Earnings Call Transcript - VINP Q2 2022

Operator, Operator

Good afternoon. And welcome to the Vinci Partners’ Second Quarter, 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Anna Castro, Investor Relations Manager. Please go ahead.

Anna Castro, Investor Relations Manager

Thank you, and good afternoon, everyone. Joining today are Alessandro Horta, Chief Executive Officer; Bruno Zaremba, Private Equity Chairman and Head of Investor Relations; and Sergio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and our financial statements for the quarter, which are available on our website at ir.vincipartners.com. I'd like to remind you that today's call may include forward-looking statements, which are uncertain and outside of the firm's control and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our 20-F. We will also refer to some non-GAAP measures, and you'll find reconciliations in the release. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Vinci Partners fund. With that, I'll turn the call over to Alessandro.

Alessandro Horta, CEO

Thank you, Anna. Good afternoon, and thank you all for joining our call. We are extremely pleased to join you all today, as we announce results for the second quarter of 2022. Adjustable distributable earnings totaled BRL61.5 million in the second quarter or BRL1.10 per common share, when adjusted for non-recurring expenses related to our corporate M&A activities incurred in the quarter. This represented an increase of 11% year-over-year. Vinci announced a quarterly dividend of $0.17 on the dollar per common share. Since our IPO, Vinci has distributed $1 per common share to shareholders as dividends, proving our resilience and ability to generate a significant amount of cash flow even in the most challenging macro scenarios. Considering yesterday's closing share price, Vinci Partners' stock is currently trading at close to 6.5% last 12 months dividend yield. The yield is secured by a highly visible management fee-driven revenue stream in a very conservative investment policy on our balance sheet’s cash position. We continue to deliver solid results quarter-after-quarter, thanks to our asset-light and diversified business model, which translates into substantial amounts of cash flow and an attractive dividend distribution to our shareholders. Vinci ended the second quarter with BRL60 billion in assets under management or a BRL62 billion pro forma considering the recently announced transaction with SPS Capital. AUM expansion in the quarter is a result of BRL4.6 billion in total fundraising coming from both private and liquid sides of our business. Fundraising comes from all across our platform, once more reinforcing the diversification of our business. The second quarter is an evident example of the power of this diversification, when we have different pools of capital working together and contributing to our AUM growth. Our IP&S business raised BRL2.4 billion in AUM in the quarter. This AUM came from different parts of capital, a combination of our pension plan products and the activation of new, exclusive mandates. Even during a challenging market for inflows in liquids, our IP&S strategy continues to raise capital, given the differentiated product offering and allocation services Vinci provides. In private markets, we raised BRL2.9 billion in new capital commitments this quarter, with highlights in our private equity and credit strategies. In private equity, we started fundraising for a VCP IV, the fourth vintage of our flagship strategy. The fund was activated as of June 23, with close to a hundred percent of capital commitments raised thus far being re-upped for existing LPs from previous vintages. The first round of commitments represents a key milestone for VCP IV, as it enables us to leverage our extensive pipeline of opportunities and deploy capital into investments that we will build upon, effectively contributing to fundraising efforts in following quarters. All management fees charged for VCP IV’s subsequent closings will redirect to the start of the fund in June 2022. We are working on this fundraising window for VCP IV’s first close until September, and subsequent closes should be held over the next 12 to 18 months. Moving on to our private credit segment, we are pleased to announce the official launch of our newest strategy, Vinci Credit Infra, a fund designed to invest in infrastructure debentures focusing on high-grade credit assets in accordance with superior ESG guidelines. The credit team has achieved the first closing for this product, with a total of BRL900 million raised, primarily from an anchoring local institutional investor. We will now broaden the fundraising effort to other local pools of capital. The launch of Vinci Credit Infra marks a decisive turning point for our private market segment. AUM for our credit strategy has grown by 75% over the last 12 months with the launch of two new products. The first listed vehicle with perpetual capital is VCRI and Vinci Credit Infra, mentioned before. This move increases our product offering in private market opportunities and solidifies our position as the player of choice for alternatives in Brazil. This quarter is particularly important as it marks the starting point of our previously announced BRL10 billion total target fundraising efforts across our private market strategies. On top of fundraising for private equity and credit that have impacted us over the second quarter, Vinci has been selected by BNDES for seed investments of up to BRL500 million each in two of our products across credit and infrastructure. In total, the BNDES news represents up to BRL1 billion in future commitments for these two new strategic initiatives. Particularly for VICC, our new product in infrastructure, BNDES commitment increased visibility on the activation of the fund in the second half of the year. We have been receiving a lot of interest in the VICC, which will be our first climate-driven fund. BNDES's anchored investment has a substantial, positive impact on critical mass for the fund. We