 million Class A shares and 46.8 million in cash. We'll pay this in two phases, one now, another one in two years, and a second payment in an earn-out structure to be paid every five years after closing to acquire the remaining 49.9% of ERD. That will depend on several conditions in a typical earn-out structure, but today the value that we estimate for that is around 127.4 million reais that we could pay in our discretion in shares or in cash. The transaction was structured for a long-term transition, so who read the newspapers will see what Luis Tuberga said. The idea is a minimum of five years of the commitment of Luis Tuberga, but he intends to stay as a partner of Vinci forever, basically mentioning his own words. He will continue to be the CEO or CIO of Verdi. The team will be untouched. So it's really a very smooth transition. The financial impact, we'll go over in more detail, but it will be a double-digit basis FRA per share and low to mid single-digit accretive to DE per share. The timing, we expect this to not have a lot of regulatory burden, so probably we'll be closing this in the fourth quarter of 2025. Of course, we have some regulatory approvals, customary conditions, but we don't expect much problem coming from this front. So with that, I would like to thank you and leave to the presentation of my partner, Jaime Marti, about Latin American investment opportunities.
Thank you, Alessandro. Thank you very much. Very happy to be here. Very happy to share our views of the Latin market and also our client relations team. This team that you see here, the client relations team, that we have 80 client relationship managers there, client-facing in nine different countries, including one presence there in the United Kingdom, with a lot of experience, 17 years of experience. Out of the 62 partners that we are in the combined entity, 21 are part of the client relations team. So very significant, on average, working together, either at Vinci or Compass, for 15 years. So it has been a lot of personal. I've been 29 years at Compass when we studied, Jaime, right? Many years ago, I mean, when we were less than 15 people. So I'm part of the inventory. And I've been very fortunate to see the company grow significantly. And now it's a 600-people firm sharing the same values and with the same partnership mentality, okay? Part of the team is also 35-plus professionals that play a key role in the relationship with our clients in marketing, client services, support, and product specialists. So a lot of experience there. And when you see here the partners that are throughout the region, then you see sort of the 21 partners. I mean, half of that, the partners are based in Brazil. still there with plenty of experience there and all of us either native in Spanish or native in Portuguese. Now with a combined entity, we're all native in Portugnol, right, obviously. So, and very deep and strong diversified client base. Alessandro touched on that in terms of our institutional background. I mean, more than 40% of the revenue is coming from LATAM institutional clients, I mean, very deep coverage there, more than 100 insurance companies in the region, 1,500 single-family offices, high-net-worth individuals, and also ultra-high-net-worth individuals, everything there. So very important. It's the second largest revenue source. It was very important for Vinci, very important for Compass, and for the combined entity, 23% of the revenues, super important. More than 460 financial intermediaries, that it's a very efficient and very, in a way, scalable way to access the mass affluent market in the region. And that's also roughly the same revenue source as the ultra-high net worth individuals, 22%. And then finally, 10% coming from global investors that we're going to talk about later. So again, a very deep, strong, and diversified client base in the region. Here, Latin market landscape, of course, after the merger, the sort of the addressable market doubled. Doubled for the combined entity. Before with Vinci, I mean, mainly, mainly, more than 90% of the assets were in the local-to-local strategies and the global-to-local that we talked about before. Alessandro also touched on that, right? Brazilian investors getting into Brazilian strategies and also global investors investing in Brazilian strategy. That was mainly the case. Now it doubles because it's now LATAM. It's not only Brazil. Also the investment strategies now are, I mean, more investment strategies, more products there. And also you see here the local to global gets very significant. And Jaime Lavarra will probably talk about that in terms of local investors investing globally. Globally, either through our discretionary global mandates and also the access to the third-party business to our global managers. Super important for us now. And also global to regional. This is happening now, basically. We have global investors investing in our LATAM products, not only Brazil. For example, our Latin American corporate debt fund, that it's a $1 billion fund. Roughly 30% of that fund is coming from global investors, so very significant. So this is super important. Here is just sort of a double click on the addressable market by type of client, but it's the same message. I mean, every type of client, the opportunity doubles in terms of that, and you see the map to your right. The darker the color is, the larger the opportunity set or the larger of the market, And here's no surprise that Brazil and Mexico are the largest markets on that front. Here we see that on the bottom right, the Latam addressable market that we talked about before, we expect it to keep on growing. It's going to get to $9 trillion by the end of 2030, in part of that driven by global investors. We believe that global investors also are underweight relative to the history in terms of investment in LATAM alternatives. And that we've seen a lot of interest on global investors. I mean, all the road shows that we're doing in Middle East, in Europe, in Asia, here in this country and everything show us that there is tremendous interest in LATAM alternatives. And on the graph to your left, it's a very interesting exercise that we did, is that we added up all the players of the addressable market, so LATAM institutionals, Heiner Worth, financial intermediaries, and we saw the asset allocation on an aggregate basis, how it looked like. And as you see there, if you add up the local alternative plus the global alternative assets, it's account to 7% of the assets. That's higher than three to five years ago, but we believe that the only direction here is going to go up. And that's basically what we're thinking. Some examples in terms of growth opportunities here. Three examples, three very concrete examples. Private wealth. Private wealth, increasing allocation to alternative. Why? Because global alternative managers are, I mean, changing the liquidity profile of the products, having the semi-liquid funds, lowering the minimum tickets there, accessing platforms like Pershing and all that. All that is going into the private wealth, accessing more and more the alternative investments. Global clients, we talked about that before, and we're going to talk a little bit more about that in terms of more interest in Latin American GPs. And finally, Latin American institutions give you two concrete examples in terms of the Mexican pension funds and the Chilean pension funds and the growth of the assets driven by a higher contribution rate. On the wealth side, investing in alternative assets more than giving you sort of a high-level projection or estimates. What we wanted to show you here is our own experience. Okay, see, these are numbers as the combined entity on a pro forma basis 10 years ago. 2015, $1.7 billion we had with financial intermediaries, which, again, is a very efficient way to access the mass affluent market in the region. Only 2% invested in alternative assets. Fast forward 10 years, now we have in this channel, we have $9.3 billion, so a very significant growth on that channel. And not only that, 24% invested in alternative assets, either our own alternative products or the global alternative products in our third-party distribution business. So we believe that the trend of this, of the growth on the financial intermediaries, but also on the percentage on alternative investments, is going to basically keep on going. Global investors. Here, again, this is our own example. It's not a high-level projection. It's our own example of what has been our history on a combined basis. 2015, we had 5.4 billion of assets in our LATAM strategies. Out of that, 800 million was coming from global investors, so 15%. Today, 13.6 is in our LATAM strategies, so very significant growth. I mean, almost triple that. But 3.6 billion is coming from global investors. So that's 4.4 times the growth on that. 26% of the assets of LATAM strategies are coming from global investors. There's a report, a NASDAQ report, NASDAQ here of our host, so it should be the best report so they can invite us again here to this audience there. The best report, 58% of global buy-side firms plan to increase their exposure to LATAM in the short to medium term. And again, we're seeing that in the visits, in the one-on-one meetings with clients globally. That is happening. And then, finally, two examples. One is the Chilean pension funds. Early this year, there was a pension fund, most of you probably know, a pension fund reform that was approved. Among other things, it increased the contribution rate. That it was super long due. I mean, it was ultra-needed because it was very low international standards, and it's going to increase gradually, right? And you see there the graph. And with that contribution rate increasing, we believe our estimates are going to get the size of the market, of the Chilean pension fund market, is going to get to $360 billion in 2035. That's roughly 90% of the GDP in 2035, so a pretty significant growth and a pretty significant industry within the capital markets and within the size of the country. We're going to go to target date funds, just like in Mexico. So we're going to have that, and there's going to be a definition of the benchmarks being used by the regulator next year, September of 2026, and that's going to be key, to assess the final exposure to the different asset classes. And finally, the alternative investment limit increase. This was actually before the pension fund reform. This was said by the central bank. It has been increasing gradually there, and it's going to keep on increasing. and by August 27, we expect an additional allocation of $11 billion, which is pretty significant versus what is currently today used in alternative investments. And finally, the Mexican authorities, the Mexican pension funds, strong growth. It's going to get to $850 billion there. Again, contribution rate is a key driver of growth. It's going to get to almost 40% of the AUM of that country, in part driven by a very large and young population, as you know there. And because of the informality that is very high in Mexico, it's going to go down, the expectations there. So that's going to be super important for the growth of the assets there. And as you see there, the contribution rate has been already increasing because the pension fund reform in Mexico was done some years ago. is going to get to 15% by 2030, so pretty sooner than Chile. And again, the alternative investment limit is going to go up. It's going to double there, and probably it's going to have a significant impact also on the local alternative pocket of the Afores, which today they have a minimum requirement, and most probably that number is going to go up. So again, a very interesting opportunity on the Mexican Afores. So that's pretty much it. As you see, very interesting opportunities in the region that we believe that we're very well positioned to capture these opportunities. I mean, given our strong distribution capabilities, I mean, our very experienced client relations team. So that's it. Thank you very much. Muito obrigado. Muchas gracias. Say again.
