Good day and thank you for standing by. Welcome to the Patria Third 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 over to your first speaker today Rob Lee, Head of Shareholder Relations. Rob please go ahead.

Thank you. Good morning everyone and welcome to Patria's third 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 U.S. 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 third quarter of 2024 was an exciting quarter for Patria as robust organic fundraising of over $2 billion in the quarter and more than $4.2 billion year-to-date through the end of the third quarter put us on track to meet or exceed our $5 billion fundraising target for 2024. Additionally, over the last 12 months, through the end of the third quarter, we raised over $5.6 billion, all organically. This highlights, how the increased diversification of our platform and the investments we are making in distribution and new product development, are translating into stronger and more diverse growth for the firm, leaving us very excited about what lies ahead. Now, let me quickly summarize our third quarter results before we move on to some of the fundraising and other highlights for the quarter. Management fees reached approximately $78 million for the quarter, up 26% year-over-year, while fee-related earnings reached almost $41 million, representing year-over-year growth of close to 13%. Fee-related earnings per share in the quarter was $0.26, up more than 65% since 2021. We delivered close to $35 million of distributable earnings in the quarter or $0.23 per share. Next, while we did not realize any performance fees in the quarter, we continue to generate attractive long-term investment returns for our clients, and we feel good about our potential to generate performance fees over the coming quarters. The net accrued performance fee balance of $455 million or $2.97 per share increased slightly sequentially due to both performance and foreign exchange movements. As a reminder, our Infrastructure Fund III with about $96 million of net accrued performance fees is already in its catch-up phase, and we have returned close to $2 billion to investors in our infrastructure funds since the start of…

Thank you Alex, and good morning everyone. As Alex mentioned, the highlight of the quarter was our robust fundraising led by our new platforms. We believe our diversified fundraising momentum is sustainable, helping us build and strengthen our base of fee earning AUM and management fee growth supporting our confidence in our 2024 and 2025 guidance. Let's review our third quarter results and the building blocks to reaching our FRE guidance for the remainder of the year. Net fee revenue in third quarter reached $75.9 million and $207.6 million year-to-date, up 28% and 19% respectively. The main drivers were the multiple acquisitions we concluded over the past year of which two of the most impactful were the acquisition of the Global Private Market Solutions business from abrdn and the Brazilian REIT business of Credit Suisse. We also generated strong growth in our credit fee earning AUM as a result of solid inflows and investment performance. As Alex mentioned earlier, our robust fundraising was partially offset by our success in returning capital to our investors through realizations and distributions. Private Equity Fund IV also had its planned step down in fee earning AUM in the quarter. We do not expect any additional notable fund step downs in 2025. As we diversify our business and onboard new platforms and investment strategies, our management fee rate continues to evolve. For example, our fee rate in 2023 was about 1.21%, compared to an average fee rate of 0.96% year-to-date and 0.94% in third quarter. In the earnings presentation, you can see that we fine-tune our disclosure of the average management fee by platform to help you understand the development of our effective fee rate, which can move around noticeably quarter to quarter depending on mix. It is important to mention that our fee rate…

Thank you, Ana. So to sum it up there are several key takeaways from the quarter. First, we believe our fundraising highlights the success we are having in leveraging our acquisitions and investments in our platform. We remain very comfortable with our fundraising fee-related earnings and fee-related earnings per share targets for 2024 and into 2025, and expect to see accelerating distributable earnings growth into the next year as the full weight of our fee earning AUM growth flows through and we move past the short-term fee-related earnings and distributable earnings headwinds resulting from M&A costs. We believe we have a long runway to grow fundraising, generate organic growth and grow fee-related earnings and distributable earnings, 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. Lastly, we are focused on maximizing returns to shareholders and we are excited to provide further color on our updated capital management strategy, we introduced in the second quarter. Overall, we remain very excited about 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 happy to take your questions.