are very happy with the continued progress of ESG-driven initiatives at Vinci. BNDES also approved a seed investment for Vinci Credit Infra, which will be activating the fund’s second close, expected to take place in the second half of the year. With all that said, Vinci has begun what we believe to be a very successful fundraising cycle for private market strategies, which will be extremely significant for future FRE results and expansion of the platform across the alternative asset space in Brazil. In addition to fundraising for our closed-end fund, we continue to present substantial long-term opportunities within our platform to raise capital for other strategies. For example, our listed vehicles, including REITs in real estate and listed funds in credit and infrastructure, are all fully invested and have an extensive pipeline for deployment that, as soon as market conditions improve, we should expect funds to return to market with follow-on offerings. The same goes for our liquid strategies, which have remained resilient in terms of outflows over the last 12 months, despite massive redemptions in the local market. According to public data disclosed by ANBIMA, public equities and hedge fund managers have suffered close to BRL100 billion in outflows only during the first half of the year. Our liquid products have proven their resilience over the overall Brazilian tendency for outflows, giving our long-term oriented investor base the value of our proprietary distribution channel’s strong relative performance and direct relationship with investors. We believe the rising interest rate cycle is toward its end and expect to see improvement in local markets as a consequence. As has been the case in prior cycles, we have once more been able to post AUM growth on the back of an interest rate tightening cycle and are now well positioned to capitalize over the coming easing cycle with a broadened mix of products, attractive long-term track records, and a strong brand. Now, let me spend some time on our recently announced transaction with SPS Capital, our first M&A transaction since the IPO. At the end of July, we announced the acquisition of SPS Capital, one of the top independent special situations asset managers in Brazil, with BRL2 billion in assets under management. I would like to highlight four key pillars of this transaction. First, the acquisition of SPS will enhance the platform's reach by adding a new strategy in which we currently do not operate. Second, we are bringing a high-quality team with extensive experience and track record in the special situation sector in Brazil. We believe the combination of SPS's track record in the special situations segment with Vinci’s distribution capabilities presents a grand opportunity for fundraising across new vintages and complementary products. I had already mentioned the breadth of our product offering, and this adds an additional relevant layer to that. In addition, the complementary investment experience the SPS team brings to Vinci will allow us to work collaboratively across our existing private market verticals to develop new investment solutions for our clients. This is especially true for the entire credit segment in Brazil, where the different angle brought by the SPS team will allow us to enhance our penetration in this growing segment of the market. A third highlight of this transaction is the strengthening of our FRE, as we are adding to our platform long-term AUM with extremely attractive fees. The transaction is immediately accretive on a low to mid-single digit DE per share with an increase to high single-digit accretion in the medium term, which should come by investing current undeployed capital as there is a management fee step-up when capital is deployed. There are additional upsides from new products, goodwill amortization, and further fundraising for the current flagship strategy. Finally, we see significant long-term upside coming from performance fees from Vintage Tree and future funds. All vintages are performing well ahead of the benchmark, with the total track record posting above 20% net IRRs. To finalize my remarks, I would like to reinforce the following message: since our IPO, at the beginning of 2021, we have faced a challenging macroeconomic scenario with rising interest rates and inflation. This has been a phenomenal experience not only in Brazil but across the world. We continue to deliver solid results and resilient growth during this period, despite headwinds pointing in the opposite direction, a testimony to the strength of our platform. The Brazilian Central Bank indicated that the rising cycle has come to an end, and we should expect interest rates to reach neutral levels over the next two years. Our inflation projections are trending in the same direction, with a significant reduction in local inflation rates expected still in 2022, implying a good outlook for an easy interest rates cycle to begin in the coming quarters. Brazil has already withdrawn all fiscal stimulus, being ahead of the global curve, and it is experiencing several upward GDP growth revisions unlike the rest of the world. All of that reaffirms our confidence in Vinci’s ability to continue growing, become more diversified, and lead the development of the alternative asset management industry in Brazil. We have several bottom-up drivers with many relevant closed-end funds commencing their fundraising cycles, in addition to the acquisition of another asset allocation platform in SPS. The opportunity ahead of us continues to be significant, with currently a small penetration of the alternative asset management class in the Brazilian market, presenting a major opportunity for us, an opportunity currently explored by a limited number of competitors. The performance we have had since the IPO, having raised or acquired over BRL12 billion of AUM in the last 18 months, solidifies our position as a leader in the ongoing transformation in the local asset management industry. With that, I’ll turn it over to Bruno to go over our financial results.

