Patria Investments Limited (PAX) Q3 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Patria's Third Quarter 2025 Earnings Conference Call. [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, Andre Medina from Patria Shareholder Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to Patria's Third Quarter 2025 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 would 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 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'll turn the call over to Alex. Alexandre Teixeira de Assumpção Saigh: Thank you, Andre. Good morning, everyone, and thank you for joining us today. Before we jump into the quarterly results, I would like to take a minute to celebrate an important milestone for Patria as our assets under management exceeded $50 billion as of the end of the third quarter, over 3.5x higher than our assets under management at the time of our IPO in 2021. Looking back to our origins 37 years ago and seeing the diversified investment platform we have built is extremely rewarding. We could not have achieved this milestone without the hard work and dedication of our team and most importantly, the trust our clients have placed in us. Since we went public in January 2021, Patria has grown from a $14 billion assets under management -- asset manager serving primarily a global investor base and focused mainly on private equity and infrastructure in Brazil to a broadly diversified multi-asset class manager serving both local and global investors with strong investments and distribution capabilities across Latin America and expanding capabilities in Europe and the United States. Congratulations to all of our amazing team members in reaching this milestone. Now with that as a backdrop, the strong third quarter 2025 results further highlight our progress as organic fundraising surpassed $1.5 billion in the quarter, led by our infrastructure and credit businesses and total organic fundraising year-to-date reached $6 billion. Therefore, we are well on track to exceed the high end of our previously upwardly revised full year target of $6.6 billion. I'd like to note that for the last 12 months, organic fundraising inflows to assets under management totaled approximately $6.9 billion. I'd like also to point out that the aforementioned year-to-date $6 billion of fundraising inflows into assets under management do not include any acquisition, a result of how we are leveraging the investments we have made in our platforms, mainly in our commercial areas. Redemptions have been trending lower and year-to-date represent approximately 30% less than what we saw last year, a clear reflection of our strong investment performance across our verticals. Strong fundraising supported by lower redemption rates is translating into solid net organic growth as we generated over $1.4 billion of net organic inflows into fee-earning assets under management year-to-date and $1.8 billion over the last 12 months. Year-to-date, net inflows reflect an annualized organic growth rate of about 6%, which continues to highlight our ability to drive strong organic revenue and earnings growth. With that, our fee-earning assets under management in the third quarter 2025 grew to $38.8 billion, up 4% sequentially and 14% year-over-year. In the third quarter of 2025, we reported fee-related earnings of $49.5 million, representing 7% sequentially and 22% year-over-year growth, driven mainly by solid fee-earning assets under management growth and margin expansion as we continue to make progress integrating our acquisitions. On a per share basis, fee-related earnings of $0.31 in the third quarter of 2025 rose 8% sequentially and 19% year-over-year. Our momentum is further illustrated by the $46.9 million of distributable earnings we generated in the third quarter or $0.30 per share, up a robust 22% sequentially and 31% year-over-year, driven mainly by the just mentioned very strong fee-related earnings growth. In addition, during the third quarter, we entered a total return swap with a financial institution to repurchase 1.5 million shares. With that, as of the end of the third quarter of 2025, our share count stands at 158 million shares. Ana Russo, our CFO, will provide further details in her comments. While we did not generate performance-related earnings in this quarter, I am excited to announce that subsequent to quarter end, we had multiple monetization events in our Infrastructure Fund III, which we expect will generate approximately $15 million of performance-related earnings in the fourth quarter, bringing year-to-date total to approximately $16 million, with the potential to move higher if we have additional monetizations over the remaining 2 months of the year. We continue to expect Infrastructure Fund III to be the main source of performance-related earnings through 2026. As it relates to the macro outlook, it is worth noting the depreciation of the United States dollar against most of the other currencies, which contribute to our revenues in addition to the dollar. Historically, periods of dollar weakness have acted as catalysts for international portfolio diversification, prompting investors to seek exposure to regions with stronger relative performance, lower correlation and more attractive fundamentals. We are seeing this story unfold once again as many global investors move to reduce their overweight positions in United States assets. We believe there is still more to come as non-United States markets continue to offer compelling valuations and can serve as effective risk-adjusted options to