Good afternoon and welcome to the Vinci Partners Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Anna Castro, Investor Relations Manager. Please go ahead, Anna.

Thank you and good afternoon, everyone. Joining today are Alessandro Horta, Chief Executive Officer; Bruno Zaremba, Head of Private Equity and Investor Relations; and Sergio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation and our financial statements for the quarter, which are available on our website at ir.vincipartners.com. I'd like to remind you that today's call may include forward-looking statements, which are uncertain and outside of the firm's control and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our 20-F. We will also refer to certain non-GAAP measures, and you'll find reconciliations in the release. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Vinci Partners fund. With that, I'll turn the call over to Alessandro.

Thank you, Anna. Good afternoon, and thank you all for joining our call. Vinci Partners reported outstanding results for the second quarter. Distributable earnings doubled year-over-year to BRL54.8 million or BRL0.97 per common share in the second quarter. Fee related earnings grew by 67% year-over-year, reaching BRL55.2 million in the quarter. In addition, we announced today our first semiannual dividend distribution of BRL0.30 on the dollar per common share. When we add up dividends with the capital used for share repurchase, we have effectively returned BRL102 million to our shareholders in the first semester of the year, equivalent to 100% of distributable earnings generated in the first half of the year, honoring our commitment of combining strong growth with capital distributions to our shareholders. We have continued to find a supported fundraising environment for our platform in 2021. AUM reached BRL57 billion at the end of the second quarter, a notable increase of BRL7 billion since year-end 2020. This impressive result was primarily driven by exceptional fundraising in our private markets and IP&S segments during the first half of the year. IP&S, for example, has been exceeding our highest expectations, almost doubling in AUM this past year. In private markets, we were able to roll out all the products we had in our pipeline, including the IPO of the new REIT, VIUR in the second quarter, which is a perpetual capital vehicle, and therefore, extremely variable to us. We continue to see great demand for our products, even with the short-term rise in interest rates during this year's first semester. Long-term real interest rates currently sit at the low 4% levels at rates we believe are extremely constructive to our fundraising outlook. We believe we will continue to see strong positive inflows across our strategies coming primarily from IP&S separate…

Thank you, Alessandro, and good afternoon, everyone. On Slide 8, we will walk through some of the financial highlights for the quarter. Fee related revenues in the second quarter were up 50% year-over-year. During the first half of the year, management and advisory fee totaled BRL198 million, up 36% year-over-year. Our fundraising efforts in 2021 are translating into outstanding growth in management fees, acting as the main driver for FRE and distributable earnings expansion this quarter. Fee related earnings were BRL55.2 million for the quarter or BRL0.97 per share, up 67% year-over-year, and BRL105.4 million for the first half of 2021, up 36% year-over-year. Vinci generated distributable earnings of BRL54.8 million in the quarter or BRL0.97 per share, up 100% year-over-year, and BRL102 million for the first half of the year, up 68% year-over-year. Total AUM reached BRL57 billion as of the end of the second quarter, an increase of 31% on a year-over-year basis. Our fee-earning AUM ended the quarter at BRL55 billion, and our performance fee-eligible AUM at BRL37 billion, representing nearly 70% of fee earning AUM. We had BRL1.5 billion in net inflows this quarter coming from our liquid strategies and IP&S, representing almost BRL4 billion in net inflows during the first half of the year. Net capital subscription from our private market strategies represented BRL265 million in the quarter and over BRL2 billion when we add up first and second quarters of 2021. As Alessandro mentioned in the beginning of our call, today, we announced our first semiannual dividend of BRL0.30 on the dollar per common share, which combined with the share repurchases in the quarter, represents a 100% payout considering our distributable earnings for the first half of the year. Moving on to Slide 9, we recap our fundraising across strategies during this first half…

