Good afternoon, and welcome to the Vinci Partners' fourth-quarter and full-year 2023 earnings conference call. [Operator Instructions]. 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, Private Equity Chairman and Head of Investor Relations; and Sergio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and our financial statements for the quarter and full year, 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 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. On results, Vinci generated fee-related earnings of BRL57.3 million or BRL1.07 per share, and adjusted distributable earnings of BRL63.6 million or BRL1.18 per share for the fourth quarter 2023. For full-year numbers, Vinci posted fee-related earnings of BRL208.4 million and adjusted distributable earnings of BRL245.8 million. We declare a quarterly dividend of $0.20 on the dollar per common share, payable on March 7 to shareholders as record as of February 22. With that, I'll turn the call over to Alessandro.

Thank you, Anna. Good afternoon, and thank you all for joining our call. We are very pleased to join you today as we announce results for the fourth-quarter and full-year 2023. This year has truly etched its mark in the history of our company. We hosted our first Investor Day as a public company at Nasdaq headquarters. It was a fantastic opportunity to share with shareholders and investors our targets and goals for Vinci's future. Another milestone for us was the partnership with Ares, a market leader in the alternative asset manager space worldwide. We believe this is just the beginning of a successful partnership. And I will provide some additional details in just a moment. In my opening remarks, I would like to cover some important topics before Bruno and Sergio go over the specifics. To start, I would like to be assertive with the following message. Vinci delivered strong results, facing another year with a challenging environment worldwide. We are reaping the benefit of a well-developed platform with several business lines built to succeed across market cycles. We posted another quarter of solid growth, with FRE and DE increasing respectively, 14% and 17% year over year on a per share basis. We ended the year with BRL69 billion of AUM, with more than BRL4 billion in capital subscriptions for our private market funds throughout the year. Fundraising remains on a growth trend going forward. 2023 started at a slower pace. And we experienced a significant pickup towards the second half of the year, with several strategies gaining traction. Our shopping mall REIT, VISC, raised more than BRL1 billion in a three-month span, a stellar fundraise to reopen primary issuances for public REITs in the Brazilian stock market. As I highlighted over the past earning calls, this should be…

Thank you, Alessandro, and good afternoon, everyone. I would like to begin my remarks reinforcing what Alessandro mentioned earlier in the call. Vinci had another strong quarter fundraising for private markets. Momentum is picking up, and we are excited with the prospects for the year ahead. First, let me provide some color on two important closings held in the fourth quarter. Our shopping mall REIT, VISC, held another closing this quarter. VISC raised BRL875 million through an oversubscribed public follow-on offering closed in mid-December. When you add to the previous offering held in late September, the fund added BRL1.2 billion in perpetual AUM for Vinci in a three-month span. We raised this amount backed up by a diverse investor base comprising retail, institutions, and other funds, underscoring the strong demand for this type of product when facing favorable market conditions. The capital raise not only solidified our leadership position in the REIT market, but also enhanced portfolio diversification. We closed our follow-on offering with seven advanced prospect acquisitions to fully deploy the capital, of which two were already closed. The real estate market is full of opportunities to deploy capital, and we should go back to the market to capitalize on and seize these opportunities. The other important close was in our infrastructure strategy. Back in late 2022, we announced that the federal government had selected Vinci to manage the sustainable regional development fund or FDIRS. Given the fund's complex structure, we spent the year discussing details and specifics for the mandate. And we carried out the transfer in December. FDIRS will start with roughly BRL1 billion in AUM and has room to grow over the years, both by appreciation and new commitments by the federal government. We are proud to be the partner of choice for such an important…