Bruno Zaremba, Private Equity Chairman and Head of Investor Relations

Thank you, Alessandro. And good afternoon, everyone. Starting on Slide 9, we’ll go through AUM rollforwards for the quarter. Vinci ended the quarter with BRL60 billion in AUM, up 5% year-over-year. During the second quarter, we raised BRL4.6 billion, with BRL2.9 billion coming from our private market strategies. We started fundraising efforts for our VCP IV, as Alessandro previously mentioned, and we will continue to do so for the next 12 to 18 months, with all fees being charged retroactively to the fund start date. This quarter, we had another transaction effect in our AUM in private equity. We absorbed a non-fee-earning vehicle from the structuring of Evino’s investment in our final investment in our third vintage flagship fund VCP III. Lastly, our credit segment launched its new product, Vinci Credit Infra, raising BRL900 million backed by an anchor commitment from a local institutional investor. This fund has also been approved for a BRL500 million commitment from BNDES, which will impact the fund’s second closing expected for the second half of this year. Moving on to the liquid side of the business, Vinci reported a BRL1.7 billion net inflow in the quarter, driven by strong fundraising in our pension plan strategy within IP&S. As we have stated in prior calls, we believe Vinci has a great long-term opportunity to grow in private pension allocation in Brazil, and we will continue to look for ways to capture this opportunity. Our liquid strategies’ AUM remains resilient while navigating through this turbulent market scenario, having witnessed small outflows against what has been a substantial market redemption cycle. However, the negative market performance impacted us differently. Our AUM was affected by a depreciation of BRL1.7 billion in the second quarter, resulting from the mark-to-market effect of liquid funds tied to the Ibovespa index, which dropped almost 20% intra-quarter. So far, the index has recovered about 10%, creating a better environment for local markets, and we should see a positive mark-to-market impact on AUM for liquids in the third quarter if markets continue to perform better. Moving on to Slide 11, we review Vinci's AUM pro forma after the acquisition of SPS Capital. SPS will represent our eighth asset management division and the fifth within our private market segment, consolidating our position as a one-stop-shop for alternative investments in Brazil. This is one more step in our journey of diversification since the inception of Vinci. With SPS, we have addressed the strategic and important gap in our asset management portfolio that we can now grow into synergistic and complementary funds like we historically did in other private market strategies. SPS's AUM of BRL2 billion is distributed across three vintages. Funds have a long-term structure of up to an eight-year lockup and carry attractive private market style fees higher than our current average fee rates. The transaction with SPS is beneficial to Vinci on all fronts, adding a high visibility long-term FRE-oriented product with great margins. Additionally, we see significant upside for PRE in the long term starting with Vintage 3 and subsequent products. Moving on to Slide 13, we review accrued performance fees in our private market funds. Performance fee receivable increased to BRL146.1 million in the second quarter, a 40% increase quarter-over-quarter driven primarily by appreciation in our VCP III strategy that currently totals BRL126 million in performance fees, representing 86% of total fees. Vinci had BRL9 billion at the end of the quarter in performance eligible AUM coming from private market funds still in the investment period that can further contribute to our accrued performance fees as these funds enter their divestment periods. In addition, we expect SPS Capital products to add to the private markets performance potential over time. Turning to Slide 15, we will cover our fee-related revenues. Revenues from management and advisory fees totaled BRL96 million in the quarter, up 6% quarter-over-quarter. Most of the fundraising across private market strategies, along with a significant amount of the capital raised in IP&S, was activated towards the end of the second quarter. This will start to positively impact revenues in a more significant way starting in the third quarter. Total fee-related revenues were down 5% year-over-year as a result of the capital return in FIP Energia PCH, in infrastructure during the first quarter of 2022. Another impactful factor on management fees year-over-year was the local mark-to-market correction, which resulted in over BRL1.7 billion in AUM depreciation in the quarter. Since these are charged over funds NAVs, we had a significant impact over management fee revenues in our liquid funds when we compare to fees charged over the same quarter of last year, with the IBOVESPA trading at around 130,000 points, almost 30% higher than the closing levels of this year's second quarter. In Slide 16, we discuss our operating expenses for the quarter and year-to-date. Total expenses accounted for BRL50.5 million in the quarter, down 6% year-over-year. For year-to-date, total expenses were BRL98.6 million, down 5% year-over-year. Excluding bonus compensation, fixed and variable expenses increased slightly year-over-year due to inflationary pressure on fixed costs, the return of travel expenses to pre-pandemic levels, and the investments currently being made