Thank you, Jaime. Now for a 15-minute overview of what you're seeing in macro in Latin America. So we have a more detailed presentation in the site, because we're sure I've had to crunch it a little bit here for this talk. But I think I would say that we have at least two common themes all over Latin America. One is the interest rate opportunity. We saw Fed cutting rates here. We're going to cut even more in the near future. So countries are in different stages of cutting interest rates. Some are more advanced. Brazil, as we know, haven't done anything at all. So we see a very good tailwind for Brazil coming from lower interest rates. Rates in Brazil are still at 15% nominal rate. We're talking about 10.5% real interest rates for the overnight rate. And we think that this is going to improve a lot. So that's a common trend all over different stages, as I said, but you know, have to look at it. And the other common trend is that we are seeing countries moving more to the center of the political spectrum. And that was an opportunity in Argentina, in Chile, and we think that in Brazil that will be the case, too. So I'm going to go very fast here. This is why we look at Brazil first, and we think there is a big opportunity in Brazil, as I just mentioned, because we see the possibility of having a political change. The red line there is people who say Lula's government is bad or terrible. The green line is people who say the government of Lula is great or good. Lula went through a very worsening situation of his evaluation by the population. The yellow line is the regular guys. And you see that right now he has more people saying that they have a negative view of Lula's government than a positive view. That shranked a little bit after Trump tariffs because Lula was very able to frame it as, oh, they're attacking our sovereignty. But I think this effect is mostly done. And when we look at the chart on the right, how much is the approval of the government? And you relate that to the votes in the second round. It's amazing that in Brazil, it's almost a straight line here. This is Fernando Henrique's support in Sarah in 2002. So we can see that had 28% and got 39% of the vote. This is Bolsonaro in 2002, Dilma in 2014, Lula in 2006. And Lula right now has 32% of the great and good approval rate. and that would translate on about 44, 43% of the votes in the second round. So we see now that the political odds are like 60-40 for Lula losing and that could be a good shift in Brazil. One amazing thing is that this thing is happening despite a very low unemployment rate, relative good growth in Brazil, short on the left, and unemployment rate is very low in Brazil. We think that this unemployment rate is going to start to go up. Why is it going to start to go up? Because, you know, if you look at interest rates in Brazil, I mentioned to you that the CELIC rate is at 15% nominal, but in real terms it reached 15% and now came back to 10.3. This is slowing down the Brazilian economy. Why we haven't seen it slowing down faster than we saw so far? basically because the government increased the fiscal deficit when Lula started. Lula, when he started his government, he asked an authorization for Congress to spend more money, so he increased the government expenditure by 2% of GDP in just one year. So the fiscal deficit in 2023 was about zero, went all the way up to minus 2.5, but that authorization was for just one year. So now we move back from minus 2.5 to zero. So getting back to my question, why rates went up so much here in this political cycle, because in this inflation cycle, because, you know, the central bank was trying to slow down the economy, but the treasury was increasing the fiscal deficit, and that was accelerating the economy. But now we are back to the fiscal policy in neutral terms, So, therefore, now both engines of the economy are pushing the Brazilian economy backwards to help fight inflation. So, that's going to be good for inflation, but that's probably going to be not so good for Lula's popularity. And we already start to see that in terms of GDP growth. That's the quarterly GDP growth in Brazil. That's the first quarter of the year, very strong because of agriculture. We had a very good agricultural year. But then second quarter, already 0.4% of GDP. The third quarter, the number has not been released yet, but we have almost all the components of GDP. So if we do our calculations, it's going to be around 0.1% growth, which is very close to zero, could be zero. So I think the political headline is going to be very hot when by the end of this month pops out Brazil grows zero. You know, so all the talk about, you know, cutting rates, you know, that's going to warm up in the press and in the markets. And for the last quarter of the year, we anticipate a 0.3% growth. So that means that, you know, we're going to see more below potential growth in Brazil for a while, which will help, you know, reduce inflation. Inflation in Brazil, the target is 3%. and has a ceiling of 4.5%. So inflation in Brazil, the blue line has been observed, went all the way up to 5.5%. Latest number is 5.13. And we think that by the end of this year, it's going to be 4.6 and then 4% by the end of next year. So that's the inflation going down that will allow the central bank to lower rates in Brazil. And you might think, wow, we just had 4.6 for this year. And you said before that the ceiling of the inflation target was four and a half. So how do you think we're going to cut rates in that scenario? Because the central bank always talks about, you know, the relevant horizon for the central bank, which is one year and a half ahead. So how do I know inflation one year and a half ahead? So from the central bank model, right now they say that by the end of this year, in their relevant horizon, inflation is going to be 3.4. but when we get by December this blue line is going to be starting from 4.6 which is our forecast and we're going to have another six months of very high interest rates almost double the neutral rate so we have our model to replicate the calculations of the central bank and we think that by December this number here is going to be around 3.1 or 3% so that's why they're going to start the rate cuts by the end of the year. We already see the market forecast going down, so that's the inflation for this year from 150 financial institutions. They report to the central bank. It's called the focus survey. It was at 5.6. Right now it's 4.81, and it's going down. Our forecast, I just told you, is 4.6, but these are 150 guys, so it's a little bit slower to reveal down. And people expect the CELIC rate to be at 15 15% by the end of the year, so no cuts. I think there's going to be one cut in December, 25 base points, but then 12, 25, and 10% going How much, is this correct, this forecast, yes or no? If it's Lula, I think this is the number. If it is someone from the center right in Brazil with a very serious fiscal commitment, I think the premium that is embedded in interest rates of the fiscal risk is going to reduce and then I think it's going to be cut much more if it's someone from the center-right. So this is, I think, the major tailwind for Brazil, for Brazilian assets, these rate cuts. And just to give you an example, this is the 10-year rate in Brazil, and this is the stock market in Brazil. I put a small cap index instead of the Bovespa because in Bovespa, the main stock is petrobras, depends on oil, and government interference. The second biggest is Vale, which depends on China, not Brazil. So there is a better correlation with interest rates in the small caps. So you can see the darker the blue, the closer we are to today, and the red dot here is the latest observation. So you can see that, of course, as rates went up, the stock market went down. The 10-year rate in Brazil reached – the Selic reached 15, but the 10-year rate reached 15.3%, And then the stock market was at the lows at $1.8K. Then when we start to see the fiscal retrench that I showed you, the fiscal policy going backwards, the rates, the 10-year rate came from $15.3 to $14.5. So the stock market went up to $2,000. And now we are around $13.7, $13.5, another big jump here. So we're going to see both cutting rates and assets in Brazil take any cash flow. If you discount any cash flow at 15% is one thing. If you discount any cash flow at 10%, it's a different thing. So assets in Brazil are going to be repriced as we start to see this interest rate cut in Brazil. I'd like also to talk about a few other markets. They're in different states. So Argentina has been one example of this political change, and one of the things that this political change translated into is an improvement in the fiscal account. So that's how the fiscal deficits were very persistent in Argentina for a long, long time, and how it changed very fast when Millet became president. So that's the good part of the story of Argentina, and we think that's a very good backbone for the long-term problem. However, we think there is a problem in the short term because they relied a little bit too much in the currency appreciation to fight inflation. It's not, I'll do the fiscal surplus, and then everything else, I don't care. No, you have to care about other things too. So you see here, that's the real exchange rate in Argentina since 1998. So this is when Millet took office. He devalued the currency, but then he let the currency appreciate very, very much, to help fight inflation. So up until a few weeks, one month ago, the exchange rate in Argentina was as appreciated as it was in 1998 during the convertibility era. So that was not right. And they didn't have reserves to sustain it. So that's why they're coming out to the U.S. asking for more reserves. So we started to see the currency to devalue. this is in real terms this is in nominal terms there is a band now and they almost missed the band they had no reserves to make significant interventions, they had to come here to the US to ask the help of Scott Besant so I think we're going to see in Argentina some bumps here is the interest rate right now it was around 30% went all the way up to almost 100% to fight the currency that was going out. But now we're starting to get back to 35%. So we think in Argentina, the backbone of the fiscal side is very good. They overdid the currency appreciation. I think after election, it's going to be late October, 23rd of October. They don't have reserves. They have to accumulate reserves. After elections are over, they're going to have to do it. So I think the currency will depreciate. Inflation will go up a little bit, but they're going to have to use monetary policy to bring inflation down. And then I think, you know, we might start to see a better pattern for Argentina and I think going to be very good for assets in Argentina in the short term. We think there might be some troubles there. These are the elections I mentioned to you are going