Thank you, Bruno. Let's start by covering management and advisory fees. Fee-related revenues totaled BRL119 million in the quarter, up 14% on a year-over-year basis. Management fees were flat on a year-over-year basis, yet they exhibit a positive growth trend going forward. Upon closer examination, private market management fees were up 11% year over year, backed by strong fundraising over the last 12 months. This growth was partially offset by liquid strategies and IP&S. Both faced challenging market conditions that led to a decrease in management fees on a year-over-year basis. As previously mentioned by Bruno, we should see a pickup of the short-term for liquid strategies revenues, given the AUM appreciation occurred in the later part of the year. Moving on, advisory fees were the main driver behind fee-related revenues' growth on a year-over-year basis. In recent years, our corporate advisory segment has been diligently engaged in refining the de-origination process, resulting in a diversified exposure across various sectors. This strategic initiative is designed to mitigate risk across different economic cycles, positioning us strategically to capitalize when favorable market conditions arise. Currently, M&A market is gaining momentum as market conditions improve. Our corporate advisory team successfully surpassed our BRL30 million annual target for advisory revenues. And we believe to be in a great position to repeat its success in 2024. Turning to FRE results, in the fourth quarter, FRE totaled BRL57.3 million or BRL1.07 per share, representing a 14% year-over-year increase on a per share basis. Looking at the annual figures, FRE reached BRL208.4 million or BRL3.85 per share, up 11% on a per share basis. FRE continues to grow, pushed by the strong fundraising of private market products and a higher level of advisory fees. Disregarding our investment in VRS, private market comprises more than 60% of Vinci's…

[Operator Instructions]. Our first question comes from William Bollingard from Itaú BBA.

Good night, everyone. Thank you for your time and for the presentation. My question here is directed to REITs. Thinking about the fundraising scenario in 2024, can you give us more color of when to expect new trenches, if it should be more concentrated in the first or the second half of the year? And then a second question here is still in the same topic. And perhaps, this is more regarding the 2025 outlook and onwards. So if the tax regulations for income tax for REITs they change in Brazil, and from now on, investors need to pay taxes on the dividends of the of the REITs. So I would like to understand how should this impact expected future fundraising and the attractiveness of the product.

Okay, William. That's Alessandro. Thank you for your question. I will start with the timing of new issuances on the REIT side. As we have several different REITs, as taking the example of VISC that we raised around BRL1 billion in the end of 2023, it's difficult to predict exactly when we'll go back to the market with that. We normally go with one product at a time, of course, to concentrate the efforts of fundraising in one product at a time. But to expect that will be well distributed throughout the year, so we do not have a specific date or quarter that we expect more issuances. But of course, as the easing cycle develops, so the interest rates goes down, the appealing for these products for the general public will grow. So normally, our expectation is that as the year progress and the interest rates continues to go down, we have more issuance towards the end of the year than the beginning because of the level of interest rates. And regarding your consideration about possibility of change in terms of a taxation of the fund, my personal view is that that will affect more people that will come into the market for the first time, doing the first IPO of fund then follow on. The change in taxation of -- the rise in the bracket of tax will affect more the price of the REIT itself, not necessarily the fundraising going forward. That's my view. That could affect the market as a whole in terms of adapting the IRR net to the new taxation, more than really affecting future fundraise that will be automatically adapt in terms of the yields that we will require for the seller when we are acquiring assets from the REIT. Okay. So what I'm trying to say is that the cost of capital for the overall market in real estate will go up if there is the case of a change in the taxation for this product.

That is great. Thank you for the explanation.

Our first question comes from Ricardo Buchpiguel from BTG Pactual.

Hello, everyone. I have two topics I wanted to ask. First, we saw a very good recovery in terms of public equity net inflows. You guys reached a very important mark of BRL1 billion in inflows and that during an environment where interest rates were very high. So I wanted to understand if it makes sense to expect this BRL1 billion in inflows as a floor and progressively improve over the next quarter, or should it be kind of a one-off? And mainly, in the second half of the year, we should see kind of higher numbers more towards the billions in the public equity side. And also, I wanted to understand a bit that -- despite the very strong advisory fees that are registered in Q4, reaching almost BRL20 million in top line, I wanted to understand, what should be a more recurrent level for the advisory business going forward, especially in 2024? Thank you.