in our Vinci Retirement Service vertical, which we expect to contribute to revenues in 2023. Moving on to Slide 17, we cover our fee-related earnings for the quarter and year-to-date. FRE totaled BRL46.9 million, or BRL0.84 per share in the quarter. Overall trends started to reaccelerate with FRE up 7% quarter-over-quarter, attributed to increases in management and advisory fees. As previously mentioned, we should expect the majority of the impact in management fees from the recent fundraisings to translate into our FRE results starting in the third quarter, as most of the AUM was activated at the end of the second quarter. In addition, we expect contributions from the SPS acquisition to positively impact FRE growth in the last quarter of the year, once the transaction is closed. We continue to expect the transaction to close by the end of the third quarter of 2022. On a year-over-year basis, FRE was down 15% as a result of lower levels of management fee stemming from the previously mentioned capital return of FIP Energia PCH and the depreciation across liquid strategies and previously mentioned cost pressures. FRE was BRL90.7 million, or BRL1.63 year-to-date, down 14% year-over-year, driven by higher levels of advisory fees in the first half of 2021, when the team closed pre-IPO advisory for the B3 listed company Espaço Laser. FRE margin was 49% in the quarter, down 6 percentage points compared to the same period last year, impacted partially by higher fixed costs following the rising inflation rate and previous investments behind Vinci Retirement Service, combined with capital returns and mark-to-market effects on revenues. Our investment in VRS has cost us approximately 200 basis points in FRE margins headwind this quarter, as we develop the team and product line to roll out in 2023. As we explain the platform through organic and inorganic growth over the next quarters, margins should have a positive bias, as fundraises that are in the pipeline carry substantially higher fees than our current average fee. In addition, the consolidation of SPS Capital, which carries a higher FRE margin than our current margins, should also positively impact margins in the coming quarters. Moving on to Slide 18, we review performance-related earnings. PRE was BRL2.4 million in the quarter. Year-to-date, PRE totaled BRL4.6 million, down 74% compared to the same period of the year before, a combination of two factors. In the second quarter of 2021, the platform was positively impacted by extraordinary unrealized performance coming from our IP&A international exclusive mandates. Most of our liquid funds haven't had the ability to charge performance fees with the correction in local markets in 2022, due to their high-watermark clauses. This is affecting the entire industry in Brazil, as high-watermark clauses are common in liquid funds locally. Shifting to Slide 19, we review realized GP investment and financial income. Vinci had BRL25 million in realized GP and financial income this quarter, up 71% on a year-over-year basis, coming from gains in our liquid funds’ portfolio and dividend distributions from companies' proprietary positions in listed REITs. Financial income continues to be an important component of distributable earnings in 2022. As previously discussed, we expect this to remain a relevant trend in coming quarters. In the medium to long term, we should see the financial income component in our distributable earnings gradually migrating toward FRE results as we deploy capital into our private market products and leverage fundraising for these products, along with additional use of capital for selective M&A, such as the case of the acquisition of SPS Capital, which had an initial cash component. In the second quarter, Vinci committed an additional BRL537 million across private market products. This capital will be called over time as funded into new investments. With these more recent commitments, we have reached almost $1 billion of IPO proceeds committed to private market funds, leveraging the capital we raised in the IPO to fund additional AUM growth and FRE expansion. Turning onto Slide 20, we review our adjusted distributable earnings. Adjusted distributable earnings totaled BRL61.1 million or BRL1.10, up 11% on a year-over-year basis, boosted by realized gains from our financial income. Adjusted DE totaled BRL118.8 million, BRL2.30 year-to-date, up 16% compared to the same period last year. Adjusted DE margins posted another quarter of expansion with 49% in the second quarter, an increase of 5.3 percentage points year-over-year. We expect to continue to add shareholder value by expanding the Q2 earnings results over the quarters through a combination of organic growth via fundraisings across our platform and inorganic AUM expansion through acquisitions, such as the transaction with SPS Capital. We still have fully deployed listed products that are set to return to market as soon as market conditions improve and liquid funds that remain resilient in a challenging market but are well-positioned to grow in a more stable environment. In summary, our platform is highly diversified and ready to capture opportunities to enhance long-term value creation for all our stakeholders. Finally, in Slide 21, we display our cash and investment balance. We ended the second quarter with BRL1.4 billion in cash and net investments for BRL24.37 per share, or approximately $5 per share in cash. With that, I'll turn it over to Sergio to go through our segments.

