Good day, and thank you for standing by. Welcome to the Patria Second Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Josh Wood, Head of Shareholder Relations.

Thank you. Good morning everyone and welcome to Patria's second quarter 2023 earnings call. Speaking today on the call are our Chief Executive Officer, Alex Saigh; our Chief Financial Officer, Ana Russo; and our Chief Corporate Development Officer, Marco D'Ippolito; and we are also joined by 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 second quarter 2023, which you can find posted on our Investor Relations website or on Form 6-K filed with the Securities and Exchange Commission. Any forward-looking statements made on this call 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 inherent 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 form. As a foreign private issuer, Patria reports financial results using International Financial Reporting Standards or IFRS as opposed to US GAAP. Additionally, we will report and refer to certain non-GAAP industry measures, which should not be considered in isolation from or as 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. On headline metrics, Patria generated distributable earnings of $43.6 million or $0.295 per share for 2Q 2023 including fee-related earnings of $33.8 million and performance-related earnings of $10.7 million. We declared a quarterly dividend of $0.251 per share, payable on September eight to shareholders of record as of August 16th. With that, I'll now turn the call over to Alex.

Thank you, Josh, and good morning, everyone. In the second quarter, Patria delivered excellent financial results for our shareholders and we are also seeing accelerating momentum in key drivers of our business. Second quarter distributable earnings of $43.6 million or nearly $0.30 per share was driven by the predictable and growing base of fee-related earnings and again the positive contribution of performance fees from Infrastructure Fund III. With fee related earnings of $65 million year-to-date, we continue to see the outlook on track to reach our target of $150 million in 2023 with more growth coming in the back half of the year. Performance fees have been a more regular contributor to earnings recently. And while we have not them every quarter, the $11 million generated in Q2 and $40 million over the last three quarters demonstrates the early stages of a performance fee realization cycle that can be a powerful driver of shareholder value over the coming years. Capital formation continues to accelerate with $1.9 billion in organic inflows through the end of the second quarter and more than $2.2 billion secured through Q3. If we include pending new AUM from the recently announced joint venture with Banco Colombia expected to close in Q3, total capital formation will reach approximately $3.4 billion year-to-date and nearing a cumulative $8 billion since the beginning of 2022, tracking towards the four-year cycle target of $20 billion by the end of 2025. While the fundraising environment remains very challenging in some areas this is where platform diversification shines with more than 30 products and counting, Patria enjoys many vectors for growth as we still see the path to reach our target of $5 billion to $6 billion of organic inflows in 2023 across all products. Looking specifically at our drawdown funds, we also…

Thank you, Marco. Good morning everyone, and great to be with you again. Patria delivered distributor earnings of $43.6 million in the second quarter of 2023, equivalent to nearly $0.30 per share and generating a dividend for shareholders of $0.25 per share. Year-to-date we have now delivered a DE of $82.8 million, which is up nearly 30% from the same period last year. For an investor who bought shares at the beginning of the year, the fourth quarter 22 dividends paid in March combined with Q1 and Q2 2023 dividends already amount to a yield of well over 5% with the Q3 dividend is still left to be paid during 2023. Let's now look at how the des composed. Our consistent management fees were $61.6 million in Q2 2023 up 11% from Q2 2022, driven by both organic and inorganic FAUM growth. As the second half of the year unfolds we will see a more relevant increase with new deployments of the drop-down funds and inspiration of fee holiday for our latest vintage private equity fund. Note that for the latest vintage flagship funds we can generally collect retroactive management feedback to the save mission date on additional closings. On the expense side, personnel expenses were $16.8 million in the second quarter 2023, flat compared to the first quarter and up 7% compared to last year. Together with administrative expenses, operating costs were up 9% compared to the second quarter 2022, reflecting the acquisitions of VBI IgA and Kamaroopin as well as inflationary pressure on sellers and expenses of around 4%. As a result, our fee-related earnings were $33.8 million in Q2 2023, up 9% from Q2 2022. Second quarter FRE margin of 56% is in line with prior year and ticked up slightly from the first quarter. Year-to-date fee-related…