Okay, Ricardo. Thanks for the question. This is Bruno. So in regards to equities, we actually saw in 2023 kind of a flattish inflow environment. It was actually a little bit positive, but it wasn't very material. What we did have in the fourth quarter was a material appreciation impact in the AUM. So thinking about the inflows, the situation is kind of stable at this point at least. We're still seeing kind of stable equities inflows. IP&S continues to be a little bit down. It's the same environment that we saw in the last several quarters, with equities kind of stable and IP&S in terms of flows a little bit down. So as we mentioned during the call, we expect this to turn at some point in the second half, likely with nominal interest rates reaching a number close to single digits. We believe that could be an important trigger. And historically, when you look at our performance in the past, when that happens, usually, we see very strong flows in both equities and IP&S. So hopefully, this is a second-half event for us that will allow us to start growing those business a little bit quicker. But the appreciation impact last year was relevant when you combine equities with IP&S. And I think Alessandro is going to take the advisory question.

Thank you, Ricardo. I think regarding your question, it's a very good question, indeed, about revenues coming from advisory. We have been discussing and what we are seeing now is that, really, our advisory business changed in terms of the level of recurrent fees. I think during these last few years, we have been seeing very, very repeated clients and a lot of reference from former clients. So I think our franchise, of course, being a very straightforward execution franchise, especially on the M&A side, but we have been able to capture some additional market share in this whole M&A market. So our expectation is that our recurrent fees regarding advisory will really reach a new level. So I think we could take an average of what we did in 2023 and take into consideration that we really changed the, I'd say, the penetration of our franchise due to the pipeline that we currently have in future and current mandates, where we believe that will materialize in revenues in the future quarters.

Very clear. And given what you mentioned in terms of the inflows for liquids, all the private market fundraising you have, and this improvement in the advisory business, does it make sense to think about an FRE growth of around 15% for this year, more or less?

Ricardo, I think, I mean, when we look at our internal budgets, we are positive for the year 2024, if everything goes well. Because we have several different opportunities to grow the business. I think double-digit growth, certainly, is possible, given all the things that we have at our table at this point.

Great, thank you.

Our first question comes from Beatriz Abreu from Goldman Sachs.

Hi, Alessandro, Bruno, and Sergio. Good evening and thank you for taking my question. I have two questions, if I may. The first question is regarding fee-related expenses for VRS. So you had a significant increase in expenses for the segment in the fourth quarter. My question is, how much more do you expect to invest in this segment? And what kind of expenses are there more to do in terms of personnel or related to the product itself? Also, do you still expect VRS to break even this year, given the pace it's been evolving? And my second question is regarding your M&A strategy. If you can give us more color on how you're thinking about potential M&A and organic growth, especially given the recent investment that you got from Ares. Those will be my questions. Thank you very much.

Hi, Beatriz, thank you for your questions. That's Alessandro. In terms of VRS, what started to happen in the last quarter of the year is that we started to amortize part of, I'd say, the investment, especially in technology. So I think that was the first quarter that we had this effect. So since the beginning of the project, we started investing and have running costs. And on this last quarter, we started to amortize. So what we saw in our financial statements is exactly this effect. We do not expect to invest more. I think the platform is evolving. We are seeing a very good, I'd say, outlook for VRS. So I personally believe that at the end of this year, we will have a running rate that could be already on the breakeven side. So 2024 is an important year for VRS for different reasons. But especially, all these changes on the tax system in Brazil, it's benefited a lot, the retirement type of products, as you know. So we are very, very optimistic about that. And so at the end of the year, we believe that we could be reaching something near the breakeven. And the investment is exactly what I explained to you. Concerning the M&A side, we continue to be very, very active on the M&A. And things are developing. We have two main, I would say, paths in terms of M&A that we are pursuing right now. One is our international expansion, especially for Latin America. So we are currently analyzing, as we told you in the last few quarters, a few opportunities. And at the same time, we are looking specifically for asset managers, especially, that are focused in just one asset class. Normally, that will have a presence or a very small presence or a reasonable presence that could add not just a , but also capability to our platform. We have a pipeline that's strong on that sense. And we believe that we will, probably, have some of these deals that we analyzed concluded in the near future.

Perfect. Thank you so much, Alessandro.