Thank you, Bruno. In Slide 13, we walk through fee related revenues for the quarter and year-to-date. Management fees remained the main contributor to revenues, accounting for nearly 80% of total revenues in the first half of 2021. Management fees grew from BRL61 million in the second quarter of 2020 to BRL95 million this year second quarter, up 56% year-over-year. Advisory fees were very much in line, resulting in a 50% growth year-over-year of fee related revenues. In the year-to-date, we reached BRL198 million in fee related revenues, up 35% when compared to the first semester of 2020. As you can see in Slide 14, our operating expenses represented BRL54 million in the second quarter, up 31% year-over-year. As we discussed in our first quarter conference call, the first quarter of 2020 was positively impacted by lower-than-usual third-party expenses, which resulted in a distortion when you compare it to this year's first quarter, reason why we had such a step-up in expenses on a year-over-year basis. This quarter, we have a much more comparable quarter to last year, and this is important because you can clearly see the platform's operating leverage potential. Expenses are increasing in a slower pace when you compare them to revenue growth, which resulted in a higher profitability profile, very evident in the second quarter, with FRE and DE margins reaching higher levels. We also disclosed separate our new recurring costs related to the company's IPO, which accounted for BRL3.2 million this quarter. These new costs can be segregated in 3 categories. The first and most relevant representing 50% of is the change in the company's compensation structure as we adjusted it to a regular G&A compensation style impacting personnel costs. Additionally, we hired a new members for our Board of Directors, and we also had…

Thank you, Sergio. Turning to our segment highlights; as you can see in Slide 21, 50% of our FRE in the year-to-date is coming from our private market strategies followed by liquid strategies, IP&S and financial advisory. The same level of diversification is reflected in our segment distributable earnings, except for IP&S that increased to 23% of segment distributable earnings with it's contribution in performance fees this year. Moving on to each of the segments starting with private market strategies on Slide 22; FRE was up 63% year-over-year driven by the strong growth in fee-earning AUM and also improvement in our average management fee rates to 99 basis points in the quarter. The increase in average fees came from important fundraisings of full fee funds across our strategies such as VIR IV that reaches hard cap of BRL1 billion in the beginning of the year. Deal activity was very strong in the quarter as all of our listed vehicles in real estate and infra are 100% deployed and can go back to the market for additional offerings. As announced in the press release last week, VIR IV closed it's third investment, reaching a 20% deployment status. The fund made an investment in Transpotech, a Brazilian medium-sized company that operates in the B2B service sector promoting the use of environmentally sustainable technologies with plans of becoming a market reference in fleet electrification and energy-efficient technologies. In addition, the new deal pipeline for VCP III remains quite strong, and we expect to announce additional transactions for that strategy shortly. Total AUM grew 20% year-over-year, and fee-earning AUM grew by 24% in the same period, highlighting the 6 fundraising processes carried out in the first half of the year, as we previously mentioned. Turning to Slide 23; Liquid strategies FRE was up 85%…

Thank you. Our first question comes from .

Hi, everyone and congrats on the strong results. A couple of questions. First, I wanted to understand a little bit how you're seeing the AUM mix evolving in this potentially higher interest rate environment that we are seeing, and also, how we should see the management fees behave under such environment like how should we be seeing a pressure or a rejection on this pressure of management fee under such scenario. And for my second question, I wanted to understand a little bit of how you're seeing the IPO helping the operation of the business like being perhaps high inflows from institutional clients knowing Vinci or maybe boosting personal attraction, how you're seeing the impact of the IPO materializing in terms of the operation of the company? Thank you.