rebalance portfolios and hedge against dollar depreciation. This environment is likely to further support our fundraising efforts. As I noted at the start of my remarks, we are pleased to report that we raised $1.5 billion in the third quarter of 2025, totaling approximately $6 billion year-to-date. And we are well on track to exceed the high end of our full year target of $6.6 billion. For the last 12 months, organic fundraising inflows to assets under management totaled approximately $6.9 billion. To provide some additional color on fundraising, we continue to see increased global interest in investments in infrastructure in Latin America from which we continue to benefit as the leading infrastructure investor in the region. Over the first 3 quarters of the year, we raised 4x more than in 2024, led by our Infrastructure Fund V drawdown fund, co-investment vehicles and other strategies. I would like to congratulate our infrastructure and commercial teams on the recently announced final close of our Fund V and related vehicles at $2.9 billion, almost 40% higher when compared to our previous vintage, making it the largest dedicated infrastructure vintage focused fund on Latin America. It is also important to highlight that our credit business continues to stand out and has surpassed total 2024 fundraising by almost 15% as of the third quarter of 2025, reaching $1.6 billion fundraised this year. It is worth noting that 2024 was already a record year for fundraising for credit. Our success in fundraising for infrastructure and credit is supported by a global economy experiencing persistent inflation and consequently, high interest rates. Finally, GPMS has raised $1.7 billion year-to-date, continuing to highlight the strong support from our clients and the success of the integration of this business onto our platform. We believe that GPMS will continue to be a strong contributor to our future growth. As we expand our business, a large portion of the capital we raise will flow into fee-earning assets under management as capital is deployed. Our current pending fee-earning assets under management totals about $3.2 billion. While the level of pending fee-earning assets under management can vary over the short term, over time, we would expect it to grow as our fundraising grows and we can raise more capital in drawdown funds, SMAs and similar fund structures. It is also important to note that our fee-earning assets under management and management fees are very sticky and highly predictable. Indeed, approximately 22% of our fee-earning assets under management are in permanent capital vehicles, listed vehicles with no redemption policies and approximately 90% in vehicles with no or limited redemption policies. Additionally, it is worth noting that over 50% of our fees are charged over net asset value or market value, which year-to-date has contributed approximately $2 billion to fee-earning assets under management, reflecting our very strong investment performance. We also would like to highlight that our fee-related earnings have limited exposure to foreign exchange volatility. Based on our current asset class mix, a 10% variance in soft currencies against the dollar impacts fee-related earnings by only about 2%. As we head into the fourth quarter and we gain better visibility into our expected full year 2025 and 2026 results, we believe we are well on the way to delivering on our targets. With regard to fundraising, we are confident in our ability to exceed the high end of our 2025 full year target of $6.6 billion. Additionally, as disclosed during our December 9, 2024 Investor Day, our objective is to raise $21 billion from 2025 through 2027, comprised of $6 billion of fundraising in 2025, $7 billion in 2026 and $8 billion in 2027. As we expect to exceed the $6.6 billion upper end of our previously upwardly reviewed 2025 guidance, this increases our confidence that we can surpass our announced 2026 targets of $7 billion. Accordingly, we believe total fundraising for 2025 and 2026 combined could reach $14 billion. Considering our $8 billion fundraising target for 2027, we believe we are well positioned to exceed our total 3-year objective of $21 billion. As it relates to our full year fee-related earnings, we expect full year fee-related earnings to be slightly higher than the entry level of our fee-related earnings target range of $200 million to $225 million for 2025. Additionally, as we look into the next year, we are introducing the 2026 fee-related earnings target range of $225 million to $245 million or $1.42 to $1.54 per share. When taking into account our share count guidance of 158 million to 160 million shares, our 2026 fee-related earnings objective reflects approximately 15% year-over-year growth in fee-related earnings per share at the midpoint of this range. Importantly, we remain comfortable with our fee-related earnings 2027 target range of $260 million to $290 million or $1.60 to $1.80 per share. Finally, we are reaffirming our performance fee-related earnings target range of $120 million to $140 million from the fourth quarter of 2024 to the end of 2027, of which we already realized $42 million, and we expect to realize an additional approximate $15 million in the fourth quarter of this year. Pulling this all together, our financial results and ongoing fundraising momentum provide additional evidence that our strategy to diversify and grow our business both organically and inorganically is paying off. Now let me turn the call over to Ana to review our financial results in more detail. Thank you very much.

