Thank you for standing by and welcome to the Patria Investments Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference call is being recorded. I'd now like to turn the conference over to your host for today, Josh Wood, Head of Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Patria's second quarter 2022 earnings call. Joining today are 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 second 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 latest Form 20-F Annual Report. 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 IFRS measures calculated in accordance with IFRS are included in our earnings presentation. On headline metrics, Patria generated fee related earnings of $31.1 million and distributable earnings of $29.2 million, or $0.20 per share for second quarter of 2022. We declared a quarterly dividend of $0.1609 per share payable on September 16, to shareholders of record as of September 02. With that, I'll now turn the call over to our Chief Executive Officer, Alex Saigh. Alex?

Thank you, Josh. Good morning, everyone and we appreciate you joining us this morning. In the second quarter, Patria continued to execute on both 2022 financial targets as well as long-term strategic growth plan despite the difficult backdrop across global financial markets. We remain on track for our 2022 full year fee-related earnings guidance of 50% year-over-year growth, having delivered $63 million of fee-related earnings in the first half of the year. After generating $0.44 of distributable earnings per share and cumulative dividends of $0.37 per share through the second quarter, we are delivering an analyzed yield of more than 5% in 2022, based on recent share price, We had $764 million of new capital inflows across the platform, putting us over $2.2 billion for the first half and more than halfway of our $4 billion fundraising target for the year across a diverse range of products in each of our verticals. We deployed about $650 million in our draw down funds to drive continued fee revenue growth. Our total assets under management and fee earning AUM are up 66% and 126% respectively, compared to one year ago, illustrating the expansion and diversification of our platform in the short time, since our IPO. We're also focused on building our base of permanent capital, having grown to more than $1 billion or 6% of total fee earning AUM in a priority of new initiatives in real estate and infrastructure with a significant opportunity to scale and consolidate. Over 20% of new capital coming into the platform so far this year is permanent GAAP. Turning now to highlights across our strategies. Our biggest story of the quarter was the announcement of our acquisition of VBI to anchor our real estate platform in Brazil and we recently closed on the first trench of…

Thank you, Alex and good morning, everyone. Patria's financial results for the second quarter reflect our continued track toward our 2022 guidance. Fee-related earnings were $31.1 million in second quarter '22, up 76% compared to second quarter '21, driven by organic growth in private equity and infrastructure as well as the addition of Moneda. On a year-to-date basis, fee-related earnings of $52.9 million were similarly up 80% from the prior year-to-date period. The FRE margin was 56% in second quarter '22 and the similar 57% year-to-date, tracking in line or slightly above our guidance for the year. Driving the FRE growth fee revenues of $55.6 million in the second quarter '22 are up 73% from second quarter '21 and year-to-date, fee revenues of $110.6 million are up 76% from last year. On a year-to-date basis, about 25% of that 76% growth is organic and driven by deployment of $2.5 billion from the flagship funds in 2021 and the remaining 51% driven by the acquisition of Moneda. Year-to-date accrued incentive fees, which are accrued in certain credit and public equity funds and mostly realized at year end stood at $4.9 million at June 30 lightly up from $4.2 million at March 31 due to benchmark outperformance despite the challenging quarter. Personal expenses were $15.7 million in second quarter '22, up 55% from second quarter '21 and $30.8 million year to date, up 51% from the prior year-to-date period driven mostly by the addition of Moneda's team. On an organic basis, year-to-date compensation increased by just 4% compared to the prior year to date period. Administrative expenses were $7.4 million in the second quarter '22, up from $3.8 million in the second quarter '21 and $13.9 million year-to-date up from $6.2 million in the prior year to date period. While some of…

[Operator instructions] Our first question comes from Craig Siegenthaler of Bank of America. Your line is open.

We wanted to get an update on fundraising. The denominator effect and a crowded private equity backdrop. They are creating some challenges in the US, but partly, I believe is competing within a different sleeve of capital. And in your vertical emerging market private dollars, and now more restricted to two of the biggest economies Russia and China. So what type of impact is all this having on Patria? Just given that Patria as the largest private markets manager in Brazil and LATAM.