to take place in October. If you look at the coalitions, if you get together, La Liberdad Avanza, the party of Millet and Pro, which is the party of Macri, they have 41.7% of the vote. and if you get the Peronists all together, they have 40% of the vote, so it's going to be a very close election, although I have to say I follow these countries for quite some time right now, Brazilian polls are very bad, but Argentinian polls are I don't have words for it they really miss big time all the time the numbers, so let's see what's going on there Chile, Chile is always the good student of the class, it's not hard to talk about it. We're going to have elections right now. The same story as I just mentioned. It's never easy. We're going to see a first round where the communist candidate, Janet Yara, will probably come out ahead in the polls. Oh, gee, no, but you said it's moving to the center-right. Yeah, but she has a very big rejection. And there is a lot of, you know, center-right. Matei is a center-right candidate. Cass is a center-right candidate. Kaiser is more a rightist, like Millet candidate. So when we get the right together and you seek the second round of votes, then we see a better profile there. I think that is going to be a good after we see that definition, it's going to be good for Chilean assets. In the short term, we start to see some concern about growth. Central Bank has cut rates. Inflation is a little bit not high, but coming from Brazil, it's hard to say it's high, but it's within the target, so it has some concern. Maybe you don't have room to cut much more. And the fiscal side, there's some concern about what's going on, but again, all those countries we're talking about, Chile, oh, I'm so concerned about the fiscal. That's nothing compared to Latin America. And a last, you know, word here on Mexico. Also, we are always surprised by how Mexico is performing because, you know, there are a lot of issues going on, Pemex and everything. One point that we think is very concerning is the Supreme Court reform that happened in Mexico, and all nine Supreme Court judges are from Morena, and they have been approving a list of legislations which are not, I don't think, are very positive reforms and might charge some price in the long run. So there are some micro things that are very interesting, as Jaime Marti was just mentioning right now. But in the long term, we get a little bit concerned. The macro part, what people are starting to be more concerned is with this renegotiation of the trade agreement with the U.S. They are going on right now. That might hurt growth a little bit. I just saw a couple of days ago President Trump putting taxes on trucks in ports, which will hurt Mexico. And with slower growth, we start to see some concern about the fiscal numbers. Maybe the fiscal numbers are going to miss the numbers. Last, in 24, it was a pretty bad number. And if you don't see growth, you know, we might see some concern in that area too. Colombia is also more a political change thing, political change story. And Petro seems not to be doing great, and I don't think that it's going to be hurt. Also a fiscal concern, but they have already cut rates, you know, a little bit, but they might have some more room to cut rates if there is also a political change in elections next year. So I'm short of time, but this is a major overview of what we're seeing in Latin America. Again, we have in the site a much more detailed presentation about all those countries. I just want to give you a flavor of what's going on and put it in context. Now we have Jaime de la Barra talking to us a little bit about.
Thank you very much, Carlos, and great to be here for the first time. Very excited about the prospects of this integration that has already produced many good things, as Alessandro said. The Global Investment Products and Solutions Unit is a testament of how complementary our two firms were. We now have an amazing platform for offering investors across Latin America and also global investors solutions for every single piece of their portfolio and for every single, in a way, need, be it discretionary, non-discretionary. Investors that are large and sophisticated enough that have large teams normally are non-discretionary clients. Investors that are sort of more mid-sized, that are sophisticated but want to focus on some strategies can give us a mandate on a discretionary basis. we also have a very interesting setup in terms of the experience of the teams. I head the area, and I've been doing this for almost 30 years since we started Compass. Very shortly after, we decided to take a strategic path to complement our own sort of asset management manufacturing capabilities with the capabilities of a very large sophisticated top-notch global managers and we've been doing this for for the last 30 years in the case of our discretionary our discretionary practice Fernando Luis Otto has also decades of experience mostly in Brazil dealing with with Brazilian clients. Daniel Navajas has also 25 years of experience in the third-party distribution business, so this is a very experienced team, seconded by professionals that have been working either at Vinci or Compass for many years. And one exciting piece of news for us, and that has been a bit surprising in a way is that the the culture the integration of how teams work has been remarkable I mean they it's the the heritage of compass IPNS a business was mostly I would say multi-asset global more like benchmark trying to find Alpha in some ways. And the Vinci heritage was more absolute return following the Brazilian heritage. And now with the transaction with Verde, I think we will be for sure the strongest and largest solutions provider for Latin American investors. The, in terms of the diversification qualities that this business brings about, as Alessandro said in the beginning, meaning we are now able to provide any sort of solution that a Latin American investor needs to invest globally or to invest locally. But we can also provide global investors with some solutions that are more sort of nuanced than the typical mandate or the typical fund to invest in in each of the countries we are present. We're working on a Brazilian fixed income offering for Chilean investors. So we are able to be nimble and to offer, again, solutions to investors either globally or locally. We also have a very diversified type of offering in the solutions space, and that's a key feature of the combined entity. On the discretionary side, we basically serve individual investors that are larger, a bit more sophisticated than the traditional mass affluent investor, endowments, retirement plans, on a vast array of services. We offer customized solutions. We have our own proprietary research in economics, in strategy, in fund selection. So we have a very deep team that can act as an OCIO. We manage alpha-driven strategies. We also manage multi-manager funds, either in a discretionary or non-discretionary way. We have a special team to do that. I will talk about that later. So we have, again, a team that can deliver a solution for investors that are investing either locally or globally on a multi-asset or single-asset strategy. One of the amazing things that happened when we merged is that the heritage of Vinci in Brazil, in a way, it matched perfectly to what we were doing at Compass. The opportunistic sort of more absolute return views combined extremely well with what we were doing in terms of asset allocation. So we now have a very strong core layer of multi-asset optimized or tools to get optimized portfolios. We have a team, a very deep team, that was complemented by the expertise of Inchi in selecting hedge fund managers to our expertise in selecting GPs and long-only asset managers. we were early adopters and this is as a result of the connection between the discretionary part of our business and the non-discretionary part of our business we were pioneers in including illiquid or semi-liquid solutions into multi-asset portfolios for our clients and the Vinci Heritage comes also with a very interesting experience in in providing practical ways of executing opportunistic ideas. And there's an example about an Argentina fund that from door to door produced close to 30% returns, and it was an opportunity that our teams saw when the new government took office. But that fund was liquidated three years after when the investment thesis was done. And that's a very interesting piece of this engine that produces multiple sources of alpha on the back of a very strong core allocation and on a very systematic way. In global IP&S discretionary, discretionary, we have approximately 50 billion reais of assets under management invested across markets all over the world, more than 1,000 mandates, 35 people, teen, with a long experience and track record. Approximately 30% of our AUM come from institutional investors. And this is, I mean, this is a very nice way of putting, I mean, thank you Leticia and team for putting this slide together. But what we wanted to bring to your attention here is the fact that after a year of being integrated, we have been able, under the leadership of Fernando Lovisoto, to make teams in Mexico, Chile, Brazil, New York work together. It's been amazing. And the results in the performance have been clearly demonstrating our ability to bring what is now called this organizational alpha. We have a very broad offering in terms of strategies. One very interesting part is we can call it maybe a portable alpha type of mindset in which we tap the different expertise of the different parts of the team in terms of manager selection, in terms of the expertise in certain specific assets in Brazil and in Chile, to offer a wide array of SMAs and commingled vehicles for our clients to access our knowledge. We have been recognized in Brazil many times as one of the top-tier managers, and how we deliver, it's a complex process, but we have been honing the joint efforts in risk management, also in working very closely with our client teams to try and identify the need of the client. And then it actually all starts there. What are the needs of the client, of the investor? And then we decide if a discretionary solution is the answer or a non-discretionary solution is the answer. but it all starts with a very close relationship between Jaime's team and the product's team in the discretionary and non-discretionary parts of the business. Vinci Strategic Partners is a very interesting part of our business. It's a new, I would say, a newer initiative in which we try to bring to our clients in Latin America all the experience that the Vinci team has in knowing GPs of alternative assets in Brazil and also globally, and the experience we've had distributing GPs, global GPs, for more than 15 years now. We started in 2010, and we've been having sort of the luxury of being in the kitchen with some of the most well-regarded and largest GPs in the world, knowing