Thank you. At this time we will conduct a question-and-answer session. [Operator Instructions] The first question comes from the line of Craig Siegenthaler of Bank of America. Craig, please go ahead. Q – Craig Siegenthaler: Good morning Alexandre. Hope, everyone's doing well. My question is on fundraising. So, with $4.2 billion raised year-to-date, you're now in striking distance of the $5 billion target for the full year. And GPMS is driving more than half the inflows, just in this past quarter. So I wanted your perspective on, how GPMS has altered your organic growth trajectory? And do you expect it to continue generating an outsourced contribution to fundraising, relative to its size going forward?

Hi, Craig. How are you? I hope you and family are doing well. And thanks, for your question and thanks for participating, in such an important date, right? We have a US election today. And between US election and Patria's earnings call, I'm glad that you opted for the second. But yes, here we go. I think we're very excited with the first data points that we have on the GPMS, organic fundraising. And it ties to the whole strategy of adding to our platform products, geographically within LatAm and outside of LatAm that are more linked to what investors are willing to buy. And again, we try to sell what we want to sell, but in the end we sell what investors want to buy, right? And so yes, we're having a very good fundraising momentum with GPMS and I think that momentum is going to continue. We are at $4.3 billion as of the end of the third quarter organic fundraising. And I see that momentum pushing us. Of course, now if I do the math, now of course and the fourth quarter of the year is the best for sure, the $5 billion guideline is already in the pocket, right? And so that actually pushes us to a very good entry in 2025 with GPMS, with credit, with real estate, with infrastructure and lastly, with private equity and the private equity as I mentioned, several quarters earnings calls, one after the other over the last eight quarters, unfortunately, we're underperforming US underperforming, private equity overperforming, the other asset classes that I performed and overperforming Middle East, Asia and Latin America. And now with GPMS, we're now in my view overperforming Europe, because most of the money is coming from European investors right for the GPMS product. So…

Thank you, Alexandre. Very comprehensive. Just for my follow-up also on fundraising specifically on Private Equity VII and Infrastructure V, should we expect final closes for large closes for both in 4Q? And then Alexandre, we heard your commentary on a $500 million SMA within Asian sovereign wealth fund. And I think that will invest directly in Private Equity VII, Infrastructure V. Can you help us with the timing and size of that one? Does that also flow in, in the fourth quarter?

Yes. Private Equity VII right now, we still keep the $2 billion mark as for Infrastructure V. And yes it's the SMA that we signed is not in these numbers. These numbers that you see from our slide number, there's a slide that actually shows here, number 16 in the presentation that we uploaded. The numbers that are shown there does not include this SMA that you just mentioned is a $500 million half and half $250 million for each of the funds. Most -- part of that is going to be through the fund structure, the traditional fund structure. And part is going to be through fee-paying co-invest. So because this specific sovereign wealth fund wants to have part of the fund and part wants to actually over -- to get an overexposure to one or two companies of Fund VII or Infrastructure Fund V, but those are fee-paying, not fee-paying and are not included in the numbers. In addition we have other -- these types of SMAs that we are actually going after and now happy to. This Asian sovereign wealth fund is in addition to what we mentioned during the call also a MoU with the Ministry of Infrastructure of the Saudi government. And also they want to invest through the fund and through SMAs. So similar structures. And we see that these very large global institutional clients are looking for that kind of relationship. Now I'll sign a check to your fund because I understand that you need the fund to be sizable blah, blah, blah. But I also want to pick and choose, but I'll pay for pick and choosing is -- but I want to have this pick and choose kind of option. So this is what we call the SMAs. So also for…

Thank you, Alexandre.

One moment for your next question. The next question comes from the line of Beatriz de Abreu of Goldman Sachs. Beatriz, please go ahead.