Hi Greg. This is Alex here and thanks for joining the call and again thanks for your patience here. Well, we continue to be very positive on fundraising. That's a general message here. And we have so many processes going on specifically on I go from the macro and then I'll talk of, kind of product by product asset class by asset class. On the macro side; yes, I think you're correct. What we see from investors is number one as it comes to emerging markets, Latin America is in advantage kind of phase right now, given the low geopolitical risks and the high geopolitical risks, of course, in Europe, Eastern Europe, more specifically, and the more authoritarian regime that we are now seeing in China. So that puts actually a region of the world in highlighted by investors. In addition, does the nearshoring thesis that favors the region? Also in addition, I think the Latin America was already increasing its market share of the overall allocations within now emerge within the emerging markets. And if you see the growth of the economies is pretty positive compared to other no developed economies. So all, all in all I think, and last, I think also, I think some the, our central banks in the region have anticipated a bit the monetary tightening. Now we're seeing that, you know, Mo most of the central banks in the regions are already predicting a, a loosening up of the monetary policies. And probably most of discard economy will continue even to grow faster in predicting a, a loosening up of the monetary policies. And probably most of discard economy will continue even to grow faster in 23 onwards. So in general, that's exactly, what's not on a macro, that's exactly what he said. I…

Alex, if I can just ask one, I'm sorry, if I could just, if I can just ask one follow up relating to fund seven private equity fund seven it looks like you raised about 900 million to date. I was wondering if you could help us in terms of timeline for the, the next set of closes and the final close and your expectations on how big that fund will be relative to the 2.7 billion for private equity fund sex. Yes we are about now. We, were going to have a second close, I think late, late July, the second quarter, but we, we were running these the processes that I just mentioned here, the with two big Brazilian ultra-high nets and high net distributors would now and again, given where we were in the process. So we went into August to grab, they were, and it's good news, cause they were pretty confident that they could raise, more money. So actually we're going to have a closing that we are expecting in the late second quarter, in the third quarter as we speak in August September and plus institutional money coming in in this we in this closing, so we, we got some of the institutional money that we already had in the second quarter that with the SubD signed, we know we're putting everything in this one quarter. Administratively is easier to have just one, one closing on the legal side and legal cost. So we just waited a little bit with all these SubD docs that we had signed in the second quarter to join this effort that I just mentioned, that we were doing, that we are doing it in Brazil with auto high net worth individuals. As far as expectations, I think we our fund does say in the cover $3.5 billion, and I think we're confident that we'll get there. And which is known a larger than the $2.7 billion and normally how these funds goes. I don't think, I can say this, but whatever it's I have to say that it's 3.5 billion, but normally no looking into the past. I think I can say that looking into the past, normally our, our, our funds did not only reach, but exceed the cover. So I think that's what I can say up to now. But the cover is C 0.5. Greg,

Thank you. Our next question comes from Marcelo Telles of Credit Suisse. Your line is open

Thank thanks for the opportunity. My question is with regards to the to the VBI acquisition you know, you mentioned, you know, there's very opportunities to, to leverage on that structure. So I was wondering, you know, this is a $1 billion you know asset business how do you see that scaling up, over time and what, you know, how big you think that business can be. And given that the high rate environment that we are, you know, the Brazil is going through right now do you think this, it can you know, be a, you know, an obstacle for you to, you know, to scale that, you know, in a, in a timely manner?

No. Thank you. I think it's first of all, hi Marcelo and nice to see you. And as, you know, hope we're going to see each in person next week. So hopeful looking forward to that and thank you for seeing me next week in person. Well in, I think taking it one step back, the whole permanent capital business for us is very important. It's already 6% of our fee AUM as mentioned by Marco here, and we were basically zero, if you go two years ago. And at the time of the IPO, we were one or 2%. So we've been growing that business it's and has been growing in general as mentioned. So have it grow more than the, the other asset classes to become? Today's 6% of the, of the total EUM, not only real estate, but of we, we also launched the infrastructure investment trusts that also add to the, to the permanent capital 6% of the specifically with VBI. Now, we're pretty, pretty and very positive about it because within the capital structures of our real estate listed assets in Brazil, you have several different themes and strategies. And one of them have been growing very significantly is the death related thesis or the CS, the crease as we call them in Brazil. And VBI did the lounge. It was in the second quarter already a CRI fund and they already had one, but they did a follow one for the fund of the C fund, which is no real estate debt also under the permanent capital structure and, and did very well and did raise good amount of money and they want to raise more. So if the high interest rates do affect corporate offices kind of strategy, you have the know real…

Thank you. Our next question comes from your [indiscernible] of JPMorgan. Your line is open.