Our first question comes from Leandro Leite from UBS.

Good evening, everyone. Congrats on the results, and thank you for the call. So my question, perhaps the more qualitative one, is regarding the interactions with the Ares team. You already talked about a bit on the new vintage in the SPS IV. But if you, please, could talk about how conversations are going, strategic plans, and what we can expect throughout the year.

Leandro, thank you for the question. This is Bruno. The Ares partnership so far has been excellent. I think we're making progress in several different fronts. This week, we have several of our people in the United States visiting the offices of Ares. Just to give you some examples, we had Carlos Eduardo, the Co-Head of Private Equity. He went to the Los Angeles headquarters of Ares. We had Marcelo Mifano, the Head of our SPS Special Situations Unit, also in Los Angeles. Pedro Quintela, who runs our international distribution business, was in both offices, New York and Los Angeles. So we're really very engaged with them, talking about all of the potential opportunities for us to develop with them. There are certainly some that are more meaningful and have more potential impact in the short term. We're working with the team there to find which would be the more interesting products for us to represent them in Brazil across our investor base. So there are several interesting products that we can show to our investor base in Brazil that people that want to allocate -- both institutions and high-net-worth individuals that want to allocate capital outside of the country. There is, obviously, the opportunity for us to work alongside with them on improving the relationship with common LPs and perhaps, some LPs that they have that might have interest in strategies in Latin America, with whom we can discuss allocation to our products. And finally, there's a very strong effort to originate opportunities -- to invest together. So we have a pipeline in infrastructure, private equity, special situations credit, where we feel there is fit for Ares to co-invest with us. We're starting to analyze that opportunity. And hopefully, by the end of the year, we're going to have one or two of those opportunities turning into real co-investment situations. So it's a very broad conversation. The interactions there are becoming more pulverized. And the teams are getting to know each other. And that's probably going to speed up the opportunity set for us and for the partnership. But we're extremely happy with what we have been able to accomplish with them so far. So things are looking very promising for the next few years.

That's great. Thank you, Bruno.

Our first question comes from Guilherme Grespan from JPMorgan.

Thank you so much, Alessandro, Bruno, Sergio. Two questions on our side. The first one is IP&S. If you can remind us a little bit what we should expect going forward in terms of outflows. Specifically, just remind us if this is a specific client or if it's a broader outflow related to the pension, given interest rates, et cetera. Just to see how we model going forward the vertical. And the second question is related to performance fees, basically, on the two sides; first, equities. If you can remind us how far you are from the water marks on the funds. And if you believe it can be a relevant driver of performance going forward. And on the private side, we noticed a pretty strong unrealized adjustment. I think it was 40% growth in the unrealized performance fees. The question is basically if there was any specific event or basically what drove this increase. Thank you.

Okay, thank you very much. And that's Alessandro. I'll start with IP&S. IP&S, the outflows is concentrated more on the clients that distribute through retail, through our allocators, and distributors channel. And this is more related with the high interest rates and the outflows, our suspicion that some of them went to tax-exempt CDs, incentivized by this tax issues that, recently, the government closed some doors. But this is not a specific client, not necessarily pensions, but more retail products that we have in our IP&S strategy. Regarding equities, to your question, we are close -- very close on the majority of the funds to the high-water marks. So yes, we could expect that to be a more relevant driver in terms of performance going forward if the market continues to behave appropriately. And finally, the unrealized number is related to a mark-to-market to our VCP III fund, where it's a relevant fund. And we had the recent re-evaluation of the portfolio. And that translated in uptick in the marks that, of course, on the end, translate in a more higher expected unrealized performance numbers.

Okay, super clear. Thank you, Alessandro.

Thank you. I would now like to turn the floor back to Mr. Alessandro Horta for the closing remarks. Please, Mr. Horta, you can proceed.

So I would like to thank you again for your continuous support and interest. We believe that 2024 will be a very important year, where we'll expect to accelerate our growth while, again, showing our resilient and well-constructed business model. So thank you again, and have a good night to you all.

This does conclude today's presentation. We thank you all for participation, and wish you a very good evening.