Patria Investments Limited (PAX) Q1 2022 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Patria First Quarter 2022 Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Josh Wood, Head of Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Patria's first quarter 2022 earnings call. Joining on the call today are our Chief Executive Officer, Alex Saigh; and our Chief Financial Officer, Marco D'Ippolito. Earlier this morning, we issued a press release and earnings presentation detailing our first quarter which you can find posted on our Investor Relations website at ir.patria.com or on Form 6-K filed with the Securities and Exchange Commission. Any forward-looking statements made on this call are uncertain, do not guarantee future performance and undue reliance should not be placed on them. Patria assumes no obligation and does not intend to update any such forward-looking statements. Such statements are based on current management expectations and involve inherent risks, including those discussed in the Risk Factors section of our Form 20-F Annual Report filed in April. Also note that no statements on this call constitute an offer to sell or solicitation of an offer to purchase an interest in any Patria fund. As a foreign private issuer, Patria report financial results using International Financial Reporting Standards or IFRS. As opposed to US GAAP. Additionally, we will report and refer to certain non-GAAP industry measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with IFRS. Reconciliations of these measures to the most comparable measures calculated in accordance with IFRS are included in our earnings presentation. On headline metrics, Patria generated fee related earnings of $32 million and distributable earnings of $35 million, or $0.24 per share for 1Q ‘22. We declared a quarterly dividend of $0.20 per share payable on June 16, to shareholders of record as of June 2. With that, I'll now turn the call over to our Chief Executive Officer, Alex Saigh.