Good morning, Alex, Marco, Josh, thank you for presenting the, the earnings. Our question here for the quarter is actually on specifically on the credit performance on the credit vertical we saw an outflow of close to $350 million in the quarter in the, in the segment to us was a little bit surprising. We would imagine that this would be a fourth code that would perform better under the environment we are. But when we add up hearing inflows and outflows, we actually had a, a net outflow in the quarter. So the question is just to, to explain a little bit what happened if this is recurring or not. And, and what was the driver behind this outlook? Thank you.

Well, on the numbers specifically, do you want on the number specific, do you want to respond to that Marco on the withdraw I can, and then I can talk more general about it.

Yes, absolutely. So what we see specifically on page you, our presentation is a year to date inflows of $392, and now for $497, let's remember that on the outflows, you have to add to that also the divestment and the dividend payment. And so this is not only no reduction of AUM resulting from withdrawals, what we see here what I can mention about the credit business specifically in Chile that has been centered over related to the local investors. We've also seen strong demand from new funds. So we we've seen some investors moving around from one fund to another and that it very well explained on the line of inflow here today. You see that we have about $2.2 billion of inflows in AUM over the year and that's that just is a sign of the capacity of the platform to leverage on the fundraising of this vertical Alex.

Yeah. And I would just, this is Josh just add of the $345 outflows in the quarter de Marco's point on dividends being included in that about $61 million of that was dividends just to put a number to it for you.

Yeah, I think that my point was exactly that I think investors do shift some time of strategy. So we had a, a very, in my view, positive cash being invested into the funds of $2.2 billion that's a very, very strong number. Sometimes you see investors coming outta one fund and joining the other fund, and because they see a, a better moment that they like specific strategy of sub strategy of the credit product in general. So they probably, they saw already a what happened with the dollar denominated securities in LA. Now they see now the pickup of interest rates in local Chile, and they want to shift to a local Chilean credit funds. So, but I think you have to look more of the general picture when you add all of these numbers. There's a very positive net inflow of, of cash into the Mon funds. So again be careful not to not to pick up, I think, one strategy specifically, and if you have the money moving to other strategies, but the net general inflows were, were positive for the quarter in the semester. Thank you.

[Operator instructions] Our next question comes from William Barnard [ph]. Your line is open,

Thanks for hosting the call. So my question is a follow up actually of Craig's question regarding demand in the current environment. So among your range of products which products do you see a higher demand now? Is it mostly the infrastructure products, as you said before, and then more broadly, how do you see the evolution of your total AUM for the next quarters? Thank you.

Yeah, I think more in, more in general now for no inflation protected and credit products are more in Vogue in, in, in general. However, I think that things are shifting over the last quarter to equities as PayPals investors are beginning to realize that we might have, hit the bottom as far as know, these public equities valuations are concerned. But yes, if you look into our manual of products I think we, we continue raising continue to be pause about our private equity now for seven our growth equity, private equity growth. We know we're having a first close as we speak in the month of now, August 30 September. So it continues to do well. It continues to, and it continues to show very positive sign that we will hit. Now the numbers that I mentioned answering Craig's question of the $3.5 billion cover for private equity fund seven we're raising $200 million and we know we should have a first close, which is already around 40% of that, which is tax case for our growth fund as we speak. So that on the equity side, on the infrastructure side, even more so we're getting reverse inquiries. When are we going to know, come back to the market? And again, we were thinking about raising or beginning to raise infrastructure fund five, which is one of our flagship funds in September of 2023. We're looking into have a first close within 2022, late 20, 22. So it's like kind of a year in advance because inflation hedge, the infrastructure products are now really in demand by investors. And with now with the major investors, the main investors of our, that support us in our infrastructure efforts we talk to them and again, why don't we then with…

Thank you. Our next question comes from Tito Labarta of Goldman Sachs. Your line is open.