So thank you, this is Alessandro. Thank you for your question. Good afternoon for everybody. I'll try to cover all your questions starting with the AUM trends going forward. Of course, the rise in short-term interest rates potentially could change the interest of investors for specific asset classes, but what we are seeing as a whole is that we continue to have a positive trend, especially in IP&S and also the private markets. We are seeing a more soft environment for the liquid strategy, both the hedge funds and the public equities, but we are still seeing a very good interest for both separate mandates on IP&S like we saw in the previous quarter and also on the private market, where in the second half, we have a more robust pipeline in terms of fundraising, both on the third and fourth quarter. So we believe that we'll continue to see positive inflows coming these 2 strategies, IP&S and private markets, as a whole in the next few quarters. So we don't think that the rise in interest rates. What's relevant for us, in fact, is real interest rates. So we are still in a level that we continue to see positive trends in the separate mandates in IP&S and also on the private market side. In terms of management fees, we do not expect any pressure coming in terms of management fees. We are -- in fact, and as you can see in our numbers, we see our return of assets improving in all business lines. And we continue to see a very stable and positive environment in terms of management fees, not see any compression coming in any of our strategies. And talking about the IPO positive, what I said before and I think continue to be very -- a very good surprise for us is that we have been seeing Vinci as a very competitive player, especially for mandates. We think the institutional investors, the local community of institutional investors, but especially the plans that are sponsored by multinational companies. On that front, I think the IPO -- and especially the IPO on the NASDAQ helped us a lot to gain the confidence and the visibility to gain this separate mandate from this institutional investor that is sponsored by multinational companies based in Brazil. Also, we had a very good effect on the international institutional investors where we already have a very good presence, but we enhanced the visibility of the brand globally due to the IPO. Thank you.

Thank you. Very clear.

Thank you. Our next question comes from Tiago Binsfeld of Goldman Sachs. Your line is open.

Yes. Hi, everyone. Thank you for taking my questions. I'd like to hear from you on dividends. You mentioned that dividend payback reached about 100% payout. What should we expect going forward from the company, given the level, do you think it's sustainable in the future? Thank you.

Yes. Thank you for the question. And it's Alessandro Horta, again. Yes, we -- as we said before in the previous quarter, our idea would be to distribute 75% of the distributable earnings in dividend in semi-annual installments. And the other 25%, the idea would be to go through a stock repurchase plan. We repurchased a little bit under this, the 25%. So we complement the 100% distributable earnings with the dividend. Our idea is to keep at least in terms of the dividend 75%, and we are still with the stock repurchase plan open. So we expect to have the same profile going forward, at least for the second half of the year providing the distribution either through dividends or stock repurchase of 100% of distributable earnings but with a target more 25% repurchase and 75% in dividends, but that could vary, depending on our ability execute the stock repurchase during the open windows that we have in the market.

Thank you, Alessandro. If I may pose also a second question, more of a long-term question here. You mentioned during the presentation that you see the market 40% allocated to alternatives today. Where do you think this will settle in the long run? What is the price potential to allocation in alternatives, even in a scenario of high rising interest rates in the country? Thank you.

Hi Tiago, this is Bruno speaking. So today as we mentioned in the call we see alternatives allocation in Brazil being about 14% of total AUM. And when we run these numbers abroad for more developed countries, these numbers, they are sometimes above 40%, depending on the country, right? So what we see is a strong expansion potential for the business. When you look at more developed countries, actually, what we're seeing in Brazil is that the growth in retail has been earlier than what is being witnessed in a more developed countries. So now you have in the United States and Europe retail being a very important trend in growth for alternative managers in those markets. We saw those trends earlier in Brazil. So -- but today, I mean, we would be talking about a potential tripling -- around tripling of the market shares of alternatives over the total AUM. And remembering that AUM is growing -- if you look at the past few years, total AUM in Brazil is growing in the low double digits. So we are talking about a low double-digit organic growth, and then on top of that, increased penetration, and that's basically translating into the CAGR and AUM that we have been seeing which has been above 30% for the last few years, right? So the opportunity in our view continues to be quite significant.

Thanks, gentlemen. And congrats on the results .

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Alessandro Horta for any closing remarks.

So, I would like to say to you that we are very happy with the development of the business and the second quarter results. We'd like to thank you all for all your interest in our company. And I'd like to say that I would hope that you keep safe and that we come back to talk with you in the next few quarters. Thank you very much.

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