how to select GPs for our clients. And we have invested in more than 150 funds. We have more than 15 mandates in place. We are advising 40 large families in the region. And in a way, we want to be sort of an alternative to the Cambridge Associates or the stepstones of the Hamilton lanes of this world for Latin American clients that prefer to deal with someone that is closer to their mindset. and many times they don't have the size to justify paying the fees of the likes of Stepstone or Hamilton Lane or Cambridge Associates. In terms of the other part of the business that is important for us is the Global Investment Solutions Unit, where we build multi-asset, multi-currency portfolios for investors in LATAM. We have 18 billion reais of assets under management, more than 500 clients in seven countries, exposure to a wide array of geographies and asset classes, and we invest in both public and private markets. And we believe that this business is also a very, it's a highly potential growth business for us since the trends in savings are very positive and the trends in making portfolios in large countries, is making portfolios that are more global, that require sort of knowledge to invest internationally. Considering that investing internationally but providing returns in your own currency is somewhat tricky, we've been doing that for almost 30 years. The Brazilian Investment Solutions is a very large team too, 20 billion reais under management, 249 funds or vehicles. Almost 50% of that money comes from institutional investors, and we have a team that has been working together for a long time and is very senior. And the growth opportunities here are also very encouraging. We've been, in a way, crossing the desert since 2022 when interest rates went up significantly in Brazil. I mean, when interest rates go up from 2% to 15%, it's a very challenging environment for investments that are not basically short-term fixed income or long-term fixed income, low risk. We've seen that happen in other countries of Latin America too. But whenever interest rates start to fall, we think that there is a big opportunity in this market to grow. In the case of the third-party distribution business, this is a non-discretionary. We have relationships with many institutional clients, many family offices, and many intermediaries that they make their own decision on which manager, on what asset allocation they need. So when we interact with them, our way of leveraging the relationship with these clients is to offer top-notch exposure to GPs and liquid managers in the world. We are one of the leaders in this business. As I said before, we started back in 1999 when Chilean pension funds started to invest globally, and we have been honing our capabilities to do this business. and we have a very significant market share in all the markets that we participate. We have placed more than $100 billion for traditional managers and more than $72 billion for illiquid or alternative asset managers. What we do that is different and that provides us with a competitive advantage is basically we have been trying and we have been successful in attracting top quality managers to maximize the share of wallet we have from the deep relationships we have with Latin American investors. We have a strategy that is not the strategy of a fund supermarket. We select a few GPs and a few managers that, obviously, there are some overlaps, but we try to make our offering as complementary as possible in order for us to know extremely well what their product offering is, to know extremely well what are the needs of our investors, and try to match that. And that's, I think, what differentiates us from many other competitors. Jaime was referring to the deep team we have across countries in the relations with investors, and this is obviously a key competitive advantage. And we have been able over the years to pass on to our client relations team this mentality of looking at the investor's portfolio and translating that into what we can offer to them so we can have one of our own funds or one of our partner's funds in the portfolio of each one of our clients. The addressable market here is the world, and that's the basis of what Alessandro was saying about the power of diversification. When Latin America is out of favor and investors want investments outside of Latin America, we have an extremely powerful offering for that environment. The main opportunities we see, as Jaime was mentioning, there's a pension funds reform approved recently in Chile that will increase the contribution rate to 15%. In 2020, there was a pension fund reform in Mexico that also increased the contribution rate. In Uruguay, there is an increased need for making the portfolios more international. Currently, in Uruguay, portfolios of institutional investors are 100% domestic, and we think that that's something that needs to change given the small nature of the country and those savings start to, and we've seen this movie in other markets. We saw this movie in Chile, in Peru, where the local market is small and the savings start to grow, so they need to diversify internationally. And in Brazil, there's a huge opportunity, as I was telling you before, when interest rates are 15% and real interest rates are 9%, the appetite of local Brazilian investors to invest internationally is obviously diminished. And we have seen this movie also. In Chile, real rates in the early 90s were 11%. Now they're 2%, and the appetite for international investments now is sort of, it's normal for any Chilean investor, it has developed an ecosystem that is a CLP-based multi-asset investment ecosystem. And we believe that in other countries, this trend will also provide us with a very interesting opportunity. We, as I was telling you before, one of the key aspects of our business is to have a broad and high-quality offering for each line item that our investors invest in. So we make sure that we have very good quality products for every asset class and sub-asset class without turning into a fund supermarket. That's sort of the beauty of the model. As I was telling you before, we see opportunities in many of these markets. We think that the private market opportunity is huge. The penetration of global alternative assets in the portfolios of some institutional investors and almost all private investors is still extremely low. So we see a huge opportunity there. As I was telling you before, the development of the semi-liquid products on the alternative side are super encouraging. And we, I mean, our partners at Ares are here, and we're doing a very interesting effort with very, I mean, encouraging results too to penetrate the wealth management market with their funds in LATAM. In the public markets, you know, there's a challenging environment in terms of fees and the penetration of passive strategies. but we have a very interesting experience in trying to find asset classes where investors are still looking for alpha, and that's where we put most of our attention in trying to find good managers that can provide alpha in the less, I would say, efficient markets, in the end, in Europe, and other markets. And the other opportunity also is, in the markets that are more developed, is to access sort of smaller, more nichier strategies on the private side. And in the end, I mean, we will always be looking for strategies or managers that can provide or that can fulfill our investors' appetite for higher returns. That is not going to go away. I mean, interest rates have gone up, but investors need more return because, I mean, they're becoming older. the fact that the pension savings are not enough to provide for a decent retirement means that all of these investors will need to look for high-returning investment strategies. And 33 seconds before my time, I would like to thank you again for listening to us and providing us with this opportunity to tell you what we do. Now, I leave with you my partner, Roberto Novelmacher, to talk to you about Latin American equities.
It's a pleasure to be here. I would like to start giving a little overview of the public equities area in Vinci. so we are one of the largest public equity managers within Latin America currently we have an AUM of 15.6 billion reais across different countries and in a plan latin strategy we have 85% of our investor base composed of institutional investors that, just like us, have a long-term horizon. In terms of teams, we have one of the largest and most experienced by-site teams in the Our partners have more than 25 years of experience, and we have a team composed of 6 PMs and 15 fully dedicated analysts working in different in the main markets within the region in Brazil we have eight analysts we have analysts in Chile we have analysts in Mexico so we are with boots on the ground in the largest markets within the region on top of that we have very important support from our macroeconomic team and data science team looking at our product suit we have a full array of funds we have a long only strategy for a plan latin fund and we also have long only strategies in Argentina Brazil Chile and Mexico in In Brazil, we also have a dividend strategy and we have a long bias strategy. In Chile, we are one of the leaders in small cap strategy too. And when we look at our track record, we have very long and consistent performance that generated significant alpha in all the regions and this has put us in a top quartile position compared to our regional peers and then moving on to the current market outlook we are very constructive about our chances of raising new capital in the current environment starting by looking at the attractiveness of Brazil our largest market I wanted to highlight that Brazil is one of the most attractive markets in terms of multiples we are having a 35 percent discount vis-a-vis the average of emerging markets and I think that this is standing out and is the first factor that I would like to to highlight on top of that the second factor would be our monetary cycle we are in a stage where we are getting ready to start cutting rates I think all of you have heard Rosa Carlos presentation but in this graph what is really striking is that Brazil last year against the pain the trend of all the rest of the emerging markets hiked rates so we are win in one of the highest level of interest rates on record and so we are probably going to be one of the economies that will have more room to cut rates in the coming years and historically we have seen that in moments of easing cycle the Ibovespa has always performed significantly well and we expect this to happen this time around actually we are already seeing the market performing well in terms of returns in dollar Ibovespa is up 40% the third factor is about flows right we when we analyze the domestic investors positioning we are in a moment where the allocation to equities in Brazil is one of the lowest on record this of course has to do with