Thank you, Alex, and good morning, everyone. Over $50 billion in AUM is indeed a landmark to be proud of. And as Alex mentioned, our strong momentum continued as we raised $1.5 billion in the third quarter and $6 billion year-to-date. Our fundraising success show how the strategic investments we have been making in our investment platforms, products and distribution capabilities are paying off. We entered the fourth quarter confident in our ability to achieve our objectives for this year. Now let's review our third quarter results in more detail. In light of our robust fundraising year-to-date, we are well on track to exceed the high end of our full year target of $6.6 billion against a backdrop of increased global uncertainty and volatility. Our fee AUM rose 14% year-over-year and 4% sequentially to approximately $38.8 billion. The strong year-over-year growth reflects the combination of solid organic net inflows of $1.8 billion, positive contribution from strong investment performance and the acquisition of the Brazilian REITs we discussed during our last earnings call and concluded this quarter. Our fee-earning AUM growth continues to highlight our expanding fundraising capabilities and deployment opportunities, coupled with the stickiness and resiliency of our asset base. In addition, our fee-earning AUM is also benefiting from a declining rate of redemptions. Pending fee-earning AUM of $3.2 billion, combined with our fundraising goals, the 22% of fee AUM that are in permanent capital vehicles, the almost 35% of fee AUM in drawdown funds with an average life of 6 years and the overall stickiness of our asset base together highlight our ongoing ability to generate net organic fee AUM growth over time. Total revenue in the third quarter reached $84.6 million, up 11% year-over-year and about 4% sequentially. This quarter included $1.3 million of catch-up fees. Our management fee rate averaged 94 basis points over the last trailing 4 quarters. As we reviewed at our December 9, 2024 Investor Day, we are steadily diversifying our business and introducing new investment strategies and product structures, which are key drivers of our growth. Consequently, our management fee rate will continue to evolve, and we expect our fee rate to trend towards 90 basis points over the coming quarters, but with the potential to vary depending on the mix. Moving on to operating expenses, which include personnel and G&A expenses, totaled approximately $34.4 million in the quarter, flat versus second quarter '25 and prior year. We remain focused on controlling expenses and capturing operating efficiency even as we continue to reinvest in the business. Looking ahead, we believe the third quarter personnel and G&A expenses combined are a good baseline for the next quarter. Putting it all together, Patria delivered fee-related earnings of $49.5 million in the quarter, up 22% versus the prior year and 7% sequentially, with an FRE margin that rose more than 500 basis points versus the third quarter '24 and 170 basis points sequentially to 58.5%. We remind everyone that the fourth quarter is often our strongest quarter in terms of FRE margin, driven by the recognition of most of our high-margin incentive fees from our credit and public equity platforms. We continue to expect the full year margin to fall within the range of our 58% to 60% guidance. As Alex mentioned, as we enter the last quarter of the year and our visibility into the remainder of the 2025 improves, we expect fee-related earnings for the full year to be slightly above the entry level of our FRE target range of $200 million to $225 million. Additionally, as Alex also noted, we expect to generate $225 million to $245 million of FRE in 2026, and we remain on track to deliver our 2027 FRE target of $260 million to $290 million with an FRE margin objective of 58% to 60%. As a reminder, about 10% of our 2027 FRE target reflects future potential M&A. Although we did not generate any performance-related earnings in the third quarter, subsequent to the quarter end, we had multiple monetization events in our Infrastructure Fund III, which we expect will generate approximately $15 million of pro forma-related earnings in the fourth quarter with the potential to move higher if we have additional monetizations over the remaining 2 months of the year. We continue to expect Infrastructure III, which pro forma for the recent monetization had approximately $45 million of net accrued performance fees at the quarter end to be the main source of PRE through 2026. Next, our net financial and other income and expenses in the third quarter '25 totaled a negative of $1 million versus a negative of $4 million in the second quarter 2025. This sequential improvement mainly reflects a greater contribution from Trio, our energy trading platform of $1.7 million in the quarter compared to $0.7 million in the second quarter '25. Additionally, lower average debt over the course of the third quarter also contributed to the lower financial expense. As of the end of the third quarter, net debt totaled approximately $108 million, and our net debt to FRE ratio of 0.6x was well below our long-term guidance of 1x. As we manage our cash flow and capital structure over the balance of the year, we expect our debt levels to remain relatively unchanged as we do not have any relevant M&A payment for this year. Our current deferred M&A-related cash payment through 2028 will be approximately $95 million, excluding potential earn-outs. In addition, we entered to a total return swap, or TRS, with a financial institution during the third quarter, which under the terms of the swap, purchased 1.5 million shares on our behalf. We expect to settle the cost of the TRS by mid-'26 and transfer the shares to Patria, which we plan to retire. Our effective tax rate in the third quarter of 3.3% mainly reflects credits related to our U.K. operations. We expect our tax rate over the coming years to hover around 10% annually, but will vary quarter-by-quarter, depending on the evolving mix of our business, although we expect 2025 to be below 10%. In the third quarter of '25, we generated $46.9 million of distributable earnings, up 34% versus third quarter '24 and DE per share of $0.30, up 31% year-over-year and 22% sequentially, mainly reflecting higher FRE helped by lower net financial and other income expense, lower tax and on a sequential basis, lower share count. As I mentioned during our last earnings call, the Board of Directors voted to renew and increase our share repurchase program, and we have the authorization to repurchase up to 3 million shares. In the third quarter, Patria entered a total return swap with a financial institution, which under the terms of the swap purchased 1.5 million shares on our behalf. Considering the nature of the TRS, we finished the quarter at 158 million shares and continue to expect the share count to average between 158 million and 160 million from 2025 to 2027, inclusive of additional share repurchase, which will be focused on offsetting stock-based compensation. Finally, as announced during our December 9, 2024 Investor Day, the Board had approved an annual dividend of $0.60 per share for 2025. With that, we declared a dividend of $0.15 per share for the third quarter. Also, it is important to note that the Board has now approved a total annual dividend of $0.65 per share for 2026. Overall, we are very pleased with our third quarter results and the momentum we have built as we continue to diversify and improve the resilience of our business. We believe we are on track to meet the various targets we shared with you, and we are excited regarding the growth opportunity that lies ahead of us. Thank you for everyone for dialing in, and we are now ready to answer your questions.