Thank you, Josh. Good morning, everyone. And we hope you are all well. I first started ‘22 very strongly delivering excellent first quarter financial results and significant new inflows to our platform. We are on track for our 2022 FRE revenue guidance, with first quarter fee related earnings of $32 million, which are up 85% compared to the first quarter of 2021. Distributable earnings of nearly $0.24 per share are up 90% compared to the prior year quarter. And thus our dividend to shareholders of $0.20 per share is up 90% as well. Our platform is growing, with total AUM up 96%, totaling approximately $27.5 billion and fee earnings AUM up 136% totaling approximately $19 billion driven by both organic growth and our M&A activity. Just in the first quarter, total AUM is up 16% and fee earning AUM up 6% which is all organic with Moneda already included in the beginning. We're now seeing significant AUM inflows from fundraising, with $1.5 billion raised in the first quarter across a diverse range of products, putting us in a good position to raise more than $4 billion organically this year, including our first closing of more than $800 million for our seventh generation private equity fund, one year ahead of expectations at the time of our IPO. That capital is available for us to deploy immediately. And that fundraising process will continue as we move through 2022 and in early 2023 as we normally keep our flagship funds open for fundraising 12 to 18 months after the first closing. We also listed our first SPAC Patria Latin American Opportunity Acquisition Corp, a $230 million effort, which gives our private equity business a versatile pool of capital to pursue attractive investments that may not fit our flagship fund profile. Our funds continue to perform very well reflected in our net accrued performance fee balance of $503 million, which is up 45%, just from last quarter, and has doubled from one year ago. All of these points illustrate that Patria’s growth trajectory is on track, and the strength of our business model allows us to maintain this momentum. While major geo political events and economic policy developments have undoubtedly changed the world around us in the past few months, Patria continues to march forward, and we believe our business continues to be well positioned for success in this environment. Indeed, the current global landscape clearly makes a favorable differentiation between Patria’s target geography, Latin America, and the rest of the world. Latin American economies are typically net exporters of commodities that are in high demand today, which speaks of increasing trade surpluses and stronger foreign investment inflows. Also, geopolitical risk for the region has been historically very low and uncorrelated with more problematic areas. Furthermore, there were never experiments with zero interest rates or massive quantitative easing programs in the region, which resulted in current lower leverage in public and private sectors compared to advanced nations or even other emerging markets. Lastly, most Latin American economies have lower fiscal deficits, higher domestic interest rates and exchange rates that are still undervalued vis-à-vis other geographies which is quite suitable mix to face turbulent times. This is not simply fortuities that the S&P, Goldman Sachs commodity price index was up 34% in US dollars year-to-date to the end of April, and the MSCI stock market index for Latin America had also risen by 9%. In the same period, the broader global MSCI index was down by 13.5%. Currencies, fixed income, and other assets were showing similar performances. This uncorrelated Latin American performance is by no means an anomaly. On the contrary, it has happened time and again. Against this backdrop, economic activity, and investment returns in Latin America have outpaced most of the rest of the world. Now turning back to Patria, we saw strong progress across all of our major asset class verticals in the first quarter. Both value creation and strong currency appreciation benefited the current portfolio in the quarter. And we are in the early stages of a fundraising cycle that we reload our platform for the next several years. In private equity, we had more than a $1 billion of AUM inflows, driven by the first closing of more than $800 million in our next vintage flagship fund, as well as the SPAC listing, which raised an additional $230 million. While the SPAC will not earn management fees like our funds, it can contribute significantly to our earnings in the future through the sponsor promote that Patria earns in the form of shares in the resulting business combination. The private equity portfolio continues to generate outstanding performance with Fund V and Fund IV generating 32% and 27% net IIR in US dollars, respectively. Fund V now has accrued more than $300 million in net performance fees. We also close the first tranche of our previously announced transaction would come out of FEAUM which anchors our new growth equity strategy. And we have kicked off after process to jointly raise a new growth equity fund. In infrastructure, the current funds continue to deliver performance and some great stories in the portfolio. Infrastructure Fund III is now generating a two times multiple and 13% net IRR in US dollars and has quickly ramped up its net accrued performances from less than $10 million one year ago to $110 million to date. Infrastructure Fund IV is much earlier in its lifecycle. But it's generating a 1.7x multiple and 37% net IRR in US dollars. The team looks to finish committing the funds capital this year. Our investment team continues to evaluate a pipeline of actual projects, totaling more than $25 billion, which, by the way, is more than 10 times the size of our current fund. Most of the AUM in credit and public equities relates to our Moneda products. And we are off to a great start as we continue to integrate and pursue cross- selling synergies. Credit AUM is up 7% in the quarter, driven by both new inflows and solid performance, it was a challenging quarter for credit markets globally, with the increasingly hawkish US Federal Reserve driving the yield curve upwards and the situation in Ukraine contributing to wider credit spreads Despite this backdrop, Moneda’s flagship credit strategies beats their benchmarks during the period. For example, our LATAM high yield strategy outperformed the benchmark by more than 320 basis points in this first quarter, and by more than 850 basis points over the last 12-month. As noted earlier, the Latin American region benefits from having well capitalized corporate issuance, many of them commodity producers, which resonates well with clients in this higher interest rate environment. Public equities AUM increased 18% in the quarter, driven mostly by strong portfolio performance, as we saw the best quarter for Latin American equities since 1991. The combination of higher commodity prices, depreciated currencies, and companies with capital expenditures discipline are producing record free cash flow which is being distributed to respective shareholders. Looking at the some of the sparks, I see a scaling investment platform that is delivering outstanding performance to investors across a diversified range of products and asset classes, with opportunities to expand asset classes, improve our local distribution capabilities, and continue our journey to become a truly comprehensive provider of alternatives investing in the region. With that, I'll now turn it over to Marco D'Ippolito for more details on the results. And I’ll come back with some final thoughts on the year ahead, Marco?