Thank you, Ana. To close here, we believe that Patria is the premier gateway for alternatives in Latin America. Our business was born in the region and we have honed our investing strategy for more than 30 years of experience on the ground. We believe Patria is the reference trusted partner for sophisticated global investors who want to allocate capital to alternatives in the region. We also believe we can facilitate the development and adoption for alternative products for local investors in the region and be a conduit for them to access alternative investments globally. Our growth strategy is built around those pillars and we communicated ambitious goals at our Investment Day last year. We are now on our way and I continue to have confidence in our ability to deliver. We thank all of our stakeholders for your support and we are now happy to take your questions.

Thank you. We will now conduct a question-and-answer session. [Operator Instructions] And our first question comes from Craig Siegenthaler with Bank of America.

Good morning, Alex and Marco. How you are both doing well?

Hi Craig. Thanks for participating in the call. I am here with Marco and all well here. Thank you.

So my question is on fundraising. And I want to come back to some of the comments you made around P Fund VI in the prepared remarks. What do you think are the two biggest challenges that you're facing with respect to raising the buyout fund?

Thanks, Craig. This is Alex here. Well, I think first and foremost, the general feeling of for end results actually for fundraising for private equity has not been as it was I think free this whole inflationary issue in the -- mainly in the US. So, as mentioned in prior earnings calls, I think we -- for this specific fund, we are underperforming in the US and this -- for this fund in particular, the US market was an important contributor of around one-third of the fund. We are managing to overperform in other markets as also mentioned in other calls like and more specifically the Middle East, including Israel, Asia and Latin America, very much surprised with the Latin American interest for this fund. I think investors see the monetary cycle here easing in Latin America as mentioned in the macro part of my little short speech there and they want to actually come into products that have very, very high returns like our private equity Fund VI. So, all in all in order to compensate for the large group of investors the North American investors mainly US and Canada less Mexico, which again accounted for one-third of prior funds, we have to really overcompensate the other regions. We're doing that, but I think as of today, we had I think the target of reaching around $2.5 billion, $3 billion for this fund. I think that it's more realistic to see the number 2.5% now. And also I think we have a composition of other products that kind of eroded some of the demand for that. Growth equity kind of competes with private Active Fund VII, some investors mainly the endowments and some smaller institutional and family offices. They like the risk return profile of growth equity, given that…

Thank you, Alex. Very through. For my follow-up I wanted to hit on the expectation for timing and size for Infra V. And I think in the prepared remarks I heard that you already raised $550 million to date although I don't think it had a first close just yet because it's not showing up on Slide 17. But my question is do you think will be significantly larger than the $1.9 billion of Fund IV at this point just given results to date with P Fund VI.

Yes and yes. For going straight to the answer here. We did have a first closing for Infrastructure Fund V. I don't think it was well communicated. But yes that first closing happened already 330 million in the second quarter another $200 million in the early third quarter $550 million. And we have already secured because secured I mean when our investors have already gone through all the approvals we are finalizing negotiations of the PA. But as it is a rep because it's an investors that have already invested in prior funds the LPA the limited partners agreement is very well known for them. So that's why I did say in my earnings call here that we're going to get to the $1 billion first close because normal a first close investor gives the papers back to us one week the investor gives the papers back the other week whatever. But within this month we get the $1 billion which is 40% of $2.5 billion. So the 2.5 billion is the answer to the second part of your question. I can see the 2.5% which is higher or larger than the 1.9% for private equity -- sorry Infrastructure Fund IV 1.9% Infrastructure Fund V 2.5. And I see an upside there. Things are going so well for our infrastructure franchise here as one of the consultants' reports that I mentioned a couple of minutes ago the headline of this private equity and infrastructure fundraising report of one of these consultants as DPI is the new king. And that's what our team has been doing on the infrastructure front they have really sold so many companies at such great valuations, have giving back so much money to the investors, investors of our Infrastructure Fund III. In reals, they are over…

No. That was great. Thank you, Alex.

