PAX — Patria Investments Limited

Summary of Patria Investments Limited Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Fundraising: Total fundraising for Q1 2026 was $2.1 billion, on track to meet the full-year guidance of $7 billion, with potential to exceed the 2025 record of $7.7 billion.
• Fee-Earning AUM: Increased to $45.8 billion, up 12% quarter-over-quarter and 31% year-over-year, driven by organic growth and acquisitions.
• Fee-Related Earnings (FRE): Approximately $51 million for the quarter, a 19% year-over-year increase, with a projected full-year FRE guidance of $225 million to $245 million.
• Distributable Earnings Per Share: Rose 14% year-over-year to $0.27.
• Debt Issuance: Completed a $350 million fixed-rate long-term debt issuance, enhancing balance sheet flexibility and extending maturity profile.

2. Strategic Updates and Business Highlights

• Acquisitions: Successful integration of Solis (Brazilian CLO platform) and three Brazilian REITs, contributing significantly to AUM growth.
• Investment Performance: Over 80% of fee-earning AUM outperformed benchmarks since inception, with notable returns in the Credit LATAM High Yield strategy.
• Diversification: Expanded capabilities in private structured credit and infrastructure, with strong demand for credit products and infrastructure mandates.
• New Product Development: Launched the Patria Co-Investment Partnership Fund, raising $139 million in its first close, and anticipated strong fundraising for the Secondaries Opportunity Fund V.

3. Forward Guidance and Outlook

• FRE Growth: Projected to grow to $225 million to $245 million for 2026, with a long-term FRE margin target of 58% to 60%.
• Pending Fee AUM: Increased to approximately $3.3 billion, expected to convert to fee-paying status within the year, contributing an estimated $25 million in revenue.
• Performance Fee Expectations: Revised expectations for performance fees, with a focus on conservative valuations and longer realization timelines.

4. Bad News, Challenges, or Points of Concern

• Political Environment: Upcoming Brazilian elections could impact the asset management industry, with potential for higher inflation and interest rates under a continued Lula administration, which may affect equities negatively.
• Performance Fee Challenges: Expectations for performance fees from older vintage private equity funds (Funds IV and V) have been tempered, with no carry anticipated from Fund IV and conservative outlook for Fund V.
• Market Conditions: The current high-interest rate environment poses challenges for exit strategies and realization of investments, particularly in private equity.

5. Notable Q&A Insights

• Election Impact: CEO Alex Saigh discussed the potential implications of the Brazilian elections on asset management, highlighting opportunities in credit and infrastructure regardless of the outcome.
• Performance Fee Clarifications: Saigh confirmed that while Fund IV is unlikely to generate performance fees, Fund V's outlook remains cautious, with a focus on conservative valuations.
• Expense Growth Breakdown: CFO provided insights into expense growth, attributing it to integration costs, seasonal compensation resets, and platform investments, with expectations for margin improvement throughout the year.
• Focus on Co-Investments: Clarified that co-investment vehicles do charge fees, but large investors often have fee waivers up to certain thresholds, impacting revenue dynamics.

Overall, Patria Investments Limited demonstrated strong operational performance and strategic growth in Q1 2026, while navigating challenges related to market conditions and political uncertainties in Brazil.