• Fundraising: Raised $5.5 billion in 2024, exceeding the target of $5 billion.
• Fee-Related Earnings (FRE): Achieved $170 million for 2024, up 15% from 2023; $55 million in Q4, up 35% from Q3 and 18% year-over-year.
• Performance-Related Earnings (PRE): Generated over $41 million in Q4, driven by the sale of a Chilean desalinization project.
• Distributable Earnings: $189 million for the full year and $89 million in Q4; $1.24 and $0.58 per share, respectively.
• Net Accrued Performance Fee Balance: $319 million or $2.08 per share, declined 30% due to realizations and dollar appreciation.
• Fee-Earning AUM: $33 billion, up 38% year-over-year, but declined 3% sequentially due to dollar appreciation.
• Operating Expenses: $37.6 million in Q4 and $128 million for the full year, driven by acquisitions and increased personnel expenses.
• Effective Tax Rate: 6.5% for 2024, up from 2023, expected to trend towards 10% by 2027.
• Dividend: Announced Q4 dividend of $0.15 per share.
• Net Debt: Approximately $190 million at year-end, expected to reduce throughout 2025.

• Warning! GuruFocus has detected 5 Warning Signs with PAX.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Patria Investments Ltd (NASDAQ:PAX) exceeded its 2024 fundraising target by raising $5.5 billion, surpassing the $5 billion goal.
• The company achieved its 2024 fee-related earnings target of $170 million, marking a 15% increase from 2023.
• Patria's diversified platform contributed to strong performance, with fee-related earnings per share rising 13% year-over-year.
• The company reported robust net organic inflows in fee-earning AUM, with a positive $380 million in the fourth quarter.
• Patria's strategy to diversify and grow its business has resulted in significant progress, with over 70% of 2024 fundraising coming from local investors in local products.

Negative Points

• The net accrued performance fee balance declined by 30%, primarily due to significant realizations and dollar appreciation.
• The appreciation of the US dollar negatively impacted CAUM, resulting in a 3% sequential decline.
• Operating expenses increased due to acquisitions, salary increases, and inflation impacts, affecting overall profitability.
• The effective tax rate rose to 6.5% in 2024, up from the previous year, due to the evolving business mix and new platforms in higher tax jurisdictions.
• The company's net debt stood at approximately $190 million, influenced by M&A-related payments and year-end obligations.

Q & A Highlights

Q: Can you clarify the performance-related earnings (PRE) from the sale of Aguas Pacifico and any other exit strategies for Infrastructure Fund 3? Also, what is the outlook for redemptions in public equities and credit strategies in Q1 2025? A: The sale of Aguas Pacifico was completed in Q1 2025, generating approximately $60 million in performance fees, with $40 million accounted for the general partner. The deal was closed in Q4 2024, and we are on track to meet our performance fee guidance. Regarding redemptions, a specific SMA saw redemptions in late 2024, but these funds were recommitted in early 2025. We expect small redemptions in credit strategies with positive net new money flows in 2025.

Q: Could you provide more details on the expected fundraising breakdown for 2025 and the net debt levels? A: We aim for $6 billion in fundraising for 2025, but we maintain flexibility in the breakdown across strategies. We anticipate more interest in credit and infrastructure strategies in Brazil due to high interest rates. Our net debt of $190 million is in line with expectations, and we plan to reduce it throughout 2025, maintaining a debt-to-FRE ratio slightly below 1:1.

Q: How do you view the impact of Chile's pension reform on local pension funds and potential inflows into infrastructure and private equity? Also, what are your expectations for real estate inflows in 2025? A: Pension reforms in Chile, Colombia, and Mexico are expected to increase contributions, benefiting local pension funds. We are developing local products to capture these opportunities. In real estate, high interest rates in Brazil may affect brick-and-mortar strategies, but security strategies could benefit. In Chile, lower interest rates may drive interest in real estate investments.

Q: What is the current strategy for developing local investment products in Latin America, and how does it align with your overall growth plan? A: We are focused on developing local strategies for each asset class in key Latin American markets, including private equity, infrastructure, credit, and public equities. This approach allows us to cater to local investors' needs and regulatory requirements, enhancing our growth and diversification.

Q: Can you provide a breakdown of the real estate AUM in Brazil, specifically the proportion of brick-and-mortar versus securities strategies? A: The total real estate AUM in Brazil is approximately BRL 23 billion. We will provide a detailed breakdown of brick-and-mortar versus securities strategies offline, as it requires further analysis.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.