Thank you, Alex. And good morning, everyone. As Alex noted, we are off to a great start in 2022. And the results clearly tell the story. Fee related earnings are $32 million in the 1Q ‘22 are up 85% compared to the 1Q ‘21 and up about 30% compared to last quarter when adjusting to the incentive fees revenue that is seasonal in the fourth quarter. The FRE margin of 58% here in Q1 is a little higher than 2022 guidance. But assuming some incentive fees hitting the top line in Q4, we still expect the full year margin to be in the low to mid-50s range. Management fee revenue of $54.6 million is up 74% compared to 1Q ‘21 and also up about 30% compared to last quarter, reflecting both the full impact of Moneda as well as incremental fees on the $750 million we deployed in our drawdown fund in the second half of 2021. We earned incentive fees on certain Moneda funds as well as our IV Fund, which are measured and realized each year relative to performance against the funds benchmark. And most of which are realized in the fourth quarter. As of March 31, we have accrued approximately $4.2 million in incentive fees at current performance levels. On the cost side, personnel expenses of $15.1 million are up 46% from 1Q ‘21 and up 36% from for 4Q, ‘21. Mostly reflecting the addition of Moneda theme. To put in context of an FRE compensation ratio, we expect personnel expenses in 2022, to ultimately be around 30% of net revenue. Looking below FRE, we generated $4.8 million in net financial income in 1 Q’22. Driven by both realized and unrealized gains, mostly attributable to the balance sheets investment in our infrastructure core fund launched last year. On corporate taxes, our effective rate for Q1 was approximately 5% on pretax distributable earnings. As we noted in the past, we expect this rate to gradually rise to around 10% over the course of ‘22 and ‘23. Our net accrued performance fee again rose to a new record high of $503 million, up significantly from $348 million last quarter, driven by both positive valuation impact and the improvement in the local currency rates during the quarter. The accrual now equates to more than $3.40 per share, and is becoming more diversified each quarter as firms like infrastructure Fund III and Private Equity Fund IV continue to progress alongside Private Equity Fund IV. We believe our current valuation is getting very little credit for this embedded value to be monetized in the future periods. Total AUM of $27.6 billion is up 96% compared to one year ago, driven not just by the addition of Moneda, but also by $1.5 billion of fundraising inflows and more than $3.6 billion of valuation and currency gains. The AUM is up 16% just in the first quarter, with both the resurgence of fundraising activity and the positive moves in the FX rate. Fee earnings AUM of $19 billion is up 136% compared to one year ago, with about 30% of that increase in organic and driven by our strong deployment paid in 2021. Fee earnings AUM was up 6% compared to December 31 as our flagship fund added the net deployment from the second half of 2021. And we saw some nice appreciation in our credit and public equities products. As we look to remainder of the year, you've heard our message that FRE guidance is on track. A 50% increase from the $86 million generated in 2021 equates to just under $130 million for 2022. For perspective annualizing, just the Q1 FRE result of $32 million would imply year-over-year FRE growth of 48%. That does not yet accounted for any FRE growth throughout the year as we deploy capital, nor does it account for any incentive fees, which would be crystallized in Q4. We don't guide on performance related earnings, because it's simply too difficult to predict exit timing. But one thing is clear. Our portfolio continues to generate gains for our investors and accrue a larger inventory of performance fees for shareholders. Private Equity Fund IV and Infrastructure Fund III are more mature and beginning their divestment cycle. And these funds have multiple paths to return capital and satisfy the waterfall threshold necessary to begin realizing the accruals. The timing and pace of divestment activity will determine when we reach that point. And we will have to see how that progresses during the year. To conclude, I'm very pleased with our results for the quarter and our trajectory toward another great year. I will now turn back to Alex for closing thoughts.

Thank you, Marco. At Patria we will build our reputation as trusted long-term investors, and likewise, we have a long-term vision and mindset for what Patria can become in the future. Along the way, we believe there is tremendous value for shareholders as we scale and expand the platform and grow our earnings capacity. We're also excited about the timing in Latin America as we think the region stands out as a particularly attractive investment destination for global investors, given the emerging challenges elsewhere in the world. Our top priority is always investment performance, because that is the core of what we do. And it drives every other element of our business. With that as a constant, we have a few key areas of focus this year. Number one FRE execution. We are in year two as a public company, and our management team is highly focused on delivering our guidance. And as demonstrated by our first quarter results, we are well on track. Number two is fundraising for a growing suite of product. Our team is hard at work raising the remainder of our newest flagship Private Equity Fund, soon to be followed by flagship infrastructure, which will effectively reload our dry powder for several years to come. Number three is divestment progress. Our professionals are searching for great deployment opportunities, as always, but also particularly focus on divestment opportunities in more mature funds, like Private Equity IV, and already for a relatively young fund, like Infrastructure III. Divestment progress, of course, returns capital to our LPs, which helps fundraising efforts and also brings us closer to monetizing the substantial accrued performance fee in those funds. And finally, number four is platform expansion through M&A. Our team continues to evaluate and pursue a number of interesting targets, which could be a great fit for the Patria platform, and enhance product offering geographic expertise and local distribution capability. We will be focused not just on increasing the size of our platform. But joining with partners, we can expand our collective investing expertise, and the ability to generate alpha for our clients. We hope and expect to have more specific news to share on that front. So as we execute on these fronts, we will continue to deliver significant value to our shareholders and finish the year with an even larger platform position to deliver significantly higher distributable earnings in the coming years through both fee related earnings, and performance fee. Thank you all for joining us today. And we are now happy to take questions.