the very high interest rates we have right now but it's striking that we are in a level compared to a very distressed moment for instance what happened in 15 and 16 when we had the impeachment of President Rousseff and that we had the worst resection in Brazilian history so we believe that when interest rates start to come down local investors will tend to increase their exposure to equities on top of that we're seeing already a significant flow of foreign investors to Brazil and to the region as a whole and one of the leading factors for that is the relative valuation first we saw that Brazil positions well among the emerging markets but now we are showing here a graph of the evolution of the relationship of the price earnings of the Brazilian market relatively to the S&P and we can see that we are on the one of the highest discounts on record with almost two standard deviations below average so we're seeing that this gap evaluation is starting to call attention and attract flows and the good momentum stands to other countries such as Mexico and Chile right we've been hearing from Jaime and from Jaime that we had a very important pension reform in Chile and also we had a very significant pension reform in Mexico that will increase the part of the salary that goes to the pension funds from 7% in 2020 to 15% in 2030 which should lead to a steady domestic flow from growing pension AUM to the market And when we think about the Chilean market, we are seeing very good prospects of economic growth on the back of important improvements in private investment, which in a way are turbocharged by the increase in investments in mining projects, such as in copper projects. so against this backdrop we are seeing a very interesting opportunity to launch our own new seats platform the use seats platform is a new way regulated structure with high investor protection which is widely accepted by global allocators and by some of our most relevant LPs in other strategies such as Chilean pension funds we think that we are very well positioned to do so because we have very strong distribution capability and we have as we shown very good track record on domestic funds and we have a very experienced team with boots on the ground and then in this usage platform we have initially two products which will be the Latin fund and a Brazil fund and we expect to raise around 1 billion 250 million dollars in a lot across these two products as we are expecting using some assumptions that we believe are conservative for our market share in this to into this true addressable markets each of them have 10 billion AUM and for the case of Latin we are assuming a 7 7.5 percent market share which we believe is achievable since we encompass used to have in 2020 16% market share and as for the Brazil fund we are expecting to have a 5% market share leading to 500 million dollars and we expect to have in the future other products such as a Mexican equity fund and a local Latin currency fixed income fund so I'm now I would like to to call to the stage with
Candiota the head of our forestry products hello everyone thank you very much for being here it's a pleasure to be with you I'm gonna talk about the Brazilian forestry market and the opportunities also in the LATAM forestry market and how we have been positioning ourselves to take advantage of the large opportunity that we see ahead. So Brazilian forestry market, well, there are more than $20 billion planned in terms of investments in the industry. Brazil leads the world in the eucalyptus wood productivity, which is by far at least two times the productivity of the second country in the world, which is Chile, and then compared with European and America, even greater. We have 10.2 million hectares of planted forests on degraded land, 4.9 billion tons of carbon sequestrated and stored in planted and conserved areas, and the first one global exporter of pulp with more than $12.7 billion in terms of exports. Our presence in this market, let's say we have currently $280 million in terms of assets and management. We do both planting commercial forests in clear or degraded land to supply sustainable wood to major forest-based companies with carbon credit as an upside. All of our forests are 100% FSC certified, and also ecological restorations in the biomes of Cerrado and Mata Atlântica. We have presence in four different states of Brazil, the largest one in Mato Grosso do Sul, with more than 85,000 hectares planted to 80,000 hectares in terms of conservation areas. Mato Grosso, 13,000 hectares planted, 5,000 hectares in conservation areas. Mato Grosso is a state where we basically plant for biomass. This is another beauty of the timber market because things have been changing a lot during the last decades. Not only wood for pulp and paper or traditional products, but now for renewable energy and many other types of products. Santa Catarina, we have been increasing the cluster there. We have more than 2,800 hectares planted, 2,400 hectares in terms of conservation areas. and Sao Paulo State with 3,700 hectares planted and 1,300 hectares in terms of conservation areas. So we're kind of spread out. We don't have any plans of planting forests in the Amazon or in the northeast of Brazil. We think there are many other different risks that are not attractive, even if the region needs a lot of hedge protection in terms of not devastating areas. Well, what is the cycle that we see ahead? Let's say this is not more a timber agenda. This is what we call a green investment agenda. So the market, the total addressable market has multiplied by 10,000 times. The thing about decarbonization of the world is an agenda that is in place. Most of the developed countries, they have been highly involved with this process of the climate agenda. Global investors need to align to the green standards and the European taxonomy. The investment drivers following this is rising demand for forest products. forest products as a substitute of fossil products like, for instance, plastic, carbon credits as a value creator for new product use, and rising GDP for capture that will create a large demand for wood in the next decades. Our region, our target is, of course, LATAM, as everybody talked about here. We have available land, high productivity, good governance in the sector. It's a 100% private sector in Brazil. We don't have any interference of the public sector in the forest market, land in terms of planted forests, and also a very good legal framework in place. Our goal strategy is basically to position ourselves as a leading nature-based solution platform in Latin. So it's not a timber and forest product only. This is an NBS business, and that has changed a lot during the last decades. So from a traditional, what we call TEMO, to a leading manager of Nature-Based Solution, become a global reference in ESG standards, continue to follow the highest sustainable credentials, like Article 9 under the SFDR regulation, and IS funds under the Brazilian local MBIMA regulation. The opportunity is this. We see significant capital inflows towards green investments. LATAM, especially Brazil, because of Brazil's size and Brazil's land availability, is set to become the mecca of green investments. This is already happening. Growth strategy, it's a mix of products of planted forests in terms of creating scalability and restoration for quality premium in carbon credits and biodiversity. We do believe that carbon credits, we're going to have carbon credits for gas emissions and we're going to have carbon credits, what we call biodiversity credits. These are going to be two different markets. We basically position ourselves in both what we call greenfield markets and brownfield markets. So we have both portfolios. We have carbon-focused funds, so in a way that we do believe the agenda of carbon credit, there's not enough carbon credits available for the needs of all corporations, governments, development banks, and et cetera. Products that go upstream and downstream into the value chain, as I was mentioning, it can go to pulp, to paper and packaging, to panels. It can go to timber construction and many other different products. So the idea is to become a consolidation platform for NBS in Latam. So core business continues to be Brazil, and the new markets opportunities mainly Chile, Uruguay, maybe Paraguay, And then, well, we take a look at Argentina and Colombia as potential markets in the future, but not as a first priority now. So positioning ourselves, as I mentioned, as a nature-based solution platform in Latin, Brazil is well positioned to supply that solution. I mean, it's just, if you look to the numbers, well, they tell by themselves. Brazil has the potential to be the largest carbon sink in the planet thanks to its reforestation and afforestation capabilities. So not only in terms of forests, in terms of agriculture and what we call also wetland, followed by China, Indonesia, European Union, and the other countries that you see here. Well, what is the timeline that we had? Let's say we launched our funds, the first one in 2012, we have been raising our fourth fund, we have been already trying to work hard in the fund five and some other different types of products, but we came from a typical Brazilian Timo institutional investor base. Let's say we have more than 45 institutional investors as LPs. Probably we are the largest independent team or management company when we launched in terms of LP-based institutional investors. 98% to 99% of our LP-based institutional investors, both in Brazil and abroad. And now we are going to what we call this NBS phase. The client focus is the beginning just return and very low risk and very low volatility, kind of decorrelated assets from other asset classes. And now it's not only return, it's also about decarbonization. Well, the total addressable market used to be in the beginning for us just the Brazilian pension fund industry. Now it's global NBS investors, which turns the market base, well, thousands of times larger. The fundraising, we used to have local and foreign institutional investors. Now we have DFIs, corporations, institutional investors, family offices, you name it. I mean, it's just a large base of LPs on the market. The pocket size, the market was approximately $3 billion when we started, and now it's really $30 trillion with NBN's market in place. Target region used to be Brazil, now Latam, mainly Brazil, but we haven't seen some other opportunities in another country, so we don't want to lose them. I guess that's basically it I guess I'm ahead of time and that's good so I'm going to call José Guilherme Souza that's going to speak to us about infrastructure José Guilherme please come to the stage thank you very much thank you very much Candiota nice to be here I'm going to talk about the infrastructure strategy a little bit of overview The history of investing in infrastructure at the firm is kind of as long as the firm exists.