Sergio Passos, CFO

Thank you, Bruno. Turning to our segment highlights. As you can see in Slide 23, our platform remains highly diversified, which we believe should be the main contributor to the resilience of our business. 53% of our FRE individually came from our Private Market strategies, followed by IP&S with 22%, liquid strategies with 21%, and financial advisory contributing with 4%. This same level of diversification is reflected in our segment distributable earnings. Moving on to each of the segments, starting with our Private Market strategies on Slide 24. FIE totaled BRL24.3 million in the quarter, down 16% over the prior period, driven by a combination of the following factors: our one-off advisory fee contribution in real estate during the second quarter of 2021, and the success of capital return, which was BRL1.1 billion in FIP Energia during the first quarter of 2022. The infrastructure vertical is in the process of raising a new strategy, VICC, which we expect should more than compensate for management fee revenues for this recent capital return. Segment distributable earnings were BRL57.3 million year-to-date, an increase of 6% compared to the same period last year, boosted by higher contributions from dividend distributions in our proprietary position across listed REITs totaling around BRL24 billion at the end of the quarter, up 16% year-over-year, driven by strong fundraising in Private Market strategies. As previously discussed, most of these capital raises will activate at the end of the product, so we should start to see a positive impact from management fees across Private Market strategies from the third quarter onward. Moving on to Slide 25, we review results for liquid strategies. Fee-related earnings year-to-date totaled BRL19.9 million, down 14% compared to the same period last year. This decrease was driven by the mark-to-market effect in liquid strategies’ AUM during the first half of 2022, which has a direct impact on management fee revenues. Despite the depreciation effects, our liquid strategies funds have not suffered from significant outflows, meaning the decrease in AUM is mostly from observed market corrections. As there will be visible recoveries in the future, we should also see a positive impact on our liquids’ AUM. Our future and proprietary built investor base has proven once again to be valuable assets to our platform; while the Brazilian asset managing industry experienced strong outflows, our open-ended funds remain resilient with low levels of redemptions. Moving on to our IP&S business on Slide 26. FRE totaled BRL11.5 million in the quarter, up 24% on a quarter-over-quarter basis due to our strong fundraising in pension plan strategy. As we anticipated while discussing PRE results, we had an extraordinary unrealized performance revenue booked in the second quarter of 2020, coming from international separate mandates, which is not core to the second quarter of 2022 and affected our PRE results for IP&S. Segment DE totaled BRL11.9 million in the quarter, down 80% year-over-year, primarily due to high levels of PRE in the second quarter of 2021. Finally, moving on to Slide 27, we cover our results for financial advisory. FIE for financial advisory was BRL3.3 million in the quarter, presenting a 525% increase over the prior period. Revenues for financial advisory carry a certain level of seasonality, and although uncertain to predict, advisory fees should be more modest in the third quarter as we expect to be more active towards the end of the year. Finally, moving on to Slide 28, we review results for the retirement service segment. Fee-related earnings for the quarter were negative BRL1.7 million, and over the year-to-date, FIE represents negative BRL3.1 million. As announced in our last earnings call, we are still in the process of structuring VRS, therefore we are only incurring expenses for the time being. Our expectation is that we'll start to see revenue for this segment in the beginning of 2023. Given the high expected growth nature of this new business vertical, we will continue to show this as a separate segment, allowing investors to keep track of its development. That's it for today's presentation. Once again, we would like to thank you for joining our call. With that, I'd like to open the call for questions.