Thank you. Operator, should we go to the next question, please.

Our next question comes from Tito Labarta with Goldman Sachs.

Hi. Good morning. Alex, Marco and Ana, thanks for the call, taking my questions. Couple of questions. I guess, can you give any more color on -- are you able to realize any more performance fees for this year particularly I guess from Infra Fund III that caught us a little by surprise -- positive surprise obviously. But just to understand how much more you can potentially realize in the short-term both from Infra Fund III and overall? And the second question. Good performance I guess on the public equities. In real estate side particularly going into a lower interest rate environment, obviously valuation benefited but also we saw good inflows there with limited outflows. Can you give some color on how you see that shaping out for the rest of the year, particularly, we saw the Central Bank of Brazil cut rates last night? Are you seeing more interest in those verticals? Thank you.

Hi, Tito. Thanks for the question. Thanks for participating. Yes, I think, on the -- overall on the performance fees, I think, we're -- we continue to see the $180 million for the next three years including 2023, which we gave as a guideline during the Pax Day late last year. So what we see there I think we -- on private -- for Infrastructure Fund III there are divestments going on and very interesting valuations that we'll be able to get for these assets. And this -- once we sell these assets it contributes 100% to our performance fee because we are in the catch-up phase. So I see news coming from that front which is the more short-term news coming there. On the private equity side, we are also distributing in kind some of our listed products --listed securities there and that generates a performance fee there. So that's what we're looking into for the second half of this year for -- and that's assets of our private equity Fund V. Also because of the appreciation of the listed securities in private equity Fund V, mainly SmartFit so we see a lot of divestments still going on for the second semester also for Infrastructure Fund II but that is not going to generate any performance fees in the second semester. So in this order, Infrastructure Fund III continues to be the main driver of performance fees in the second half of the year. Divestments going on as we speak. We're selling assets that are still in that fund. We have five remaining assets in that fund. Proposals are coming in. We have organized processes and we're moving ahead and that's why I'm comfortable that we will continue to deliver on performance fees this year and overall for the…

Okay. That's great.

Hope we answered your question, please.

Yes. No, very helpful, very good color and hopefully it's a good time for Brazil and LatAm given they were a bit ahead of the curve here. Thank you.

Thank you. Thanks for participating.

One moment for our next question. Our next question comes from Ricardo Buchpiguel with BTG Pactual.

Good morning and congrats the results. I have a couple of questions here. First, can you please give us an update and more details of the levels of inflows in the liquid strategies that we should expect in the following quarters going by each product and what product should benefit the most with the impact in the Chilean interest rate cut? And also for my second question, do you believe that right now is a good moment to accelerate the consolidation of the LatAm asset management industry. And you mentioned Mexico should be an interesting region to take. If you could also comment what product will make sense to add to your platform would also be helpful. Thank you.

Of course. Thank you very much, Ricardo. Nice talking to you. And well we have -- I think we're cautiously optimistic on the fundraising for our liquid strategies. We saw good fundraising momentum in the second quarter for our public equity strategies. We have large cap LatAm,small cap LatAm. Small cap LatAm, we're actually reaching a point that we might even close the fund for a while because we were managing a max amount of dollars there $150 million to $100 million. We've reached $500 million in basically 60 days the last 60 days of the second quarter. So no good momentum on the inflows there and on the large cap LatAm the same. And then the Chilean strategies, we have large cap Chile, we have small cap Chile, and we have pipe in Brazil. All of the performances have been as I mentioned a couple of minutes earlier, 20% plus in local currencies then you add the strengthening of the Chilean peso and the Brazilian real it's really impressive. And of course, that drives the fundraising momentum. So I see that momentum continuing in the second half of the year. Yes, it's hard to say exactly a number. But overall I think the $5 billion to $6 billion number that I mentioned earlier in the call for organic fundraising for the year should be met between the drawdown funds. We have fundraising for our flagship drawdown funds going on. Infrastructure Fund V and Private Etity Fund VI mainly, but also growth equity and venture capital and also the private credit funds like infrastructure credit and the Brazilian private credit fund. So if we add everything the $5 billion to $6 billion I can go I think with you, I think it's more effective and productive to go offline. We…