We have been invested around five billion reais in eight different vehicles. And most of this capital is already being returned to investors over time. We have been focused in three sectors, energy, transportation and water. And some of what we are going to present to you are related to those three. We have 14 professionals all together dedicated to infrastructure strategy, both at the investment team and also at the company levels. We use some operating partners for that as well. And here, we brought the selected numbers of returns for you. Going from left to right, we have a snapshot of the full portfolio of investments in infrastructure. it's in the left, up until the active funds that we have so far. And we've been able to deliver solid and consistent returns over time in all of the strategies that we had invested, both when we compared to the stock exchange return and also to our base interest rate. As of today, we are managing basically three strategies within infrastructure. First one, typical private equity type investments in infrastructure. infrastructure. Mostly core and core plus strategies. On the left is our most recent fund, Vinci Climate Change. Last year I spoke about it to you. We were fundraising. We just finalized fundraising in June this year, last closing. This is a 350 million US dollars fund that will invest in sustainable infrastructure in Brazil. Mostly green fuel projects, two biggest sectors, renewables and water and sanitation. Vinci Transport and Logistics is a fund that we are dedicating to invest in a port terminal in the south of Brazil. This is a green field project that will be one of the key container terminals in Brazil in the next coming years. We are still in the development phase of that project. Vinci Water and Sewage is the third one, is the dedicated to this sector in Brazil. We have allocated 100% of that fund in a company that we now operate in Rio de Janeiro State. We are managing the water distribution and sewage collection and treatment for 18 municipalities in our state, serving roughly 2.5 million people there. Vinci Infra Transmission, this is fund that we had just finalized divestment vintage of this fund this 2017 we allocated in two power transmission greenfield assets and we just sold the last one in the in the end of last year so those are core and core plus strategies then we have an evergreen fund listed at the stock exchange that provides yield to retail investors with a tax benefit its portfolio is basically composed of ground-filled power transmission and power renewable assets, and finally we have an advisory business anchored in a federal government fund that aims to finance states and municipalities to structure their privatizations or concessions of infrastructure assets. We are now working in three different mandates one for irrigation area second one is for social infrastructure schools and the third one that we are about to start is to structure the concession of several water and sewage in the state of Rio Grande do Sul those three are up and running the pipeline is big and also this advisory business has a bucket for structuring collateral for our concessions and PPPs in the country so I mentioned about the team so the investment team we are all together ten people most of us working for more than seven years now together my partner Rodrigo leads the effort on the Vinci climate change fund and we also have the presence of four operating partners that are today working for us in our portfolio companies so this chart probably you already saw and these are for Brazil, but you can basically copy and paste for the other countries of Latin America as well. This is just to say that there is a huge gap of investment in this sector in the country. Historically, the country has been underinvesting in its infrastructure assets tremendously. You see that on average, we are basically investing roughly around 2% of our GDP every year. And the international average or rule of thumb is that you should have been investing at least double of that number just to cope with the depreciation of your assets. So our infrastructure inventory of assets has been depreciating over time a lot. So that creates a lot of opportunities. And over time what we have been seeing in the country is that given the fiscal situation, the public sector has been prevented to invest in infrastructure And it's been the same case for the other countries of Latin America, so that in Brazil, over the last decade, private capital has been called to invest in these types of assets in the country, so that the most recent numbers that we have, roughly three quarters of everything that is invested in the country in infrastructure is being deployed by private capital, both industrial players and also financial sponsors. And this is a huge opportunity investment for us in this case. Why invest in Brazil infrastructure now? Three big drivers, a lot is being done in the energy transition space and renewables. Brazil has one of the most successful case stories of the insertion of renewable power in its matrix in the whole world. We have been a hydroelectric system forever, but over the last 20 years, the participation of wind and solar has increased a lot. So it's very important. The space to have more wind and solar is still very big. We are just beginning our history in energy storage systems, as you'll see in other countries as well, to support the more renewable power into the system as well. And because Brazil is a huge country, we need a lot of power transmission, basically to bring the whole renewable power from the north-east part of the country to the south-east and south, where the big consumption are. Transportation. We have huge needs in roads, airports, and ports. As of now, we have been investing in the port business, as I mentioned to you before. More recently, we have acquired the controlling stake of Rio de Janeiro International Airport, which is a very substantial and strategic asset in the country, one of the leading airports to receive international passengers, and we understand that that could be the first step in the consolidation of this market in Brazil. Not only that, but toll roads present a huge opportunity as well. The country has a tremendous network of roads. Just a small part is paved, and even a smaller part is tolled. So the government is in a big push to transfer toll roads assets to the private sector for them to build, expand, and maintain this infrastructure. And finally, digital infrastructure. Brazil is prone with power renewable and water to fulfill in this sector here. So data centers, cell towers, it's a big market for us in the future as well. So I just mentioned to you our most recent update is in the transportation sector. We have just acquired the controlling stake of Rio de Janeiro International Airport in a partnership with the Singaporean operator, Shangi. And this airport, some highlights in here, it has a capacity to have 37 million passengers a year. 2025, it's going to process roughly 15 million passengers, 2025, with a big chunk of international passengers. In fact, 2025 will be a record high for Rio de Janeiro receiving international passengers. There will be an auction of this new concession contract of this airport in March next year, and we are going to participate in that together with our partner to eventually acquire Infraero's 49% stake, which is a state-owned company that has been there since the privatization in the beginning of the 2010s. So finally, going forward, the prospects for growth are basically expanding our strategy to the other countries of Latin America. It will have a very interesting mix of currencies, countries that are part of the OECD, that Brazil is not. So that opens room for us to tap some of the investors' pockets that are prevented from investing, for example, in non-OECD markets. So Brazil is not able to access those buckets that we now, with the LATAM portfolio or fund, could eventually tap. So Chile, Mexico, Colombia especially, both in renewables and transportation are very interesting markets for infrastructure with this combination of FX diversification and OECD markets as well to build this portfolio. So this is exactly what I had for today. I would like to call here to the stage Rodrigo Coelho and Lilan Nigri, my partners, to talk about real estate.
Thank you very much. it's a pleasure to be here today I'm Rodrigo Coelho I'm a partner and together with the Lanigri we are co-heads of the real estate division at Vinci partners today we'll be speaking about the real estate division so basically it's the last real assets strategy after forest and infrastructure so we last but not least and we are going to be speaking about what we be building at Vinci and the perspectives and opportunities that we see ahead of us. We are basically one of the largest real estate managers in Brazil, currently managing 6.2 billion reais in equity. Roughly 80% of our AUM, actually more than 80% of our AUM comes from perpetual capital vehicles, which of course is a very interesting for our business. And we invest in across all key sectors in Brazil, such as shopping malls, industrial, office, and residential for sale. Altogether, our portfolio comprises about 12.8 million square feet of gross leasable area in 65 properties. Even though most of our vehicles have long-term perpetual capital that do not require divestments, we've been very active in recycling strategies. We've done more than 80 transactions in total in acquisition and sale of assets. In 15 of them we closed in the full cycle of the divestment achieving an IRR of 18% in those transactions in average. We've been a pioneer in the REIT market in Brazil and we have a differentiated investor relation platform that kind of brings us to have now 460,000 investors in our client base. That number means that one out of the five investors that invests in the real estate market in Brazil has at least one quote of one fund from Vinci. One of our greatest strengths is our team. We have 14 fully dedicated investment professionals with the skill sets that are very complementary, allowing us to execute complex and large-scale transactions across multiple segments and strategies. Our structure positions us to continuously identify and capture opportunities, even in challenging microenvironment, such as the ones that we faced in the last couple of years with high interest rates. We are also among the fastest organically growing real estate managers in Brazil. Our AUM grew approximately 25% CAGR since our first fund in 2013. Due to the nature of our business, as the chart shows, during the previous easing cycle from 2019 and 2021, we expanded our AUM meanfully. And it's also important to mention that we're able to sustain and even grow the AUM in a tougher macro years. So, considering the expected macro scenario that José Carlos Carvalho showed us today, pointing to the start of a new easing cycle, we believe that could open a new avenue of growth to our platform. Our two largest funds, VISC, folks in the retail shopping centers strategy, and VIEWG, folks in the industrial segment, mainly distribution centers, have experienced consistent returns since their IPO, outperforming the Brazilian REIT benchmark index IFIX. Those funds are among the largest funds in the industry and are recognized as top-tier funds in their peer group. As well, they're well-positioned to grow in this new easing cycle ahead of us. With that, I turn to Ilan, who will detail the real estate market opportunities in Brazil, where we should see growth avenues for Vinci, and then I return at the end to detail the plans for the rest of Latin America.