[Operator Instructions] Our first question comes from will come from Marcelo Telles from Credit Suisse.

Hi, good morning, everyone, and congratulations on the very strong results. I had two questions. The first one regarding your fundraising activity. I mean, congrats, you had your first closing on our next generation fee fund. And my question with that regard is how do you see that play out going forward? Is this amount being better that are in line with your expectations? Has this volatile environment affected in any way? Let's say that the timing of your fundraising or maybe not. And it also connotation the nearly $450 million in fundraising in Moneda. And if you could dig a little bit deeper, and understanding I mean how much of that was related to what they should synergies with Patria or if this was really more related to investors searching for like higher yield investors, as you commented little bit in your initial remarks will be great to understand that. And the other question with regards your divestments going forward, I mean, we've seen a big increase in M&A transactions in Brazil and lockdown in this environment. Do you think that facilitates your ability to divest in ’22, can you expect some figure that I know you don't give formal guidance for that. But how should we think about your divestment schedule in this higher M&A environment? Thank you.

Okay, hi, Marcelo. How are you? This is Alex Saigh speaking. Thanks for joining us this morning. How are you? Nice to talk to you over the phone again, and hope to see you in person soon again. So going back to your first question on fundraising for Private Equity VII, as far as timing and expectation I think we're right there where we want to be and very aligned with previous fundraising, for Private Equity VI, V, et cetera going back in time, we normally have a first close, which is approximately 25% to 35% of what we announced that we want to fundraise. In this case, we have on the cover of our perspective $3.5 billion, with an upside case of over $4 billion that goes in our industry here, they call it a hard cap, a little over $4 billion, so no 800 something million over the $3.5 billion. That's the math that the industry now does have a KPI for a first close is right on track. We do normally, as in past, other past fundraising processes, keep the fund in a fundraising mode 12 to 18 months after the first close. So we have all the way to, I'm exaggerating here, but technically speaking all the way to October of next year, which is 18 months for March two fundraise for Private Equity Fund VII. And we are seeing a good market to fundraise. And I think it changed over the end of last year to the beginning of this year, to the better for Latin America as a whole I would say and for Patria’s, we are the leading alternative house in Latin America. If you go back I think, Marcelo, 18 months to 24 months, now how the region was doing on treating COVID. And we had low vaccination programs in the region. And some of the leaders in the region were being questioned by the market if they were going to be fiscally disciplined, et cetera. Now, if you turn that movie that video there for now 24 months, and you get back to today, I think most of these micro questions have been answered positively for the region, as you know. And in addition, we were already seeing a commodity cycle upswing as of the second half of 2021, which helped the region of course, because most countries who are net exporters of commodity, gating to the Ukraine war that nobody, of course wanted to have this war ongoing, but it did benefit the region, because of the low geopolitical risks and the commodities prices also continuing to strengthen. So on the macro side, I think the situation turned to our side. And in addition, when you double click there, as far as Patria is concerned, we have no great funds, prior private equity funds with over 30% net IRR in dollars. And so a lot of re-ups of our current LPs in this first close, we're going to have another close in the second quarter of this year and keep on going. What is the -- some of the backslash on fundraising, which is no good reason, but it's the backslash. I think the industry has been performing extremely well. You probably know that private markets in 2020 and 2021 had record IRR and DPI as a whole in general. So investors are extremely happy with the asset class and I put a note in all of the alternative assets in this big private markets asset class and most of the asset classes within private markets performed extremely well over the last two years. And what happened and it's a good problem to have but it's a problem investors know them in their portfolios are over allocated to private markets because if public markets don't actually go up or come or come down and private markets go up substantially as it did over ‘21 and 2020, the allocation, the percentage of your portfolio allocated to private markets increased. And sometimes it actually went over what theoretically, you had approved by the respective board or pension funds of your sovereign fund, et cetera. So most of our clients are having to go back to their boards or investment committees and approve a higher allocation for private markets, it's a good problem to have. But again, it is the whole process