[Operator Instructions] Our first question comes from Rodrigo Ferreira at Bank of America.

You've raised $6 billion year-to-date and are on track to exceed the $6.6 billion full year target. Given the strong momentum, how are you thinking about the pacing of capital deployment, especially with the $3.2 billion in pending fee-earning AUM? Alexandre Teixeira de Assumpção Saigh: Thanks for the question. Thanks for participating in the call. No, really, we've been very excited with the $6.6 billion raise up to the third quarter of '25. As I mentioned during the call, last 12 months, we did raise $6.9 billion. That's why we feel comfortable with not $6 billion -- sorry, to the end of the third quarter. Guidance was $6.6 billion. Last 12 months, $6.9 billion. So that's why we feel comfortable that we are probably going to beat the $6.6 billion new guidance. We have over $3 billion of pending paying AUM, but I think over the next 12 to 18 months, we should deploy that. We do have a very active pipeline, mostly in infrastructure. Most of this earnings -- fee-paying AUM, Rodrigo comes from our infrastructure efforts as we did raise in 2025, finished rating our flagship vintage Fund V for infrastructure of approximately $2.9 billion. So most of that capital will come from investing in our infrastructure new vintage, vintage #5. In addition to the co-investment vehicles that are paying fees together with the infrastructure closed-end Fund V. Also, we did raise capital that's pending for us to invest, which is in the GPMS and also the GPMS, mostly the secondaries, our secondary strategy. We envision to invest along the next 12 to 18 months as well. So most of this fee-pending AUM [ fee-earning AUM ] should be invested over the next 12 to 18 months. I hope I answered your question.

No, that was great. And then for my follow-up, can you give us an update on how you're thinking about inorganic growth at this moment? I know we have the $14 billion Investor Day guidance. But at this moment, what asset classes or geographies are you most interested in? Alexandre Teixeira de Assumpção Saigh: Yes. Well, we had guided that we would try not to do any acquisitions in 2025, that we will try then to restart with our acquisition efforts end of '25, '26. Of course, it's easier said than done. I joke that sometimes the mergers and acquisitions, M&A is a mystery and anguish, right? You don't never know when you're going to sign a deal. But jokes aside, I think we managed to do that. Now we're finishing '25 because we wanted to have a full 4 quarters, 6 quarters of no M&A. As we mentioned, the last 12 months, the last 4 quarters, all the numbers that we just posted are pure organic fundraising, organic growth, organic related numbers. And we wanted to have that pause to show us and of course, investors and stakeholders that our strategy was working that the acquisitions that we did were being integrated. You saw that we are very, very disciplined on the cost level of -- you can see it in the third quarter results, and you're going to see it in the full year results. So this was an important as a checkpoint that we paused, we integrated, we fundraised for these new asset classes that we acquired. We controlled costs, et cetera. As we move into '26 and '27, we would like to turn on then the inorganic expansion, which is important for us to complement our menu offering to also complement our geography footprints. And what we see going on right now is most of the activity is in the real estate and credit arenas. So these 2 asset classes are the ones that are with negotiations in a more advanced phase coming then in third place, our infrastructure-related also strategies. So -- and of course, it has to do as well, I think, with the strategies that have been performing the best in fundraising and the best in interest level from our clients. On the geography side, I think we will -- as we mentioned all the way back, I think our GPMS, Global Private Market Solutions that we did buy as a carve-out from the asset manager, Aberdeen, was a mostly European-focused business, 2/3 of the business is European focused. And we would like to expand our U.S. side of this business to become more of a global solutions provider for private equity, primary, secondaries and co-invest. So U.S. would be a geography that we are looking into. I think the acquisition that we're going to do there is not going to be very substantial. That's why it's forced in the list of relevance. I go back to the infrastructure and real estate -- credit and real estate and then comes infrastructure -- then comes GPMS on relevant size, geography, U.S., mostly GPMS and Mexico, mostly real estate and credit. So in order of importance, again, just repeating here to be redundant, I'm sorry, credit, real estate, then comes infrastructure, then comes GPMS, geography, U.S. and Mexico as new geographies, and we continue to enhance our presence, of course, in the geographies that we already exist, mainly in Brazil. We are trying to spearhead and be a protagonist of this consolidation of the industry. We see several asset managers in our industry pushing that agenda from the mega ones to the large ones. And now with a $50 billion asset manager, I think we joined the club of the other $50 billion asset managers. So I think we have the mega ones managing close to $1 trillion. Then there's a second group of around 20 that managed globally between $100 billion and $300 billion. And then we come in this third group, which is -- we're # 31 now globally, #30, #31. Of course, so the second group of $50 billion asset managers, all of us actually pushing this consolidation agenda. Interesting that these $50 billion managers, they have a geographic also origin. Some of them are -- have Asian origins. Another has a Middle Eastern origin. We have 2 Europeans. We have a couple of Americans and us, I think the only Latin that does exactly what we do, pursuing this consolidation agenda in their respective regions of origin, first and foremost, in our case, Latin America, of course. And then, of course, trying also to expand globally with 1 or 2 asset classes or strategies. In our case, GPMS was the chosen one. So I hope I answered your question, Enrique.