Thank you, Rodrigo. Good afternoon, everyone. So let's dive into the REIT market opportunities now in Brazil. In the last easing cycle, we saw a growth of more than 40% in a compound annual growth rate in the REIT market in Brazil. This was between 2018 and 2021. During this period, we were able to grow our main funds and create new REIT strategies. However, we still see a huge gap between the REIT market in Brazil and other countries like U.S. in terms of market size and fund scale. Brazil REIT market represents currently 2% of the country's GDP. This number could more than triple if it reaches the share of a developed country like U.S. We could drive our market cap for more than 500 billion reais. And the Brazilian REIT market has generated a vast number of subscale funds. So when we look at the REIT numbers in Brazil and the average AUM per REIT, we clearly see an opportunity for a consolidation of the industry. And that translates to a potential inorganic growth for a range compass. Considering that we are approaching a new easing cycle, Brazil's interest rate could drop by 500 basis points between 2025 and 2028. With a lower interest rate, we can expect a higher valuation of our funds, a greater fundraising capacity, unlocking AUM growth, follow-on, and new public offerings opportunities. So, and from Vici Compass, this scenario represents a potential AUM growth of around 28%, without any new public offerings, and bringing our market cap close to 7 billion reais. There's also opportunities on investor side. we see that we could double the number of REIT investors by exploring the stock market potential. In the past six years, the number of REIT investors in Brazil has increased 13-fold, reaching almost 2.8 million, with a care of around 28% between 2018 and 2024. And there's still room to grow, With more than 5 million individual investors in the stock market, there's an opportunity to migrate approximately 2.5 million individual investors to the REIT market. So, considering tax incentives, daily liquidity, and a stable cash flow, the REITs are one of the most attractive investment products to individual investors in Brazil capital market. But there are other opportunities beyond the REIT market. Our opportunistic development fund strategy strengthens our diversification and earnings power. We focus on industrial and residential segments. This strategy is important because it attracts institutional investors, such as pension funds and family office, and also complements our income strategies, adding carry optionality with clear, repeatable exits. Now I'll pass back to Rodrigo, who will wrap up and share our broader vision across Latin America. Thank you.
So, since the combination of business between Vinci Partners and Compass Group last year, we've been exploring the expansion of our platform beyond Brazil, leveraging both our experience in the real estate segment and Vinci Compass's strong local presence across the region. We've identified three key markets, Mexico, Chile, and Colombia. Each offers a compelling mix of scale, institutional depth, regulatory clarity, and growth potential. Mexico is the second largest real estate market in Latin America. We see strong tailwinds coming from near-shoring and e-commerce. Most of the leases contracts are U.S. dollars denominated, which brings active participation from international investors, allowing the execution of sizable transactions in that market. Chile offers a stable and transparent market and environment with inflation-linked leases contracts, called the UF, across different segments. There is also availability of long-term debt, which is cheap for Latin America country standards. We see possibilities in Chile that closely mirrors our successful mall and logistic strategy that we are doing in Brazil, basically partnering with local players to provide them capital to their growth, while we benefit from the partner's expertise in that team and structure locally. And lastly, Colombia, though a smaller market, but has been improving its regulatory framework and expanding institutional participation, making it an attractive early mover opportunity for the medium term. To access those markets, we see two complementary paths, either inorganically, through the acquisition of local well-established investment managers, or to build small teams and to do local partnerships with the main players of each of the segments, like I mentioned in Chile, as we are copying With those strategies, we believe that we'll be able to leverage Vinch Compass reputation, investment capabilities, and local relationship with investors due to our strong local presence in the region. So, with that, I would like to thank you all for your attention and interest, and I'd like to invite to the stage Gabriel Felsanzual and Carlos Eduardo Martins, co-heads of the Private Equity Division.
Good afternoon to you all. I'm Gabriel Fasens-Faub. This is my partner, Carlos. We run the private equity group at Vinci. It's a pleasure to be here with you. Well, real quick by the numbers. What is our private equity practice today? We are 41 professionals involved. The leadership has been working together for more than 20 years. Very stable and cohesive team. I think it's very rare, especially in the region. We've done more than 50 investments in eight funds with more than a hundred platform add-ons Subsequent to that we've committed almost eight billion reais and we have distributed back that amount to to our piece Also a level of DPI that is not common in the region and we've been generating a lot of co-investment opportunities We've generated $1.5 billion in closed co-investing opportunities, and we have shown much more to our LPs. That's on the top of a very strong track record over that long period of time of a 44% net IR to our LPs. PE is still a very underpenetrated market in the region. Okay, wherever you see in North America, U.S., Canada, you see 10% of AUM to GDP ratio. In that time, this is 1%. 1% in Brazil, 1% in Mexico. In Chile, it's a bit above. But it's still a market that needs to grow a lot. We see a lot of fragmented industries, a lot of family-owned businesses that can benefit from a more professional management from better capital location we see a very similar situation of what was the US 30 maybe even more years ago and the playbook that we use in Brazil is different from what is a norm in more developed markets we very rarely and very conservatively use leverage so on LBOs in the US are levered more than five times our Leverage is at the is 1.4 times in the latest vintages The level of valuations is completely different The average entry price in US buyouts is north of 11 times The average entry price in our latest buyout vintage is 4.6 times The value creation drivers are different. We rely much more or on in organic growth and core earnings growth 92% of our value creation can be attributed to EBITDA growth and only eight percent multiple appreciation this is not the norm in mature markets where multiple appreciation pays a more important role and as we mentioned the growth of PE backed companies in the US is still way lower as returns rely much more on on leverage pay down we rely much more on growth 27% is the average growth in our fund three portfolio since inception what is it the deal that is that we do as you may understand there are no traditional LBOs in Brazil leverage doesn't allow for that and and the volatility doesn't allow for that what we look for is to sponsor good businesses that are in industries that will increase in penetration in the economy and try to find the winners in those markets so we can also sponsor market share growth and also benefit from the growth in the economy. So it's a three-pronged growth bet. So we basically target industries that are in secular growth profiles, macro-driven, behavioral-driven, demographic-driven, with proven business models where we can foster growth with the right capital allocation and the right people. This typically is focused in the upper middle market in Brazil where we have the good combination of enough critical mass to pay for talent but also good growth opportunities. We always vie for strong governance with either control or very strong enforcement of our government's rights and accountability for results. We are able, since capital is so scarce, we are able to structure our deals quite smartly. We use a lot of seller financing, so we pay in installments mitigating FX risk. We also mitigate downside risks a lot and align ourselves with our partners through upside sharing mechanisms. So it's very much structured as I mentioned before we make very little use of leverage and as a team We are very hands-on we have a very concentrated portfolio and we're very hands-on helping our management teams Perform create opportunities for them to generate a lot of value We tackle this opportunity with two strategies we have the VCP strategy, which which was our flagship and core strategy, which is basically our growth and buyout strategy where we target upper middle market companies with both primary and secondary capital, essentially control and co-control deals where we have impact guidelines, but we're not driven by impact. And we also have a minority-oriented strategy called Vinci Impact and Return that does much smaller equity checks. So, VCP writes 300 to 500 million reais equity checks. VIR writes 50 to 150 million reais equity checks. Essentially, cash-in deals, primary deals, with first-time institutional partners to entrepreneurs in minority positions with also an impact mandate where we generate also positive impacts along a clear ESG framework. And the team that drives these two strategies is myself, Carlos, and Pepe, who runs the VIR strategy. We are backed, as I mentioned, by a 41-strong team, including nine senior investment professionals, nine investment analysts who have all been working together with us for a very long period of time. The senior team has, on average, more than 10 years working with us and also a very deep bench of operations team. I'd like to call on Carlos to follow with the rest of his presentation.