Operator, Operator

And our first question comes from the line of Ricardo Buchpiguel from BTG. Your question please.

Ricardo Buchpiguel, Analyst

Good afternoon everyone and congratulations on a good set of results. I have two questions. First, can you please talk about what you expect in terms of fundraising and inflows for the second half of the year, both in terms of private market and liquid strategies? And also, we saw BRL7 million loan synergy investment income mainly on realized impact, so I wanted you to understand a little bit more about what drove this impact? Thank you.

Alessandro Horta, CEO

Hey Ricardo, thank you for your question. That's Alessandro, and I'll take the first part of your question and leave Bruno to cover the investment on the unrealized results on the investment side. Talking about the fundraising for the second half of the year, we expect to continue the fundraising for the private market products as Bruno said before during the presentation. We believe that we could likely have another closing for VCP IV during the second half of the year. So, we should have more on that front. We probably have the first closing of VICC, that's the other important product that we are launching, and we will likely have a first closing probably in the second half of the year. Also, on the private credit side, we should have a few new closings and fundraising for our other products. So we are quite optimistic about the prospects on the private market side. On the liquid side, as you saw, we have been able to continue to raise money on the IP&S front, so we have a very strong pipeline for IP&S that we could likely activate new mandates during the second half of the year. We are seeing a more benign environment for equities, and we are not experiencing significant redemptions; starting to see net inflows. Therefore, we believe the prospects for the second half of the year on the equity side will be favorable. So we are quite optimistic about the fundraising activities in the second half on both fronts, given the strong pipeline of new products that will probably see subsequent or first closings during the second half.

Bruno Zaremba, Private Equity Chairman and Head of Investor Relations

Okay. This is Bruno. Thanks for the question. So the investment – unrealized investment income mainly pertains to the GP commitment we made on our listed REITs. There were a few opportunities for capital raising that happened over the last quarters that were attached to transactions and that were leveraged with additional capital from the markets. So we committed capital to those capital raises to anchor those transactions, and since then, the interest rates in Brazil have widened quite substantially. We obviously had the correction in the stock market, and those REITs are trading slightly below the levels that we invested in. So that's the unrealized explanation of the income statement. We obviously expect that over time these prices will return, and we will recover these losses.

Ricardo Buchpiguel, Analyst

Thank you. Very clear.

Operator, Operator

Thank you. And our next question comes from the line of Tito Labarta from Goldman Sachs. Your question please.

Alessandro Horta, CEO

Tito, are you there? Let's ensure we are not hearing you at this point. I think we can go to the next one, operator, as we may have lost Tito.

Operator, Operator

And our next question comes from the line of Kaio Prato from UBS. Your question please.

Kaio Prato, Analyst

Hello everyone. Good evening. Thank you for the opportunity for asking questions. I have two on my side, please. The first one is when could we expect this new fundraising, especially in the private market strategy to contribute positively in terms of net management fees going forward? And the second one, if I may, we saw an increase of almost 14% in core expenses.