Our next question comes from Tito Labarta at Goldman Sachs.

A couple of questions. Just on the FRE guidance for this year, you mentioned you'd like to be slightly above the lower end of the range. Just looking at the trends right now, if FRE is similar in 4Q, you'd be around $188 million. Should we assume that the difference to get you to above that $200 million would mostly come from the incentive fees that you most typically get in 4Q? Or would there be any other potential upside that we could see in 4Q other than the incentive fees? And then I have a second question. Alexandre Teixeira de Assumpção Saigh: Thanks, Tito. Nice talking to you, and thanks for participating in our call. I think that both, I think mainly the numbers that you just went through there, I think, makes sense. we expect around $10 million to $12 million coming from incentive fees, and that's a relevant portion of the FRE contributor for the fourth quarter of 2025. In addition, but not at this level of relevance in absolute dollar terms, we have more FIE coming from management fees because the management fees is being driven by the fundraising that we just described during our earnings call and answering Diego's question. All of that fundraising is already translating into more management fees and that management fees, it's the same team basically that we had in the third quarter. So that actually then flows down to fee-related earnings. But -- in absolute value importance, you are correct. I think that $10 million, $12 million coming from incentive fees is number one contributor for us to then surpass the $200 million of FRE, which is the entry level of our guidance. Coming second, the contribution from the fundraising that is translating into fee earnings, fee-related earnings in the fourth quarter that we have more fee earnings AUM in the fourth quarter than we had in the third, more in the third than we had in the second and so on and so forth because we are managing to fundraise more than what we expected. I'll give you one example here just to know also using your question here to throw in another interesting subject that I would like to cover. We didn't cover this in the call because we got that we got that news late last night, our data center platform. So I'm using your question here also to make this release of information here, Chito, but it has to do with your question. As of yesterday, the Brazilian government did approve a very interesting regulatory framework that basically enables exporting data from these incentivized areas in Brazil in an incentivized tax framework. Basically, you don't pay taxes as data center exports data. So the data that is processed in these data centers in Brazil have this very interesting tax advantage. And also if you import the machinery equipment to build a data center, you also don't pay any import tariffs. Brazil is kind of mimicking what other regions in the world did like in Malaysia and Singapore, et cetera, to attract these massive data center-related investments. And so I think the Brazilian government is in the forefront in the vanguard of this regulatory framework by approving the legislation as of yesterday. And of course, an additional advantage of actually building these data centers in Brazil is the vast availability of renewable energy and also the low consumption of water and recycling water that we have in our specific design data center design. And of course, you know about the renewable energy in Brazil and in our project per se that is actually will leverage on this regulatory framework approved by the Brazilian government of. And of course, we have been working with the Brazilian government very intensively over the last quarters. We already have an offtaker, a relevant offtaker to build a 200 mega data center that consumes around 300 mega of energy. We already have the energy provider, in this case, is Casa dos Ventos, 100% renewable. And we also have several of the licenses and mainly and most importantly, to connect our data center to the substations that actually are connected then to the submarine cables. The real estate that we actually have already identified and already optioned is very close to the submarine cables that connect the Brazilian coastline with the major regions of the world. And that submarine cables help on the -- in reducing the latency of actually processing that data in the data centers in Brazil. And we're putting up $2 billion of construction infrastructure. The offtake is putting up approximately $8 billion. So it's a $10 billion project. We can threefold, fourfold, fivefold that because it's a 200 mega, there is potential for us to increase that with the same offtaker, which the offtaker has the interest actually to more than double. We also have the interest to continue investing in that project, and we can actually work with other offtakers as well. If you see that we do have -- we do manage approximately on fee-paying AUM going back to Rodrigo's questions and your question on FREs and revenues. For our infrastructure vertical, we are managing around $4 billion, $4.5 billion of fee earning AUM. We can basically double that with the fee-paying SMAs dedicated to these data center platform. So extremely interesting. We also did the same kind of SMA joint venture framework to invest in toll roads in Brazil, also through our infrastructure vertical, also answering Rodrigo's question, that will take on then, of course, the AUM raised for our infrastructure vintage #5 and invest and then turning that into fee-earning AUM and revenues. We won a couple of toll roads through this JV that we call Run or Union Unified that has not only Infrastructure Fund V, but has other very, very important