All right. Thank you, Gabriel. So having said that, one of the things we would like to highlight today our competitive advantage, which are based on five pillars. The first one is the fact that we are one of the pioneers in private equity in Brazil, so raising eight different dedicated funds to address and tap opportunity in the region, investing in more than 53 platform companies in over a hundred transactions that we made, including all the add-ons, the very robust experience of the team as well. So we, as a senior partners, we have been working together for more than 20 years with more than 40 dedicated professionals involved in the private equity practice. Definitely the track record put us in a position of a top quartile in the region, but also So globally, generating over 62% gross IIR, which is eight times what the public markets benchmark would have yields in the same period. And an important thing is that 98%, as Gabriel said here, 92% of the value creation comes from earnings growth. also the fact that we bought companies, bought business, and with the help of the management teams and our partners, we generated value to create those returns. The ability to return capital, so something that is, we tracked of course our numbers, but the marketing competitors as well, we are one of the few managers in the region that across the eight funds, including the very recent allocations that we did in portfolio companies, we were one of the fields that have a DPI on aggregate that is greater than one, considering all the funds, and on the realized investments is over three times in U.S. dollar terms. And a strong line of interest, which is a core value of Vinci Compass, Because in the case of private equity, we have committed over a billion reais over time in the four funds and 370 million in VCP for our latest vintage raised December last year. Our approach to generate that alpha that we mentioned is based on the identification of the secular trends that Gabriel also mentioned here. So teams like aging population, circular economy, digitalization. So some of these teams, we have been tracking and investing from Fund 2, Fund 3, Fund 4, VIR as well, 3 and 4. We have been investing in companies that benefit from those 15, 20-plus years of important growth tailwinds. The proprietary origination being part of Vinci as a large firm that touched a diverse base of asset class generates a lot of opportunity to us. So two-thirds of all the deals we've done so far, they were proprietarily sourced. And with that comes the benefits of having a much better entry valuation level with very relevant discounts. when compared to public markets of 50%. We have been implementing more and more, especially since the early days of Fund 2, mechanisms to offset, for example, DFX variation and impact in our funds, as we have an important base of LPs in U.S. dollars, so the seller finance mechanisms that push capital calls over the years, downside protection, upside sharing mechanisms so we can avoid overpaying for assets and align ourselves with partners over time in the returns that we generate in the investment, as well as preferred dividends mechanism where we can generate early DPI in the investments that we make and return that capital to investors. The operation and hands-on approach is another important pillar. We have been very active with the partnerships with management teams, entrepreneurs, and the corporations that we partner over different investments that were made, fostering growth on those portfolio companies. The average of growth in our most recent fully invested fund, VCP3 is over 25%. The average of this strategy, including the eight funds, it's over 20% growth of EBITDA since the inception of all those funds. And all the levers that we typically touch to foster that growth, which includes helping the companies implementing some strategic acquisitions, things around digital transformations have been important the building of the the management teams are things that we touch extensively during the value creation agenda that we implement and finally our experience in on on divestment so mostly through sales to strategic players but we have done a lot on selling to other sponsors which is different from developed markets like the US you have more limited options in Brazil but are seeing more and more that increasing we have also the IPO market that from time to time we have some windows that are open for us to do listings and we we had prior track records in doing several IPOs in Brazil as well as in the US which allow us to maximize sometimes returns and as I mentioned 92 percent of the value creation on the private equity strategy comes from earnings growth here we have a table with some selected case of the portfolio existing portfolio companies as well as companies that we have already divested some of the growth levers that include human capital, M&A, tech, things that we work around in expansion of the potential TEM for the companies where they operate as well as units expansion and the results in terms of EBITDA. So we have the example of AGI that from the investment that we made in December 2020, the business has grown profit more than ten times to our clock which is more most recent one of the recent investments we made in fund four we generated already almost three times that growth into in two years and so several examples where all these things that we touch we we and helping management teams to to develop over the years they turn into EBITDA growth and those returns that we have as a track record for the private equity strategy today and talking about track records here have the two different strategies that Gabriel presented the Vinch Capital partners on the left hand side and VIR on the on the right side both strategies we have is very important outperformance when compared both to public markets in an environment which is long term here talking about more than 20 years of track record of several vintages where not only the realized returns they were great but look at the full portfolio which which includes recent investments in – we don't need very high GDP growth to being able to deliver such a result in an environment where Brazil was growing like 2%. So we think that with our investment philosophy and the opportunity we have in the market, we can continue to generate that return for many, many vintages to come. One important aspect is talking about our private equity business, we were able since the inception of Vinci starting with a little less than a billion and the AUM and multiply it to 22 times, which was a growth of 23% per year to today's 16% AUM, 16, sorry, billion AUM that we have today. And the most recent milestone that we have includes the fundraising of VCP4, which summed between the fund and the co-investment pocket for BNIs, exceeding our 2023 investor day guidance that was provided during our presentation. Also, capital commitments, they were very robust between the two strategies, both VCP allocating 40% of the latest vintage in three deals, 1.2 billion reais, as well as VIR4 completed its investment cycle with nine portfolio companies and investing over 300 million reais in the last two years. And distributions, even in these very challenging markets for distribution on the private equity side globally and, of course, in our region as well. We have total over half a billion in distributions, including sale of relevant portfolio companies from VCP and the VIR strategy, as well as dividends from the portfolio companies. They're growing and also generating returns to us as shareholders. And looking ahead, we are very confident that this strategy is poised for further growth. The first thing we have as a next step is the launch and the fundraising of VIA5. So we are fully committed to work on a fundraising process in the next 18 months to have a fund kind of the same size, around a billion, over a billion reais in size as the next vintage for the strategy. We, in the case of VCP, our idea is to close the investment cycle of VCP4 by early 2027, so we can launch a VCP5 campaign by end of next year start some conversation with prospects LPs and the full campaign in early 2027 another important thing that we have been working and think we're gonna we have planted some seeds and we should see some some results and harvest some results is the region expansion we engage in conversations with some GPs in the region and in Latin America, ex-Brazil, and that will be important as our target is to have a LATEM fund in Fund 5 and have some allocation, ex-Brazil, over the years. And, of course, DPI is something as important as the results these days, and we are, ourselves, myself and Gabriel, as well as the team, fully committed and achieving a dpi greater than one in vcp3 and v4 in the coming quarters so having said that i would like to to invite alessandro to talk about credit thank you so much thank you again it's uh just a brief introduction to our credit business and i will call the presentation
for our heads of these different verticals of credit. So at a glance, our platform of credit has a Latin reach. It's one of the businesses that we already have the presence in Latin America, not just one specific country. We have a multi-strategy approach and institutional team. So the key takeaway is now we are in a new phase of growth, launching regional vehicles with a focus on private credit, access to new markets and LPs. So we are taking advantage of the Compass footprint to enable geographic expansion and abroad fundraising. Coverage across products, so public and private credit. So we are seeing opportunity and avenue for growth in both. On the ground team, of course, we have a very deep presence in each of the countries and across selling engine leveraging compass and VINCI capabilities to really place private credit solutions. So our credit AUM to date has very diversified in terms of breakdown, local currency, high grade and high yield, hard currency, real estate and infrastructure, opportunistic credit solutions, structured credit and confirming, diversified private credit and finally agribusiness we have a regional credit platform with 11.3 billion in local currency high yield 7.3 hard currency high grade circuit and confirming 2.7 billion and adversity diversified private credit 1.6 3.3 in opportunistic capital solutions through SPS products agribusiness almost 1 billion real estate real estate a little bit under one billion and infrastructure 2.6 this go north from 30 billion reais so with that uh i would like to invite my partner marcelo mefano to talk about opportunistic credit solutions thank you all my name is marcelo mefano i'm a partner responsible for opportunity capital solutions it's great to be here so the ideas to share a few updates, especially the things that I think last year we promised and now became a reality.
The first thing is now we have four vintages. So we just had our first closing of Fund 4. It's the first fund that we raised since the acquisition by Vinch in 2022 of SPS. So now we currently manage $3.3 billion among those four vintages with the same 18 professions, same core investment strategies and the same. And the idea, as you may remember, is the first pillar, deliver equity-like returns with debt-like downside protection. So we've been delivering mid-to-high teens in dollars, even though a lot of those investments are marked at cost, with very interesting DPI. So, for example, Fund 2, last week we just reached a close to one-time DPI. So to keep the same investment strategy of using debt instruments to achieve those equity-like returns. So we have three main strategies. On the left, which is the corporate side, is basically we have a big credit market in Brazil, close to 75% GDP, but highly concentrated banking system, close to 80% of the loans held by five banks. So we focus on the niches where the banks don't want to participate for regulatory restrictions, complexity, et cetera. So we do both new loans and buy loans on the secondary market, but on the new loans always with collaterals, asset-based lending. We don't do lend-to-own, but always with uncorrelated assets as collateral. The second strategy, which is legal, we have a huge legal market in Brazil. So we have 20 million new lawsuits every year. And in many cases, people or a company have a lawsuit, they have a cash flow, They're going to receive a certain amount of money in a certain amount of time. And we are able to advance that cash flow given our legal expertise. And following on the right side on the platforms is the idea that buying very small ticket assets, mainly from people, we are able to buy assets with very low or almost zero credit risk at very interesting returns. So, for example, a person has either a collective savings account, which you call consortium or a claim against the federal government, instead of paying 5%, 6%, 7% per month interest on a personal loan, they prefer to sell that asset to us at, let's say, a 2% discount rate. The average ticket is around $5,000, and we'll be investing almost $5 million per month. So imagine the number of transactions we do every month. It's like a machine, a platform that works every day. Going a little bit deeper on the corporate side, as I previously mentioned, five banks control close to 80% of the loans. So basically, they are very strong on the high-grade market, more traditional lending, and we focus on situations where they don't want to participate. And imagine, for example, if you look on the right side, now our base rate is 15%. If the company pays 5%, 10% spread, and let's say it's four times net debida, Almost 100% of debida is just to pay interest. So it's a situation where we're finding a lot of opportunities. In addition, the regulatory environment...
