William Buonsanti Barranjard

William Buonsanti Barranjard of Itaú BBA asked if it's fair to assume gross margins will improve sequentially, given that repricing appears to be offsetting funding cost increases, or if other factors could negatively impact future margins.

Answer

Executive Artur Schunck clarified that repricing has not fully compensated for the rise in Brazil's Selic interest rate, and the full impact of recent rate hikes will be felt in Q2 and Q3. He indicated that while the company is focused on cost controls, further margin pressure is possible and pointed to the full-year guidance as the most reliable indicator of expected performance.

William Buonsanti Barranjard asked about the gross margin outlook, observing that repricing appeared to more than offset rising funding costs in Q1. He questioned whether it is fair to expect sequential gross margin improvement, considering a potentially slower pace of interest rate hikes ahead.

Answer

Executive Artur Schunck clarified that repricing did not fully offset the impact of the Selic rate hikes in Q1, and the full effect of recent rate increases will be felt in Q2 and Q3. He stated that while the company is working to reprice clients and manage costs, there will be more impact on gross profit in the coming quarters. He ultimately pointed to the full-year guidance of 7% to 11% growth as the key metric, expressing confidence it will be achieved.

William Buonsanti Barranjard asked for a more detailed overview of the $3.5 billion in pending fee-earning AUM, requesting a breakdown by strategy, the expected management fee, and the anticipated timing for capital deployment.

Answer

CEO Alexandre Saigh clarified that the pending fee-earning AUM is primarily allocated to the Infrastructure and GPMS verticals. While not providing a precise fee breakdown, he suggested using the current average management fee of 96 basis points for modeling purposes. He estimated a typical deployment timeline of four to six quarters, but noted that due to the strong start to the year, much of the current pending AUM could be deployed throughout 2025.

William Buonsanti Barranjard requested more detail on the expected breakdown of the $6 billion fundraising target for 2025 by strategy and asked for confirmation on the net debt outlook, specifically if the debt-to-FRE ratio guidance from the Investor Day is maintained.

Answer

CEO Alex Saigh stated that Patria does not provide a specific breakdown of its fundraising target to maintain flexibility, but highlighted expected appetite for credit and infrastructure in Brazil and GPMS strategies globally. CFO Ana Russo confirmed the year-end net debt of $190 million was in line with expectations and reiterated the goal to keep the debt-to-FRE ratio slightly below 1:1, with debt reduction anticipated throughout 2025.

William Buonsanti Barranjard asked about Patria's medium-term product and geographic expansion plans, particularly into new areas, and whether future growth would be pursued organically or through M&A.

Answer

CEO Alex Saigh stated that the focus remains on product and geographic expansion within Latin America, highlighting organic product launches in Colombia via the Bancolombia JV. While acknowledging potential M&A opportunities to expand GPMS in the U.S. and Infrastructure globally, he announced a 'hiatus' on M&A for the next four quarters. The priority is to integrate recent acquisitions, improve margins, and demonstrate synergy realization to investors before considering new deals in late 2025 or 2026.

William Buonsanti Barranjard asked about any new seasonality effects in fundraising, fees, performance, or expenses that analysts should incorporate into their models following the combination with Compass.

Answer

Bruno Sacchi Zaremba, President of Finance and Operations, identified the advisory fee line as having the most significant new seasonality. He explained that this is due to the incorporation of Compass's third-party distribution business, where fees are lumpy and dependent on the timing of fund closings, adding to the existing variability of the corporate advisory segment.

William Buonsanti Barranjard asked about the potential sale of the software asset, specifically if potential buyers who already have their own acquiring capabilities could be excluded from the process, given the desire for a commercial partnership.

Answer

Executive Mateus Schwening stated that maintaining existing commercial agreements would be a very important condition for any transaction. CEO Pedro Zinner added that they could not share specific details on buyers but confirmed strong interest from a diverse group of over 20 players, including both financial investors and strategic companies, indicating an open process.