takes a little longer, et cetera. That's the A, B, now we are facing, of course, higher competition, because the whole a lot of other funds also performed very well in 2020 and 2021. So even though the performance of our funds, the highest ever, to be honest, Fund V and Fund VI, other funds also performed well in other parts of the world. So that was going on, when we come into know 2022. And the geopolitical risks that happened, because of the Ukraine war, actually the geopolitical risks increased because of the Ukraine war, and several investors then went back to look at Latin America as a desired place to invest. Because everything that I just said. So I think, again, I started with a conclusion here, and now we're on track with our fundraising base, as you asked, what we wanted to raise in our first close was what we did raise $800 million out of $3.5 billion, which is on the cover of our perspective is exactly the textbook fundraising case. And I'm happy and we already having a second close in the second quarter, and then gave you a double click, I think there's two forces going on here. I think Latin America in general has been on the move to attract attention from investors and but at the same time, the industry performed extremely well over the last few years, which is a good problem to have, but we have tougher competition in the fundraising side. So these are the forces going on here, then you asked about the Moneda, our fundraising synergies with Moneda have not actually kicked in yet, or they did in a general sense. Now having Patria on Moneda together, investors are very, very happy with that combination. But we haven't seen a lot of the Patria long-term institutional investors already convert, because we didn't have a lot of time, as we did actually combined the businesses in late last year, there was not enough time to then officially and technically legally been able to go to on the road together, and already have positive influence in the first quarter. So we're going to see this kick-in as we move into 2022. So I was very impressed to be honest with the amount of money that Moneda raised in the first quarter. And it has to do with performance, of course it has to do with their relationships, and they have great relationships with very, very large, sizable institutional clients all over the world. And of course, inside Chile as well. But performance though, I think attracted a lot the inflows. I mentioned during my speech here that their equity funds perform extremely well in the quarter. And their credit funds, which was not an easy market performed extremely well. And I mentioned the 300 something basis points over the benchmark in the first quarter and over 800 and something basis over a longer period of time before credit Moneda has substantial alpha. Although the investments side, we would definitely have turned the knob to divestments. And on a macro sense, what did we do? Last year, we were pressing the pedal on investments because we had EBITDA that were hurt because of COVID. And so we also have lower multiples, because the whole situation that I just described it's kind of question mark over Latin America that got raised over the latter part of ‘21, beginning of ‘22. And we also have a weaker currency in the region. So we turned them out to investments and we had our record year for investments as you know. As we come into 2022 we turned the knob and the focus to divestments. And that's because again, all these few things that I just mentioned turn the way in favor of divestments, we have stronger local currencies. So the dollar denominated funds do show better returns, we have the COVID kind of uncertainties kind of out of the table, because of the very successful vaccination programs. The economies are growing, again, fiscal discipline from the leaders in the region, from the -- or the main leaders in the region, et cetera favoring the region, as you said, and very active M&A activity 2022. So we're using that general situation that favors divestments too actually then sell several of our companies in the private equity and infrastructure portfolio. So we're very happy with where we are, we know we have to be honest, over 15 companies that we actually have a sale process going on in a portfolio of 35. And 10 of those are very recent investments. So like 15 out of 25 companies that we're actively pursuing a divestment, which is substantial, it's two thirds of the portfolio, because of the situation that I described, and that you alluded to as well, given the active M&A activity in the region, most of that interests are coming. It's coming from strategic global investors that are ready to invest in the region. So we did sell earlier this year, for example, in the private equity portfolio, elderly living company, or the largest elderly living company in the world is a French company that is listed in the Paris Stock Exchange. So we see -- we have no infrastructure assets being sought after by global strategic players. So over 90% of interest that we receive for our portfolio companies, the one that I mentioned, that are in a process of being sold, we see interest from global strategic investors that are willing to invest in the region. I hope, long answer to your question, but I hope address all of your points.

