Good day, and thank you for standing by. Welcome to the Patria Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions]. Please be advised that, today's conference is being recorded. I would now like to hand the conference call over to your first speaker for today, Rob Lee, Head of Shareholder Relations. Rob, please go ahead.

Thank you. Good morning, everyone, and welcome to Patria's second quarter 2024 earnings call. Speaking today on the call are our Chief Executive Officer, Alex Saigh; and our Chief Financial Officer, Ana Russo; and our Chief Economist, Luis Fernando Lopes for the Q&A session. This morning, we issued a press release and earnings presentation detailing our results for the quarter, which you can find posted on the Investor Relations section of our website or on Form 6-K filed with the Securities and Exchange Commission. This call is being webcast, and a replay will be available. Before we begin, I'd like to remind everyone that today's call may include forward-looking statements, which 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 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 a solicitation of an offer to purchase an interest in any Patria fund. As a foreign private issuer, Patria reports financial results using International Financial Reporting Standards, or IFRS, as opposed to US GAAP. Additionally, we would like to remind everyone that we will refer to certain non-IFRS measures, which we believe are relevant in assessing the financial performance of the business but 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 are included in our earnings presentation. Now, I will turn the call over to Alex. Alex?

Thank you, Rob, and good morning, everyone. The second quarter of 2024 was a very busy quarter for Patria, as we continue to make solid progress towards our near and long-term goals. This morning, we are also excited to announce our first share repurchase program and an update to our capital management strategy, as well as the acquisition of the 50% of VBI we did not previously own. But first, let me summarize our second quarter results. Management fees reached over $70 million, up 14% year-over-year and 12% sequentially, while fee-related earnings reached $39.5 million, representing year-over-year and sequential growth of 17% and 13%, respectively. Expenses continue to be tightly managed, and we were able to deliver a 56% FRE margin despite the onboarding of our acquisition of the private equity solutions business of abrdn, which, we have previously indicated, has a lower margin. We expect that we can realize some synergies from our acquisition and our full year FRE margin for 2024 to be in the 56% to 58% range, trending back towards 58% to 60% in 2025, as we realize expense synergies and the full impact of our fee revenue growth flows through the P&L. Moving on, we delivered close to $34 million of distributable earnings or $0.22 per share compared to $0.21 in the prior quarter. Next, focusing on AUM. We finished the quarter with more than $40 billion, a robust 43% increase compared to the second quarter 2023 and 26% versus first quarter 2024. Our AUM growth was driven both organically and inorganically by fundraising that remained strong with $1.3 billion of organic inflows in the quarter and approximately $5 billion over the last 12 months. We continue to see a clear path to achieving our previously communicated $5 billion organic fundraising target for the full…

Thank you, Alex and good morning, everyone. It has indeed been a very busy few months since we close our -- on several acquisitions announced the update to our capital management strategy and new share repurchase program, and continue to invest in and build out our expanded product suite and distribution capabilities. Overall, we remain confident in our growth and FRE outlook over the balance of the year and into 2025. Let's now review the results for the second quarter, and work our way down the P&L. Starting the total fee revenues, the $71 million we reported was a 20% increase over Q2 2023 and 17% over Q1 2024. The sequential increase was mainly driven by two months of revenues from the abrdn acquisition, which closed on April 26 as well as fees from net new flows into credit and real estate fee earnings AUM all partially offset by a reduction in public equities, due to outflows and negative asset returns in the quarter as well as negative FX impact. Higher year-over-year fee revenues also benefit from the November 2023 closing of our transaction with Bancolombia, new commitments, fundraisings and deployments in various vehicles including Private Equity Fund VII among other things. We expect fee revenues to continue to benefit over the coming quarters and into 2025, as well we fully onboard our recent acquisitions. As a reminder, we closed on the abrdn acquisition at the end of April and $500 million of fee-earning AUM of Credit Suisse REITs were transferred at the end of June, with the remaining $1.5 billion transferred by the end of July. We also closed on the Nexus Capital acquisitions, with over $700 million of fee AUM in July. And finally, we closed on the acquisition on the remaining 50% of VBI that we did…