Hi. Good morning, everyone. Thank you for the call and for taking my questions. I have two questions; one on FRE margin. If you could please repeat your expectations for FRE margin for next year. I didn't quite catch that. But I wanted to know if you expect some expansion to happen in FRE margins in 2025 due to synergies that you may be able to capture from the recent acquisition. And also I understand that margins should maybe go up in 4Q as revenues are usually higher because of incentive fees. But should we expect that margin to go back to 53% 54% levels in 1Q next year and perhaps increasing throughout the year? It would be great to get some color on that. And for my second question on the tax rate. You mentioned that you still expect 6% to 8% tax rate this year and that would imply a lower effective tax rate in 4Q. Maybe you could give more color on what would be the reasons behind that expectation. And if we should expect the effective tax rate to increase towards the 10% already in the next year? Thank you.

Okay. Thank you, Beatriz. Thank you also for participating in our call. This is Alex here. I'll take your first question and Ana will take your second question on tax. So as far as margins are concerned, of course, you saw the margins for this quarter a little lower than previous quarters because we did absorb 100% of the abrdn GPMS business and the real estate not only VBI, but the Credit Suisse. These three businesses the Credit Suisse Real Estate Investment Trust, the VBI Real Estate Investment Trust and the GPMS the carve-out from abrdn, the three businesses they had lower margins than we did operate. And I mentioned during the announcement of these three deals that GPMS abrdn carve-out was running a 30% FRE margin as the real estate businesses, right? And we do run an upper 50s FRE margin, right? So we did absorb these businesses in the third quarter in a full quarter remembering that in the second quarter it was just partially absorbed because these businesses came in late in the second quarter. So the whole -- these whole three businesses was fully absorbed during the third quarter, and of course, the margins come down. I see margins going up to the high upper 50s in 2025 as we move to integrate the businesses. And I can show you what we have done in the past. I think when we did absorb the Moneda business, the Chilean asset management business that we acquired late 2021, at that time, we announced that Moneda was running a 40% FRE margin business. During 2022, you saw margins coming down also to the mid-50s, lower 50s range. And then we pushed margins up again to 60% FRE by the end of 2022. And then comes 2023, we did other acquisitions there. And I think and it comes 2024 the same effect. So, we know how to do this. I'm confident that we're going to push the margins up again back to the upper 50s. As far as the first quarter of 2025, I'm not sure where we're going to land in margins. So, I would say a mid-50s number, I think 53% is kind of the low end but a mid-50s number. We should reach the upper 50s as a year as a complete year full year 2025, not in the first quarter, first quarter more mid-50s. And then I'll turn to Ana for your second question.

Hi Beatriz. Good morning. As mentioned this quarter, our tax -- effective tax rate reached 10.6% and the year-to-date 8.8%. This is all caused by the different mix of jurisdictions that we have our income. And basically the signal of our diversification that we have and the onboarding of the new companies and new M&As. And what we basically are envisioned by throughout the end of the year that this tax should be between the rate could be between 6% to 8%. And this is also again basically the result of the income we have in each jurisdiction. And also the different expenses that hit our fourth -- normally hits our fourth quarter income and expenses in that particular quarter. So, this is what we believe. And as I also mentioned during the IPO that our evolution and diversification would bring tax through closer to a 10% throughout the year. That's what we are look into at a 2025 tax rate.

Yes. And just getting back to the margin question again just to use some examples here. Just again I think you alluded to this Beatriz during your question, but in the fourth quarter, we do have higher margins because of the incentive fees. And using 2023 as an example the fourth quarter of 2023, we had 70% -- 71% FRE margins compared to the third quarter of 2023 that was in the 60s. So, we actually increased by 10 percentage points the FRE margin in the fourth quarter. That trend should also happen here in this year of 2024. As we move into the year and as you look into the $170 million of FRE and we are at $115 million, how can we bridge this remainder $55 million? If we do a similar quarter of $40 million, $41 million of FRE, we're up to $155 million. Then we have around $10 million of incentive fees around 10-ish that's already $165 million. Then we have to bridge $5 million for the $170 million. So, if we repeat the third quarter and as I said we integrated all these businesses in the third quarter and we already started integrating them, so we're moving up the margin ladder in the fourth quarter. I need $5 million gap between the fourth quarter and the third quarter pretty feasible. That's why we are confirming our $170 million FRE for 2024. And that trend should also happen in the 2025 and going forward. I hope we answered your questions Beatriz.