Alessandro Horta, CEO

Okay. Thank you for your question. That's Alessandro speaking here. Regarding when we can start to see revenues from new fundraising efforts, we will start already in the third quarter because, for example, some closings regarding VCP IV will start charging from the first closing. Of course, for subsequent closings, we will have this retroactive, but they will be booked in the quarter to come. That will be the case for some other products, including VICC and the credit fund, as they start to invest. We expect to see some impact from this fundraising already in the third quarter. Regarding corporate expenses, it is more seasonal. We are discussing expenses related to travel because as we engage in the fundraising of these products, we are starting to travel more with the teams after the COVID situation to be present with clients. Thus, we are incurring more in travel expenses related to fundraising, but it’s not linked to any significant issues; it's really more seasonal. Of course, we also incorporate the correction of compensation, which took effect in this quarter.

Bruno Zaremba, Private Equity Chairman and Head of Investor Relations

Kaio, just to add to what Alessandro mentioned, the fundraisers that we had this quarter were primarily towards the end of the quarter. Therefore, we had the closing of VCP IV occurring at the very end of the quarter, and the inflow, the strong inflow we observed in IP&S, also occurred during the last month or last half of the quarter. As a result, the impact from these fundraisings, while we saw a maturing impact on AUM at the end of the quarter, we observed quarter-on-quarter acceleration for a year, with growth in high single digits compared to the last quarter. We expect management feedback to be more pronounced in the third quarter. Thank you.

Kaio Prato, Analyst

Okay, great. Thank you very much, Alessandro and Bruno.

Operator, Operator

Thank you. And we have returning to the queue Tito Labarta from Goldman Sachs. Your question, please.

Tito Labarta, Analyst

Hi, trying again, I don’t know if you can hear me now.

Alessandro Horta, CEO

Yes, Tito. We can hear you fine. Thank you.

Tito Labarta, Analyst

Okay. Yes. Sorry. I don’t know what happened before. But yes, thanks for the call, and for taking my question. I was curious about the accrued performance fees, as it seems there's been some increase there in terms of the ability to realize performance fees for the remainder of the year and going forward.

Bruno Zaremba, Private Equity Chairman and Head of Investor Relations

Okay. Tito, the slide we presented on accrued performance fees encompasses our private market fund. So we have two main components. We have VCP III, which is already within the carry parameters, so any increase in NOC going forward will positively impact our expected performance. We have reached full commitment in the fund now, so we have 100% of the capital allocated to portfolio companies. As these companies grow their equity value, we expect to see this line increase. For VCP III specifically, we might start to see a capital return cycle probably between this year and next year, but it will take us a little longer to realize the carry for that particular fund since we need to return 100% of the called capital first. The other components in that slide relate to our assets in the infrastructure funds, transmission funds, which are closer to being realized, and that capital has already been returned. What we have in that fund is only carry. The key is really about monetizing the assets. I believe you recall we had an impact in the fourth quarter of last year, which was the initial half of that fund being realized, and we anticipate that the other asset will be realized in the next several quarters, probably within 2 to 4 quarters. We expect to realize this final asset in the fund, which should positively impact our numbers. Talking about the liquid side, we are somewhat dependent on market performance for the liquid side. As we've indicated in our prepared remarks, most of our funds in the liquid side carry high-water mark clauses. The stock market remains below the highs we saw last year, approximately 20,000 points lower. While we are generating alpha in the funds, we need to reach the high-water mark of the fund to trigger the performance fees. This has several components to it. As we have seen historically, when we look back at 2018 and 2019, the liquid segment can provide a substantial contribution to performance, and we anticipate that can resume once conditions improve in the market, enabling us to charge performance fees again. So, it does depend on market recovery.

Tito Labarta, Analyst

Okay. That’s helpful. Thanks, Bruno.

Operator, Operator

Thank you. And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Alessandro for any further remarks.

Alessandro Horta, CEO

Thank you very much for your continuous support and for attending our call. We are very happy with the results that we achieved during this quarter, and we are optimistic for the rest of the year. So thank you very much, and have a good night.

Operator, Operator

Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.