large institutional investors of ours, mainly sovereign funds investing in that platform. We, again, won 2 concessions through that platform, and we see that we can continue going on that can become it's $1 billion commitment, but it can become 3, 4, fivefold that as we look into the future. So we see these platforms in toll roads, which is already up and running and already won 2 concessions in data centers where we have this project that I just described and the company there is called Omnia. And we see other potential platforms that -- infrastructure-related platforms throughout Latin America where we can actually then co-invest with our infrastructure fund or just have a JV kind of framework, an SMA kind of framework to invest significant amount of money in infrastructure-related projects in Latin America. And all of that actually transforms then because all of them are fee paying Tito and Rodrigo, all of that transforms into fee earning AUM that actually then fuels our revenues and our numbers going forward. So as we look into '26 and '27, we feel comfortable that we will continue with that good pace of fundraising and good pace of FRE increase that we went through during the call today. Thank you. Sorry to take a long answer to your question on using the data center depot, Tito, but I think that was important.

Yes. No, very helpful. Thank you Alex, for all the color. And then just one other quick question on your performance fees. I mean I think you mentioned Infrastructure III sort of the main likely place where you can maybe realize some performance fees in the near term. In the past, we've seen 4Q, we typically are able to realize them? Just any color you can give on your ability to realize some of these performance fees in the short term? Alexandre Teixeira de Assumpção Saigh: Yes. After the end of the third quarter, so into October of 2025, we did have some realization events that we highlighted during the call, pushing -- increasing our performance-related earnings by $15 million. We had a small number up to the end of the third quarter of $1 million. So that actually adds to the $15 million. So we're now looking to $16 million of performance-related fees for this year-to-date end of October. As we look into November and December, we're very active on realizations. So potentially, we're going to have more realizations from our Infrastructure Fund III in the last 60 days of the year. However, as you know, I don't want to be repetitive on my joke here, but mergers and acquisitions also means misery and anguish in some cases. And so they're signing the deal or something happens, the deal then slides to be signed early 2026. It's part of the game. So that's why we like to give more of a broader kind of view on timing as far as realization of performance fees are concerned. So into 2026 and of course, 2027, we still see the $120 million to $140 million out of which we already did deliver around $45 million. And so we still have some that might happen end of this year, but we see a very good pace and the quality of the investors also very, very high quality as we have been able to attract strategic foreign investors that are coming into the region. We're going to see the French toll road operator in their first incursion into Brazil was buying one of our toll roads. We also had Indigo, which is another French parking lot operator that bought into our parking lot company called [ Paque Bain ] and so on and so forth. So -- and so very, very high-quality sovereign funds also buying into our assets. So very interesting in quality of investors and bringing money into Brazil to be able to buy our assets. And you see that the whole theory here is actually turning into reality as it has for the last 25 years in infrastructure. We have development funds. And then once the asset is developed, we sell to strategic investors. That can be sovereign funds that take a role of strategic investors and can be also pure strategic investors. We see that as well coming along now closer to 2025 now, Chito, not '26. Some of our private equity-related strategies also with a high probability of generating performance fees. In this case, specifically, we see our growth funds and our venture funds have been able to generate interesting performance fees later in the 3-year plan period, which is into 2027. So we're probably going to see Infrastructure Fund III realizing most of its performance fees during '26. And as we look into '27, we see some PE-related private equity-related funds in a good moments to realize investments as some of these investments are already mature and we start actually looking into realizations and building into that performance fee. For example, we recently sold 2 assets from our growth fund. One is an online psychology-driven business, psychology sessions-driven business that we actually sold and merged into another company. And then we sold our online education business as well. And as you sell these businesses, they build into then return principle and hurdle and after that, you start generating fees. So as I see the realizations from these funds already happening, I mentioned 2 examples this year 2025, I see other deals that we're working on that we're probably going to realize from these funds in '26, building in to deliver back capital to investors and then performance fees in 2027. So I can -- I have a lot more of a 24 to 36 months advanced look because I see the realizations building up and getting close to the principal and hurdle. And then we have the whole catch-up as we have right now for Infrastructure Fund III. So more PE-related strategies for 2027, more infrastructure-related strategies for '25 and '26. I hope I answered your question.