Perfect. No that was very clear. Thank you, Alex.

The next question comes from the line of Ricardo Buchpiguel. Ricardo please go ahead.

Hi, everyone, and thank you for the opportunity of making questions. I have just one from my side. Can you please comment if the environment assets in the infrastructure fund hit the hurdle rate given the deterioration in the market conditions is always in any way affect or this particular segment very much impacted by the environment we see in Brazil with higher rates and effects? Thank you.

Thanks, Ricardo. Thanks for participating in our call. Yeah, I think there are several things going on in Brazil and some of them there are not a lot of good news coming from the volatility caused by our President not willing to come out straight with his vision on the fiscal imbalances, right, and all the effects that, that causes to the economy, as you just mentioned. But the infrastructure side has been going through a mini boom, if I would say, right? The last auctions that came out, be it federal and state auctions, there were all huge successes in several different sectors, several different states and including the federal union. I mentioned some examples, water and sewage, two or three auctions of Northeastern states that we're not the largest and the most appealing states in Brazil and the auctions all went well, and we bid for one, we lost, but -- so competitive bids with three, four, five bidders for the water and sewage businesses. And then we go to toll roads. As you know, we bid and we lost for the last toll road a couple of weeks ago, but also strategic players and financial sponsors. So everybody is very disciplined, as you saw also in the numbers that were -- the winning numbers also more toll roads to come. We have schools in the state of Sao Paulo, two auctions for the construction of schools. I'm naming three sectors here, and I can name others. So again, I think the infrastructure is going through a because of the characteristics of infrastructure that, in general, you have a long-term contract and these are the ones that we look for to add to our funds. And these long-term contracts are adjusted to inflation and you have financing. And…

Very clear. Thank you. And just a follow-up on one thing you mentioned. You said that incentive fees could be in the 10-ish level. Is that correct? We just wanted to confirm if that makes sense for Q4?

Yes. Incentive fees in the fourth quarter around $10-ish million, right.

Thank you. Thank you very much.

One moment for our next question. The next question comes from the line of Guilherme Grespan of JPMorgan. Guilherme, please go ahead.

Good morning, Alex, Ana and team. Thank you for the call and opening for questions. Just two on my side. The first one is actually pretty quick. I think Ana mentioned among the incentive fees that part of it comes from real estate. I just want to confirm, which products inside real estate generated performance fees just to be sure, we have it here. I think the ballpark – the bulk of it is going to come from private credit, right? But just to confirm the real estate products which one generates performance? And the second one it's more on the product strategy Alex. You talked a lot about infrastructure and GPMS but I wanted to get your view on private credit. You touched a little bit during the call but has been a booming I think industry in Brazil and globally. I think most of your strategy today it's still Chilean legacy, right, Moneda business. I just want to get your thoughts, if you feel that there is an opportunity in Brazil or in the rest of LatAm to develop the business I think was part of the deal as well. But just want to get the kind of milestones on what you're thinking about this strategy in Brazil and the business outside Chile? Thank you.

Great. I'll ask Ana to answer the first question and then I'll ask – answer your second question on the credit business. Please, Ana.

Hi, Guilherme. Yes, you're right. What I said is incentive fee comes mostly from the strategy of credit, public equities and real estate. However, most of our incentive fees are generated by the credit is if I look into the size, it's really like 95%, 97% is the credit and there is just a small proportion coming from Real Estate. We are actually coming from some of the funds that we acquired from Credit Suisse.