Very clear. Just a quick follow-up here. How much of your liquid funds you charge based on NAV. And then the fee earnings should benefit from all these positive mark-to-market that we have been discussing?

I'm guessing here I'm going to have Marco answer the question in more detail and Ana. It's not 100% all of our – most of our funds liquid strategies charge on NAV. We're checking that information but if not 100% Ricardo. Is it 100% Marco. Marco D’Ippolito: So I think the best reference you have Ricardo is on Page 14 on your presentation, where we provide an overview by asset class and you can take the line with ESA public equities. And the piece where you credit open evergreen funds that is on the fee modality that you just described on NAV. And then the others will be the drawdown modality.

Very clear. Thank you. Marco D’Ippolito: Thank you.

One moment for our next question. Our next question comes from Yuri Fernandes with JPMorgan.

Good morning, Alex, Ana and Josh, Marco. I have a first question regarding your performance in fees this quarter. I guess Marco mentioned effects benefiting a little bit. And I think Alex and the presentation mentioned about an Entrevias sales, so my question here is on Entrevias. I guess you had about 45% stake on the company. So just checking if you sold this additional stake now or anything not if you didn't sell it, when you plan to sell this Entrevias stake? And how much do you believe this can help you on further performance fees? That's the first one and I can have another question after you answer this one. Thank you.

Hey, Yuri. How are you? Thanks again for your coverage there. No I did read your report. And let me -- yes, why did we have performance fee from deals that were already announced, right? And we did not sell an additional portion of Entrevias or an additional portion of any other assets from Infrastructure Fund III. What happened here was that we conservatively projected some of the accounts that you actually do close just at closing dates and I'll give you an example here. So now we sell the company for X. And there are some slight adjustments like working capital, the actual debt, because then it depends on how much cash the company generated between signing and closing. So there are minor adjustments that we do at closing. We normally -- what we do we are conservative on those assumptions in order to lower the price sold the equity value because of course, we have our projections. We are confident that things are going to go our way on working capital and cash flow generation but we are conservative. So the performance fee that we announced on the sale of data Entrevias, did take into account conservative assumptions for working capital and the indebtedness of these companies at closing. When things came to closing we were right. We had a little upside on what we needed to leave on the table there for working capital needs of those specific companies. We were also on the upside there. The debt was a little lower than what we expected because the company generated a little bit more cash between signing and closing. And all that of course contributes to the price is the same of course but it raises the equity, because it has less debt so more equity. And that actually contributed to more performance fees. So the actual price of the company basically is the same but we had a little less debt, a little bit more equity and that actually went into -- straight into our Infrastructure Fund III. And as we are in the catch-up phase now 100% of what comes into Infrastructure Fund III is now comes to the general partner. We did then, managed to have additional performance fees. So we do not sell additional parts of any assets was this between signing and closing adjustments which were positive adjustments for us. Again, $10 million out of the $1.8 billion that we sold slight adjustments but were on the positive side. What I mentioned I think when answering one of Craig's questions earlier today, was that we are selling other assets of our Infrastructure Fund III. That now I am cautiously also optimistic that we will manage to signed the sale of these assets in the second half of 2023 contributing then for performance fees for the general partner for PAX. I hope I answered your question and ready for the next one here.