Thank you, Ana. So to sum it, up there are several key takeaways from the quarter. First, we remain very comfortable with our fundraising FRE and FRE per share targets for 2024 and into 2025 and we expect to see accelerating DE growth in the second half of 2024 and into the next year as the full weight of our fee-earning AUM growth flows through and we move past the short-term headwinds resulting from M&A-related financing costs. We believe we have a long runway to grow fundraising, generate organic growth and grow FRE and DE as it remains early days in executing on the platforms we have added through our M&A strategy and the investments we have made in new products and distribution resources. We see multiple early proof points that this strategy is starting to pay off. And lastly, we are focused on maximizing returns to shareholders and believe redirecting a portion of our capital generation to share repurchase is a very attractive use of our capital. This demonstrates that we will be flexible and opportunistic as we look to use our capital to drive profitable FRE and DE growth, while maintaining a conservative balance sheet. Overall, we are very proud of the differentiated and diversified investment platform we have built both organically and inorganically, making us the largest alternative asset management platform in the region in terms of direct assets under management revenues and fee-related earnings. We remain very excited generating our future growth prospects and look forward to providing a more complete update at our next Investor Day scheduled for December 9. We thank you for your time and we are now happy to take your questions.

Thank you. [Operator Instructions] Our first question comes from Tito Labarta with Goldman Sachs. Tito, go ahead.

Hi, good morning. Thank you for the call and taking my questions, Alex and Ana. A couple of questions. I guess first on the deployment of the $200 million in the quarter. Can you give us some color on how you – how that should impact the fees going forward from here? And which funds that is expected to go in? And then the second question on – if you look at the real estate management fee at least the implied fee was down a bit in the quarter. Can you give any color on that? Why that was a little bit lower?

Tito this is Alex and the team here. Thank you very much for participating in the call. Thanks for your questions. Most of the investments were from our infrastructure fee-related earnings, right [indiscernible] earnings infrastructure and the private equity funds. So Private Equity Fund V, a little bit VI and mostly VII, are continuing to deploy capital and infrastructure – now Infrastructure V is already committing capital as well. Just reminding here the Private Equity VII already started deploying capital. We did acquire a food retailer in Brazil and looking to grow into the sector as an example. An example on the infrastructure side we did win the concession of a toll road in the state of Parana. We also committed to other investments in Private – in the Infrastructure Fund V. On the real estate side I think we did divest a couple of assets from our legacy real estate funds. We have two – basically two families of funds. Now private equity real estate which have a drawdown nature to it, where we raise capital and then we call capital and we divest as a regular private active fund but of course focused on real estate assets. And this is exactly what happened here. We sold – among the assets that we sold I'll name one as an example, which is a self-storage business that we did hold in Brazil. This fund did hold in Brazil as an example. And the second family of funds that we have in real estate are permanent capital nature funds where we then raise money and it increases the NAV and we don't have to actually give that money back. So the divestments that you see there in that slide is related to the private equity real estate funds, which are now divesting assets and namely one of the assets or a significant asset that was divested over this quarter was our self-storage business in Brazil. I hope I answered your questions there.

Yes, perfect clear. Thank you, Alex.

Thank you, And our next question will come from Guilherme Grespan from JPMorgan. Your line is open.

Good morning, Alex and team. Thank you for the presentation and questions. Two on our side. The first one is just a little bit on fundraising again Alex just to confirm. You mentioned I think you expect some additional closings in the Private Equity VII and the infra. Just remind us a little bit the timetable, like you have this fundraising open then I think the expectations were $2 billion to $2.5 billion for each and with potential closes come in the second half. And then remember for how long does it remain open to fundraising? Should we see the closing of this fundraising by when? And then – and if you could also touch a little bit on the Fund V I think was the first time I heard you were planning to launch opportunity for Fund V. And then the second question is just on GPMS. I saw – we saw this quarter a little outflow on the vertical I think was $800 million. I just want to confirm what exactly was that and if it's related to Aberdeen or not.

