Patria Investments Ltd. Q1 FY2025 earnings call

• Record fundraising of $3.2 billion in Q1 2025, driven by large customized investment accounts and SMAs, showing transition from product-centric to solutions provider.
• Fee earning AUM grew 46% year-over-year and 6% sequentially, with $700 million organic net inflows, reflecting an annualized organic growth rate of over 8.6%.
• Diversification and expanded investment/product capabilities paying off in robust fundraising and profitable net organic growth.
• Latin America seen as attractive destination for capital due to low geopolitical risk, local consumption markets, and FDI trends amidst global macro uncertainty and tariffs.
• Focus on 'One Patria' program to integrate M&As, with HR, systems, and other areas already integrated with no major issues.

In the first quarter of 2025, Patria reported fee related earnings (FRE) of $42.6 million or $0.27 per share, representing 21% and 16% year-over-year growth respectively. Fee earning AUM grew 6% sequentially and 46% year-over-year, with over $700 million of organic net inflows into fee earning AUM, reflecting an annualized organic growth rate of over 8.6%. Fundraising totaled a record $3.2 billion, which is 21% and 16% year-over-year growth respectively, putting them well on the way to achieving their $6 billion fundraising target for the year. Fee earning AUM contributes significantly to revenue, with fee earning AUM growth and management fee revenues benefiting from the over 60% proportion of assets earning fees based on net asset value and/or market value.

• FRE per share guidance for 2025: $1.25 to $1.50, reflecting approximately 20% year-over-year growth at the midpoint.
• Fundraising target: On track to achieve $6 billion target for the year, with $3.2 billion raised in Q1.
• FRE margin guidance: Expect full year margin to fall within the range of 58% to 60% as they grow fee revenues and capture incremental expenses synergy from acquisitions.

• Global macro uncertainty, including tariffs and volatility, which could dampen investors' willingness to commit capital.
• Currency FX volatility, though expense base provides a substantial natural hedge, limiting impact on FRE.
• Uncertainty in timing of large customized investment contracts closing, cautioning against extrapolating Q1 fundraising success across the year.

Q: How are Patria's portfolios positioned from higher tariffs from the U.S. and its largest trade partners?

A: Most investments are LatAm oriented with minimum exposure to Mexico. Investments are in resilient local sectors like healthcare, food and beverage, and infrastructure. The region is in a low-tariff bracket, benefits from large consumption markets, and investors are likely to invest more in the region due to low geopolitical risks.

Q: Could there be potential upside to the $6 billion fundraising target for the full year given tariffs and interest in LatAm?

A: Yes, geopolitical concerns driving investors to LatAm, Patria's non-US structure (Cayman-based) benefits, and conversations with investors have intensified, with potential for more SMAs and relationships driving fundraising.

Q: Update on integration of M&As completed last year?

A: Focus on 'One Patria' program integrating HR, systems, back office, etc. HR is under common system, payroll, compensation schemes, valuation done under common methodology. No major issues seen, on track for full integration by end of 2025.

Q: Overview of pending fee earning AUM of $3.5 billion?

A: Mostly in infrastructure and GPMS verticals, changes over time. Average management fee to use is around 96 basis points, with deployment over next quarters, likely in infrastructure and GPMS within 2025.