Strong quarter.

Our next question comes from Ricardo Buchpiguel at BTG...

Can you please provide an update on how the cross-sell of the GPMS products to Pat LP should evolve over the next few years? The vertical is now growing around like 8% year-over-year, the AUM. So it will be interesting also to hear what we can in terms of potential acceleration over the next, I don't know, 3 years without considering M&A on this vertical? Alexandre Teixeira de Assumpção Saigh: Yes. Ricardo, thanks for participating, and thanks for your question. I think it's a -- when we did the acquisition, we saw a couple of phases into raising money from all of our client base. I think Phase 1 was to gain the confidence from the current clients, right? I think we, as a Latin origin company, buying a business in the U.K. Of course, we did the diligence before that, and we saw that -- and we heard from the clients we did, of course, interviews with these clients, blinded and nonblinded interviews with the main clients of this business, Ricardo, and a lot of thumbs up. They really like the team. And they were saying, of course, depending on the buyer, we would actually, of course, support that new buyer. So Phase 1 was actually getting back to these clients post closing, which we did, which was, as you know, we did -- we took over the business in April of 2024, so a year or something ago. And that actually went very well. You can see the kind of how do clients actually respond to that in a concrete manner. They don't redeem and they invest more, right? They invest more with you because they're happy and they don't redeem because they're happy. And that's what happened. I think over the last 12 to 14 months or 15 months, everything worked well. We saw clients actually re-upping. We saw 4 hours special secondaries opportunities in Fund #5, which is a blind structured fund. We saw SMAs continue to be beef up with new money and renewed and so on and so forth. Then I think we started with, I think, secondaries opportunities # 5 fundraising to attract new clients, new clients from our base and clients that were not in our base of clients or -- and we've been able to be successful, and we are very well on plan to be able to have secondaries opportunities Fund to reach its target, and I think it's going to exceed its target. We were targeting around $500 million for that. And I think we already see that kind of that number. So it's not very common these days. for a blind structure funds to hit the targets. And I think we're going to surpass it. I think we're going to surpass it in 10% to 20% of that number, which is rare. It's not very common for private equity related strategies, in this case, is a secondary strategy to hit the number that it announces in its -- when we say in its front cover page of the prospectus. And it's even more rare for actually funds to overcome that number. And we're going to do it. I think we're going to overcome that number in 10% to 20%, as I just mentioned. So that was the second phase and the real test, as I say, is clients actually give you more money. And that's what they did for secondaries opportunities from #5. And not only from our own base, but we had clients that were not even our clients, which is because we had a new product to offer. And so we are happy. So we are in Phase #2, we're living Phase #2. Of course, Phase #3, we're going to launch more products from this -- from the GPMS structure. We have ahead of us so many new strategies that we're thinking about a blind fund structure, a pure co-investment fund that we are thinking about starting to launch early next year. So we have the SMAs that invest in private equity primaries, secondaries and co-invest. Then several years ago, the Aberdeen team actually did spin off the secondary strategy and started raising blind structured funds, Fund I, II, III and now we're raising Fund V, as I mentioned a couple of minutes ago. When we take a look at their co-investment track record that they did over 100 co-investments through the SMAs, amazing track record, 16% to 20% net IRRs. So we are then pulling that off. We're, of course, working to show the investors the fantastic track record that the team actually delivered with that specific strategy and then actually raised a closed-end fund. So it's going to be our co-investment fund #1. And we see some traction, and we're taking that to the road early next year. So that's Phase #3 to have a new product with the same investors and new investors. And so -- so we're pretty happy that, that's working on well. And I can mention several other products that are also in our pipeline that actually derives from the GPMS strategies. We can have a credit fund that actually works in the same kind of mid-market level. We can have actually a GP stake fund like Diodes of the world or whatever. So other -- so many new products and exciting new things that we can do over the next years. I mentioned a blind fund structure investment fund as an example. On the Latin American side, we continue to raise a very important absolute value from Latin American investors into our GPMS products, less so because we are bringing them now into our strategy. But to other global asset managers that we do represent in the region, Carlyle being one, as you guys know. And we have been very successful with that strategy in 2025, raising significant amount of money with Latin American institutional investors, mainly into Carlyle-related funds, working with AlpInvest, which is the solutions provider for Carlyle, helping us actually develop solutions for our institutional clients in LatAm. We're also looking to represent eventually other global alternative asset managers to sell for our Latin clients. And -- so happy with that as well. So no, I can't complain. I think it's -- we were well accepted by the GPMS clients. And again, as I mentioned, the best way for our clients to say that they are happy with you is to put more money in the new fund or a new strategy and not redeem. And that's what's been happening. And I think we're going to have great news to report during 2026 in these fronts. I hope I answered your question for you.