Yes. And going to your second question, I think not only credit but also real estate, but are doing extremely well this year. Let me turn to credit and then I'll touch on the real estate side for a second, as I finish my answer. On the credit side again, I couldn't be happier. We do post the returns of the funds and you can see in our presentation here. As I mentioned in any shape or form that you see, it we're beating the benchmarks. And on the private credit side William, we have a 15% of our public equity funds are private credit transactions. It's a pockets that we have and given our size. So for the $6.5 billion that we currently manage, we have around $750 million that is pure private credit, right? And then the main strategy is $6.5 billion minus $750 million. So you have the number of $5,750 million, right? Out of the $5,750 million, 15% of that which is now close to $800 million is private credit, right, which is the pocket of private credit within the public equity fund. So if you look at how much we do manage in private credit, it's a substantial number and probably making us one of the largest private credit alternative asset managers in the region. Because of the sum that I just did, we're managing over $1.5 billion of private credit. Pure private credit around $750 million, there I have infrastructure private credit. I have the Fiji's that you know in Brazil Fiagro and all of these other products that are in the Fiji's format. And then I have a LatAm dollar denominated private credit funds and I have the 15% pocket out of the $5.5 billion public credit strategy. And that part of the…

That's clear, Alex. Thank you.

One moment for your last question. The next question comes from the line of William Barranjard of Itau BBA. William, please go ahead.

Thank you, Alex. And thanks for the time. So my question here is also on the topic of product expansion, but here more broadly. So I would like to understand if you still think there is any product or region that is not already included in your portfolio, but you would like to expand there in a medium term? So like I understand you're already in the process of digesting recent acquisitions, but if there's any upside for the next year maybe two years to go to another region other products, and complementing it if in order to expand on those fronts if you see it necessarily through M&As or inorganic movements or if you believe organic movements would suffice here?

No, thank you -- thanks for the question here, William. I think, we definitely continue to see the strategy that we actually set up prior to the IPO that we delivered during the IPO roadshow, which is product expansion, geographic expansion within LatAm. And for some strategies like the PMS, it has to be outside of LatAm. The PMS market within LatAm is very narrow on the product side. It's more on the fundraising side. It's good for local investors investing in global products. So starting with that strategy, we continue there. We are in year number three for my view that it's a 10-year strategy for me to see the complete menu of geographies and products that I like to attain almost 30% 40% of the way. You will listen from us in this December 19, New York, and hopefully, you can participate or someone from your team the next three year performance and guidance. And you will see that we will expand the number of strategies to this 38. At the time of the IPO, we have seven strategies. Today we have 38, and we continue to expand strategies. Specifically where? I think there's a lot to do within LatAm mainly in Colombia. In Brazil and in Chile, we have complementary products frontier products. Now that will come through organic launching of products. As I mentioned, we launched some Fiji's some Fiagros in Chile. We launched some local products there but they are complementing other many of products. In Colombia after we signed the JV with Bancolombia late last year in October we are launching several products there. We're launching a local credit fund in Colombia. We're launching a private active fund in Colombia. We're launching an infrastructure fund in Colombia. We're launching a real estate bad debt…

Yes, you did. Thank you, very clear.

Thank you. This concludes the question-and-answer session. I would now like to turn it back over to the CEO and Founder. Please go ahead.

All right. Thank you very much for a very thorough earnings call. I really appreciate your questions and the more interactive and the better. Thank you. Thanks again. I know that it's a busy day for all of us here with US Elections. Reiterating then our guidance of $170 million of FRE for this year, $5 billion of organic fundraising. Next year, $225 million of FRE for next year. We're going to have our PAX Day nine of the December and we are preparing great content for you and team. So I hope that you guys can participate. It's going to be in New York in the NASDAQ venue, the NASDAQ building, the same place that actually did our last one late 2022 whoever participated. And hopefully, we're going to see each other in person in a month's time. Today it's the 5th November. So thank you very much again. All the best and see you soon. Thank you very much. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.