Great. No, guys, thank you for the clarification. I have a second one regarding Banco Colombia is a recovery here. And I guess you put in the press release and you mentioned some time about Central America operation. I guess this is the smaller portion of the pie. But just checking if the €1 billion AUM you benefit, you mentioned this includes also Central America if you see like you can also leverage in those other countries that Banco Colombia serves. And a second topic here also regarding Banco Colombia is sure right? I know it's not the same company but usually it's also an important distribution channel for like asset management products in the region. So just checking if this is only Banco Colombia or if you have any kind of agreement with Sura or not really? Thank you.

So the deal that we have with Banco Colombia as of today is Colombia and is only Banco Colombia only. As you pointed out Banco Colombia is the dominant player in Central America in Panama Guatemala and El Salvador. We have not touched those geographies so far. It's open to explore in terms of distribution. But the REIT business that comes along with Banco Colombia is exclusively a Colombia dedicated vehicle. But we have no limitations to expand the relationship into Central America and in fact is part of the discussion okay? And Sura we are not contemplating in the existing business plan distribution through Sura. But there's also no limitations that we go into that direction.

Perfect, thanks. Super clear. Thank you guys and congrats on the quarter.

Thanks Yuri.

One more for our next question. And our next question comes from William Barranjard with Itau BBA.

Good morning, Alex. Here so, regarding a quick one here. So regarding that FRE target of BRL150 million so this target in place that the company should show a good performance in the second half of the quarter around 30% growth in FREs okay over the first half. So if you could go through it, we would like to understand what are the levers for that improvement?

Yes. Hi, William. Thanks. Thanks for your question, thanks for participating. Yeah. I think the way that these drawdown funds works is that you do the first close of the fund. And then as you raise money after the first close the fees are retroactive to the first close. So contrary to the liquid strategies as we talked here with Ricardo, when someone invests subscribes quotas for a liquid fund strategy the day that it hits as of that day we start charging fees. In the case of the liquid funds which is a major fundraising effort of this year the flagship infrastructure Fund V Private Fund VI. Blah, blah, blah, we did project first closing last year. We did our Infrastructure Fund V closing late in the second quarter in late June. So for example if I raise $100 million in September of 2023 I do not charge fees only for from September to December. I charge fees from June late June to December. So if I raise $1 billion I have the whole six months of fees not fees as of the date that we raised the money. So that's a major contributor for that because I given an example here if I have $1 billion William of fundraising for the drawdown funds by using $1 billion just as an illustrative exemple 2% of $1 billion is 20 million. I don't if I raised that during the quarter I might have less than the $10 million for the semester. But no as I go all the way back for private Active Fund VII to January of this year. So it's a full year. So if I raised $1 billion for Private Equity fund VII I have $20 million of fees even if I raised that money in November…

I think what we can do here William is to -- again I think it's more effective here if we go offline and explain to you exactly on an asset class by asset cloud basis. But in general is for the illiquid [ph] drawdown funds is the fact that I mentioned of the -- you have the first closing of the fund, and then when you raise money after that first closing, the fees are retroactive, number one. Number two we are more optimistic in the second half of 2023 versus the first half of 2023 on fundraising for the liquid strategies because of the Latin American backdrop. And we began seeing that in the second quarter, more money coming in for our liquid strategies. That's the two macro factors and then I think we can go with you offline and explain in more detail.

Okay. Thank you. That’s really clear, Alex and Marco.

Thank you.

I’m showing no further questions at this time. I would now like to turn the conference back to Alex Saigh for further comments.

Well, thank you very much for your patience for hanging on for over an hour with us here that, of course, it's a huge pleasure that we have you guys with us here today. And I know we are honored that you guys are covering us. Thanks a lot for all of your efforts. Be sure that we'll continue to do our best here to deliver on our promises, on our PAX Day, on the fee-related earnings of $150 million, et cetera. And I hope to see you guys in person, and I think we have no meetings with most of you in the coming weeks and months. So that would be a pleasure again to see you in-person. Thanks a lot. Thanks for your presence and talk to you soon.

And this concludes today's conference call. Thank you for participating. You may now disconnect.