• Fundraising: Over $2 billion in the third quarter and more than $4.2 billion year-to-date, on track to meet or exceed the $5 billion target for 2024.
• Management Fees: Approximately $78 million for the quarter, up 26% year over year.
• Fee Related Earnings: Almost $41 million for the quarter, representing a year-over-year growth of close to 13%.
• Fee Related Earnings Per Share: $0.26, up more than 65% since 2021.
• Distributable Earnings: Close to $35 million for the quarter, or $0.23 per share.
• Net Accrued Performance Fee Balance: $455 million or $2.97 per share, increased slightly sequentially.
• Fee Earning AUM: Almost $34 billion, rose 9% sequentially and 58% year over year.
• Dividend: Declared a $0.15 per share dividend for the quarter.
• Net Fee Revenue: $75.9 million for the quarter, up 28% year over year.
• Operating Expenses: $34.7 million for the quarter, up $11.8 million versus Q3 2023.
• FRE Margin: 53.4% for the third quarter, with a year-to-date margin of 55.5%.
• Debt: Approximately $165 million outstanding at the end of Q3.
• Effective Tax Rate: 10.6% in Q3 2024.

• Warning! GuruFocus has detected 6 Warning Signs with PAX.

Release Date: November 05, 2024

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

Positive Points

• Patria Investments Ltd (NASDAQ:PAX) achieved robust organic fundraising of over $2 billion in the third quarter and more than $4.2 billion year-to-date, putting them on track to meet or exceed their $5 billion fundraising target for 2024.
• Management fees increased by 26% year-over-year, reaching approximately $78 million for the quarter.
• The company's fee-related earnings per share rose by more than 65% since 2021, indicating strong financial performance.
• Patria's diversification strategy has led to significant growth, with over $4 billion of fundraising year-to-date coming from strategies and product structures not offered at the time of their IPO.
• The infrastructure fund has returned close to $2 billion to investors since the start of 2023, demonstrating effective capital recycling and strong investment performance.

Negative Points

• Patria Investments Ltd (NASDAQ:PAX) did not realize any performance fees in the third quarter, which could impact short-term revenue.
• The company's effective tax rate increased to 10.6% in the third quarter, higher than previous quarters, reflecting a change in business and geography mix.
• Operating expenses rose by $11.8 million compared to the previous year, driven by acquisitions and increased personnel costs.
• The integration of recent acquisitions has temporarily lowered the company's FRE margin, which stood at 53.4% for the third quarter.
• Patria's share count is expected to increase, which could dilute earnings per share in the short term.

Q & A Highlights

Q: With $4.2 billion raised year-to-date, how has GPMS altered your organic growth trajectory, and do you expect it to continue contributing significantly to fundraising? A: Alexandre Saigh, CEO: We are very excited about the momentum GPMS has brought to our fundraising efforts. It aligns with our strategy to diversify our platform and meet investor demand. We expect this momentum to continue, pushing us to exceed our $5 billion fundraising target for 2024. GPMS, along with credit, real estate, and infrastructure, is contributing significantly to our growth.

Q: Should we expect final closes for Private Equity 7 and Infrastructure 5 in Q4, and can you provide details on the $500 million SMA with an Asian Sovereign Wealth Fund? A: Alexandre Saigh, CEO: We maintain the $2 billion target for Private Equity 7. The $500 million SMA with the Asian Sovereign Wealth Fund is not included in current numbers and will be split between fund structures and fee-paying co-investments. We expect to continue fundraising for Infrastructure 5 into mid-next year.

Q: Can you provide expectations for FRE margin in 2025 and explain the tax rate outlook? A: Alexandre Saigh, CEO: We expect FRE margins to improve to the upper 50s in 2025 as we integrate recent acquisitions. The tax rate is expected to be between 6% to 8% for 2024, trending towards 10% in 2025 due to diversification and jurisdictional income mix.

Q: How is the infrastructure segment performing given the current macroeconomic conditions in Brazil? A: Alexandre Saigh, CEO: Despite macroeconomic volatility, the infrastructure sector is experiencing a mini-boom with successful auctions and strong foreign interest. We are well-positioned with a new $2 billion fund and strategic partnerships, allowing us to capitalize on these opportunities.

Q: What are your plans for product and geographic expansion, and will this involve M&A or organic growth? A: Alexandre Saigh, CEO: We continue to focus on product and geographic expansion within Latin America, particularly in Colombia and potentially Mexico. While we are not planning acquisitions in the next four quarters, we aim to integrate current businesses and explore organic growth opportunities, especially in private credit and real estate.

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