Hi, Guilherme. Thanks for your question. Again, thanks for participating also in the call. As we -- well, going back to the fundraising question then I'll talk about the Fund V. Well, fundraising question, we see our fundraising organic -- I'm talking about organic fundraising. Now organic fundraising really speed up. And I'm excited with what I see and the prospects with what I'm seeing for a couple of reasons. First, we have, of course, more products in our menu to fundraise. I know you saw that we did, of course, launch new funds and I'll talk about some of those initiatives and also, with the acquisitions that we did over the last years, we added also new products to our menu. Specifically, about Private Equity Fund VII and Infrastructure Fund V. Private Equity Fund VII has raised around $1.5 billion. As of now, we want to continue to raise until the end of the year another $500 million target to reach the $2 billion that I mentioned. We see a pipeline of investors in due diligence, so we can actually read of course the funnel, right, the funnel -- the fundraising funnel. Most of that will come from Latin American investors. We see interest -- additional interest from Brazilian investors, Colombian investors and some Peruvian and some Chilean but mostly Brazilians and Colombians. And of course, also some investments or some interest coming from ex LatAm investors, some in Europe, some in the US, and the significant also portion coming from Asia. So if you add all that, it adds another $500 million. Everything is, of course, rounded numbers, approximate numbers that will push then Private Equity Fund VII to $2 billion, which is the target number that I mentioned during my speech here. On Infrastructure Fund V, we…

No. That's it Alex. Thank you for the very detail answer here. Thank you so much.

Operator, next question.

Thank you. And our next question will come from Ricardo Buchpiguel from BTG Pactual. Your line is open.

Good morning guys. And thank you for the opportunity of making question. I have just one here on my side. We have a lot of acquisitions closing recently. And with part of your cash locked with the SPAC deal that you have, and also the announcement of the repurchase program, would it be necessary for Patria to look for new sources of funding in the coming quarters? And does it make sense for the company to keep its appetite of pursuing more M&As given this sort of capital constraint? Thank you.

Yeah. I think the one of the reasons actually that we did of course review our whole capital management strategy here was exactly everything that you mentioned here Ricardo. We are extremely comfortable of the way that we see our cash flow over the next six months, over the 18 months. We -- as you know, we are a very healthy cash generation business very light balance sheets. We're a service provider. We don't do a lot of investments. We do -- we see a couple of funds, but that very insignificant versus the whole scheme of things. So as of today, you'll see the debt level that Ana mentioned $175 million or $176 million at the end of the second quarter, because most of these acquisitions that you mentioned the carve-outs of the abrdn business and the acquisition of the Brazilian real estate funds from Credit Suisse, they landed in the second quarter which is good from one side, because we're already integrating these businesses. We already have all of the revenues. But it does of course make us have to commit to more cash outflows in the second quarter. As we saw, conservatively as we projected this, we saw these businesses being incorporated in Patria over the second quarter. And we had good news, because the shareholders' meetings of all of the Credit Suisse funds went very well, faster than we expected. They voted in favor of transferring the funds to Patria, also the regulatory approvals that we needed in the United Kingdom went faster than we expected. And we managed to then close these two deals in the second quarter. But as we move into the second half of the year, the beginning of the third quarter we have a lot of cash coming in where we…

Thank you very much, guys.

Thank you. [Operator Instructions] And our next question will come from Pedro Leduc from Itau BBA. Your line is open.

Thank you guys for taking the question. A few here. First on the personnel expenses that we saw it going up with the M&A integration, obviously, wondering if it's here or on some other regions where we could start seeing synergies in the coming quarters that? And in the conciliation of IFRS to non-GAAP measures, we saw a lot of expenses flowing through it here and some are M&A related, some fees, tax. Wondering if we should see those fading out into the next quarter’s already so maybe a closer relation between the earnings IFRS and the non-GAAP. Thank you.