That's clear. And for my follow-up question on capital return, it would be interesting if you could provide more color on the total return swap mechanism you mentioned in the call and also give more details on the rationale for the 0.65 per share dividend that you also announced for next year. Alexandre Teixeira de Assumpção Saigh: No. Thank you for those 2 questions. Well, the TRS is a very interesting way of actually to execute a share buyback program, right? And I'll give you my comments on it. So just take a couple of steps back, late last year, we did -- our Board approved a $3 million share buyback program. I think it was early this year, I'm sorry. Late last year, we did approve -- the Board approved $1.5 million, and then it increased to 3 million shares share buyback program early this year. When we looked into -- as the CEO and the management team, together with Ana, our CFO, when we looked into alternatives to execute this share buyback program, the 3 million share buyback program, we saw and concluded that the TRS total return swap, I think, was one of the most interesting ones. First of all, you do, I think, for confidentiality reasons, for conflict reasons, you do outsource the execution of the share buyback to a third party, in this case, to a financial institution. So you give the financial institution a plan, an order and you set up a plan, how you're going to buy amount of shares during this period. And we are completely out of the execution. So as far as conflict is concerned, as far as any type of execution risks are concerned, the company is completely exempt from that. So this is, I think, it is a very pure way of doing something, which the financial institution has a predetermined plan, and we will execute the plan with no interference whatsoever from the company. And so number one, no confidentiality; number two, managing very well compliance conflicts of interest. Then it comes to the financial, I think, advantages a bit that as you do buy the shares that we have, of course, a cost of -- it's like a loan from a bank, but we don't have to -- we don't have the obligation to actually pay that loan in a year from now, for example, because you could actually have the option to ask the financial institutions to sell down the shares and repay that loan. Of course, if the shares are now traded at a lower value, we are -- we're going to have to pay the difference. But that's another because it's an asset backed, right, the financial institution does have that asset in this case, the shares and they can sell those shares back into the market. And during the process of buying these shares, the dividends of these shares are flowing back to the company to Patria. So the net cost is the interest rate that they charge, the financial institution charges minus the dividends. So therefore, a year from now, of course, the cost of actually us having to finance this loan is lower than a pure loan. So it's pretty interesting if we had then, of course, bought the shares and actually canceled those shares, the shares wouldn't have any dividends. But no, we actually then -- the shares is held by the financial institutions. The dividends paid to these shares are netted from the interest expense. So I think the first 2 reasons are the majority of the reason why we decided for it, confidentiality, execution, the low risk of execution, et cetera, and financially very interesting. So that's why we went through a total reserve swap and we did buy -- we did -- the financial institution did buy 5 million shares during the third quarter, and that's why we now have 158 million share count as of the end of September 2025. On the $0.65 per share, I think we wanted to keep on transferring part of our growth in revenues, in fee-related earnings in distributable earnings to the shareholders. And we looked into lower interest rates in the U.S., which have now treasury bill is running at 75% per year. And we do the math of actually raising our dividends by approximately 10%, will be 66%, but 65 and we rounded the number to 65 -- and if you do the math, if you want to get a dividend yield similar to what the U.S. Treasury is paying in the short term, we should then actually not only transfer more dividends, more money to our shareholders, but also plus a share buyback program, right, but also give the stock a support level that should push the stock up to around $17, $17.3, which is the $0.65 is 3.75% of $17.3. So also supports a growth in our stock price. If -- as I talk to shareholders, they kind of tell me that they have this framework in mind. They look at the low the short term, sorry, interest rates paid by the U.S. government. They look at our dividend yield plus the growth that we are delivering. So it's a dividend yield that actually mimics the short-term U.S. treasury yield plus the growth of 15% per annum to 20% per annum. So that's the combination plus the share buyback program that we just announced. So that combination should then give our share price not only support, but should actually help it increase as we move forward. So that's the rationale, Ricardo. I hope I answered your question here.

This concludes the question-and-answer session. I would now like to turn it back to Alex Saigh, Patriot's CEO. Alexandre Teixeira de Assumpção Saigh: Thank you, Rina. Well, thank you very much, all of participants. I was extremely happy to be able to answer so many interesting questions and very happy that all of you participated. Again, we had a solid third quarter, looking to a very solid, very positive 2025 and even more so into 2026, '27, feel comfortable that we're going to deliver our PAC Day in December 2024 announced PAC Day numbers guidelines. So thanks again for your patience. Thanks for participating. I hope to see you in person until the end of the year, trying to organize a couple of roadshows and in-person meetings in Sao Paulo and New York and London. And hopefully, I'll see you in one of these 3 meetings and roadshows. See you soon. Thanks a lot. Bye-bye.

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