You did address, thank you so much. And they're very detailed answers, and congratulations on the results again, great start of the year.

Our next question will come from the line of Tito Labarta from Goldman Sachs.

Hi, good morning, Alex and Marco. This is Tito from Goldman. Thanks for the call. Also congratulations, solid results for the year. My question is on the deployment, just want to see how you think about the ability to deploy capital in the current market environment, you highlighted you had to deploy on $2 billion over the last 12-month in the quarter, it was only $55 million in mostly in others and not in private equity or infrastructure. So where do you see opportunities to deploy capital, any particular industry just given the current market environment? How do you think about that outlook? Thank you.

So thank you. Nice talking to you again, and thanks for participating in our call. So we still keep the $2 billion kind of guideline for investments this year, as I think we mentioned earlier. It's -- there's several, I think, very interesting opportunities as we move along on the private equity side and agribusiness and healthcare are the two verticals that we see a lot of things that we would love to invest, in addition, logistics and food. So these are the four sectors in this kind of order. Agribusiness, as you know, have been booming in the region and in Brazil specifically because of the strength of the agribusiness in our country. Healthcare, foods and logistics are sectors that are also performing well. You probably know that the economies in the region have been actually beating some of the expectations. As you probably know, even Brazil that I think the general consensus was that the economy was going to retract this year. I think most of the economists that are analyzing the region and specifically Brazil are changing their expectations to a growth scenario, 1% to 2% growth. And we can see that I think our companies perform very well. Most specifically private equity companies that has more to do with the performance of the economy of the infrastructure assets, most of them have contracted already revenues, right? When you participate in a knock and energy auction and whatever, so the private equity side, now we finished the first four months of the year. Revenues of all the companies, if you add all of the companies, they are a little bit above budget, and we have and we had a very aggressive budget given that we were foreseeing and expecting a return from COVID levels. So we are happy to see that, of course, some company is performing better or the company is performing not that aligned with budget, but I think we're like plus 7% to minus 3%, 4% from budget. So no variances, but not a lot of variance not like one company is plus 50% and the other companies minus 50%, it plus 7%, minus 3% to 4% from budget. So and we're very happy to see that number for the month -- four months of 2022. On the infrastructure side, I think energy continues to be a great focus of ours as logistics as well, from the infrastructure side, for example, the toll roads et cetera that we know are very keen to continue to invest. We have a great year in that sense with no great toll roads being auctioned in 2022 or ‘23 that our team is really focusing on that sector to continue to invest. So the $2 billion kind of guidance continues to be our internal base. And you will probably see a pickup in the second quarter and going forward.

Thank you.

And just to complement it, Tito, this is Marco, good morning. The way we allocate our deployment implies that we reserved to get to them get into execution. So there's been a lot of execution of underlying M&A activity going on in the quarter. That doesn't really show up on the bridge. But the M&A teams have been very, very active on the execution of the investment pieces that Alex alluded to.

Great, thank you, Alex and Marco. That's helpful. Yes, I guess that was kind of answers my follow up. Yes, was there anything else specific in a 1Q that you didn't deploy much? Was it just to kind of active in net M&A that you mentioned? Or was there anything else in the quarter that didn't allow you to deploy much capital?

No, it was no real big reason to be honest. I think it was just the negotiations going on. I think that's when we -- our expectations of value versus the salaries and there was, but there was no specific reason to be honest. I think it was normal process that sometimes it just jumps from one quarter to the other. But I don't see any decreasing in the momentum of the investment base.