Hi, Pedro. Thanks for your question here. It's Alex again. And Ana is here also with Marcelo to help me answer the questions. But yes personnel went up because of the integration. These businesses that we did incorporate in the second quarter are businesses with lower margins at the first month. We mentioned a couple of earnings calls ago that GPMS runs a 30% FRE margin business. And you know that we run an upper 50% level FRE margin business. And the same with the real estate business from Credit Suisse/VBI that will be incorporated in the second half of 2024. And as we work into the synergies, you will see FRE margins go up. I think this year, it will become -- it will land in the 56%, 58% level FRE margin. And we see it going up, trending up in 2025 back to the 58% 60% level. And how do we do that? Through the integrations. We went already through that process with the acquisition of Moneda. Late 2021, we did sign the acquisition of Moneda. Moneda was running a 40%, approximately 40% FRE business. We were running a 60% FRE business. In 2022, you saw that margin also trending up. End of 2022, we were back to the 60% level -- close to 60% level. So by integrating expenses -- and our main expenses now are personnel which is 80% -- 70% 80% of our expenses and then rent and travel whatever is not a significant portion. So, it's personnel. And that's what we're going to do as we move on into this year and into 2025, through the trending up that I mentioned to you 56% to 58% this year, and 58% to 60% FRE margin next year. We know how to do this. This is our day to day. You know, that we run consolidation private equity buyout business. So we have done more than 100 of those consolidations in Brazil, in LatAm and whatever looking for synergies in processes IT and of course, sometimes in people as well. On the IFRS side, expenses yes, they did go up significantly this quarter. It has mostly to do with the expenses that we did run because of these two closings that happened in the second quarter. But I'll ask -- I'll turn over the floor to Ana to comment -- to make a few comments on that, please.

So the main variance that we have for this quarter, has to do with all the transactions M&As that we closed. And I just want to point out it was three, that impacted quarter. So we have all the abrdn acquisition that impact significantly, the line of transaction costs which means, different expenses when you say -- also the effort for the transferring of the Credit Suisse funds, which also was hit this quarter. We also have a smaller -- if not that segment, but we start having as well for our Nexus as well. And of course what is normally part of the -- those transaction and remaining transactions in small part. On top of that, when you see on the deferred and contingent consideration, has to do with our option that we have to evaluate with VBI -- option with VBI, which we have to evaluate every quarter. And actually specifically, this quarter there is an adjustment that also was included in this line of -- that I have just mentioned. So I think all in all, that is the main variance that we have in this quarter in these two lines from other transaction costs and deferred and contingent consideration related to adjustment of our VBI option. If you just as minor, but if you look into our financial income expenses unrealized, which is $3 million this is all related to FX or investment in reais, which impacts is unrealized as it impacts our this line because of the real devaluation.

Yes. So we -- yes. And here Pedro, I think one of the lines is cash related, which is the expense the transaction expenses. The other ones are not cash-related costs and expenses. And just going back to your comment, as we move into the third and fourth quarter, as we did exercise the VBI option and we did close the abrdn transaction and the Credit Suisse transaction in the second quarter, these numbers should be washed out from our P&L and we should go back to where we were in prior quarters. So yes, everything happened. It was a very busy quarter. I actually tried -- I actually started my speech there. I'm very proud of the team to be honest, because we have such a very busy quarter of two closings, plus now the VBI option that we did and now the acquisition of the other 50%. And all of that is happening in the same three-month period. So, yes, so this will be washed out and we would go to more normal levels in the next quarters. Thank you.

Thank you. And I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Alex Saigh for any closing remarks.

Okay. Thank you very much all of you participating in the call, and thanks for your questions here and Tito, Pedro, Guilherme, Ricardo thank you very much. I know that you guys have a very busy morning, with so many financial institutions also having their earnings call. So, thanks for participating. Hope to see you guys presently [ph] in person soon in New York or some other place. Thanks, again. Have a great day. Goodbye. Ciao. Gracias.

Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.