For taking my question. My question is around net financial results, which were a negative $0.8 million this quarter especially comparing to last quarter. One was a PO positive 4.8. You mentioned during the call that this was related to unrealized impact from currency and in the balance sheet, but could you give us a little bit more color around why that is? And is there any, anything else that impacts this line? And a second question, if I may is a more broader one around dive investments and equity exit strategies what are you thinking in terms of dive investments for the year do you think that the macro environment and Latin America impacts dive investments at all? If you could talk a little bit about that. That would be great. Thank you.

And then, hi. Yeah, I'm sorry, Marco. That's why I was going to say, I was just going to say hi trees, and I think Marco, if you want to answer the first part of the question, I'll take the second. Thank you.

Sure. Hi. So when you look at the net financial income, what you're going to see there is unrealized results from our investment to clear, closer attention to our presentation on page 22, you see the, the there's a line of investment that is about $24 million for the, the number is basically a function of the currency impact over our investments, and also the valuation impact on our investments. What are these investments? These are mostly GP commitment and the minority stake in our recent acquisitions. So we, at the time of the IPO, this number was very small and it's not meant to be very significant into our financials.

Okay. I can talk about investments and we're pretty fast with the dive. We have been as mentioned, I think with a lot of our companies, the portfolio companies actually for sale, we did sell a couple of them already during the quarter from, from our infrastructure efforts and from our private efforts. And we have been receiving no non-binding offers at valuations that we expected. And now we are receiving binding offers that evaluation that we expected, even with a plus a slightly notch up here VIG where we expected or our marks. So everything going in my view was planned. I think during the, the, the second half of the year, I think we will continue to be able to deliver on that. And that actually is the, the, the, the main engine, the main driver to push performance fees and the way that we see it, I think private, active fund five continues to, to do well on that front, on the divestment front, no building in D DPI or, or disable paid in capital to get into the performance C zone. And I think we see the same thing for infrastructure front three, which again, to our surprise we're not expecting to get in close to the performance fee zone this year. We were expecting more to get into the performance fee zone in 23, 24, but because of some investments that we are pursuing in our infrastructure fund three we see that we are moving in that direction. I don't see actually generating a performance fee from infrastructure from three this year. There's a chance that we can, but we were not expecting that. So it's we were expecting in 23, 20 23, 20 24, but we are anticipating some of those investments. And again,…

Thank you. I'm showing no further questions at this time. I'll turn the call back over to Alex Saigh, CEO for any closing remarks.

All right. Thank you very much for your patience and thanks for participating in our, in our second quarter, that 2022 earnings call again in our view very, very positive we are now very much in line to deliver the guidance for fee related earnings 50% growth versus last year. We are in line to deliver our $4 billion organic growth in a, in, in fundraising. We also, I in line with what we expect to do in inorganic growth or M&As with the acquisition of F VBI already public and already announced and looking at the, you know, a good pipeline for acquisitions in the second half of the year. In addition, I think I see that we are entering in a good divestment cycle and base, I think with the, everything that I just mentioned here answering question so very positive about that as well, that actually then pushes us to the performance fee zone generating performance fee related earnings. So fee related earnings, right on track to hit the 50% growth, good chances on the, on the performance fee related earnings. If we do these investments, we move into the performance fee zone. Of course, as you guys know it know it might slip a month here a month there, quarter here, quarter there, but the general direction and the, and the prices and valuations that we are getting from the non-binding and the binding process are pretty much in line with what we expect with a notch up. And if we move into that direction, we get into performance fee zone. Even though, again, it might step a quarter here, but the direction is the right direction. We didn't, we didn't get any negative impact on our valuations or processes that we are divesting. So that actually then pushes us to a very strong distributable earnings growth for the year. And hopefully now, again, as we, as we move into 2022, we'll give you more good news on that front. I'm already know, looking into given that our business so predictable looking also already into 2023. So thank you very much for participating and I hope to see you guys in person over the next couple of months in different meetings and conferences and with that, I'll close the call here, if there's no other further comments from Marco or Josh. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.