Our next question comes from the line of Robert Lee from KBW.

Great, thanks. Good morning. Thanks for taking my questions. I apologize if you went over this earlier, I catch to the call a little late. So could you update us on where you are within Infra V since you're pretty much deployed and reserved on Infra IV I believe? And then also any update on your new growth equity strategy that you are launching and receptivity there and expectations there.

Yes, of course. This is Alex again, and thanks for participating in our call. Of course, I think when on the Infra V, I think we are there very much in line with our new schedule, kind of ahead, one year ahead of our schedule that we defined during our IPO process. So we're going to start fundraising next year. We were expecting to start fundraising in ’24, ‘25 and what we're building this momentum and interestingly we're already having a lot of LPs asking us on when the next thing for fund is going to come on to market. There's not a lot or actually very few opportunities for investors to expose themselves to the real assets for the infrastructure sector in Latin America. And we're definitely the number one in that sense. So happy to see it and with no reverse inquiries from our LPs, for Infra V and the way that we're now building the whole case here, we are also actively divesting several of our infrastructure assets. As we mentioned during the call and that actually builds momentum to drive money back to investors, increase our DPI indicator, the returns of the funds are now looking great. So we've now, we have all of this planning phases and several processes going on in order to maximize the whole probability of raising a very strong Infrastructure V, next year. So if everything goes as planned, which is the returns of the fund continues to be strong as they are, as you saw in the first quarter for infrastructure. Number two, we continue to deploy money in very interesting auctions and other infrastructure assets that I think we're very convinced that we will. And number three, we managed to sell the assets that are already on [Indiscernible] investment, I think there's going to be good news on the infrastructure side on the divestment front this year. So all of that builds momentum to and we are receiving already reverse inquiries on our fundraising process running for Fund V. So as we go into market in 2023, we have all of these KPIs already in the right place. Investments, divestments, DPI, and returns all looking good for a great process. So I'm very confident on fundraising calling for V. And I think we are really building great momentum there. And again, we are one of the few options and the best options for investors to get exposed to the very active privatization and concessions sector in general, in Latin America. As far as private equity growth is concerned, our fundraising process year and date look like we're going to have a fundraising this squatter first close for the funds, also looking very strong. As you know, we plan to raise $200 million, which is the number that we actually did announce that was already aligned with the commodity partners. The way that I see it today, I think there's very good chance that we're going to reach the number beat the number again, I think the first close within this quarter looks in line with our expectations and the expectations of our LP and our commodity partners. We already kind of now investing the fund as we speak. So that also pushes fundraising on the good side, because investors can actually manage it to see some of the assets that are already in the funds. We already have three assets in the fund. And we already know signing MOUs for another couple of assets and that also on private equity growth, not for private equity buyout, or infrastructure development, that doesn't work that way. But for fundraising for private equity growth already having some assets in the fund helps the fundraising process. So we already have the assets in the fund, and actually going to have another two as we fundraise in the next quarter. So I'm confident there's well of course $200 million, given the size of things within Patria, it's important on this on a strategic side and because of the performance fee that actually this fund generates not, doesn't move much the needle on the management fees on the $200 million itself. But I think the whole process of having a product that targets that part of the lifecycle of the company, the early part of the lifecycle of a company, and the potential performance fee that such funds do realize are very important for us.

Thank you. And I'm not showing any further questions in the queue. I'd like to turn call back over to Alex Saigh for any closing remarks.

No, thank you very much, everyone. And thanks, Rob, also for your questions there from KBW. Thanks a lot for all of your participation there and questions, I think, we are, of course, more than available after the call to keep on taking questions. Hope to see you guys in person very soon. Hope all of you are well. Your families are well. And thanks Josh and Marco as well for the call. And if Josh and Marco doesn't have anything else to add here, I think we are. That's it, Josh. Yes, I think so. Thank you very much, guys. Have a good day. Be well, be safe.

Thank you, everyone.

Thank you. Have a good day.

This includes today's conference call. You may now disconnect. Everyone have a great day.