Vinci Compass Investments Ltd. · NASDAQ:VINP
Vinci Compass Investments — Vinci Partners Investments — Investor Presentation (February 2023)
57 slides from Vinci Compass Investments's investor presentation, Feb 15, 2023
Slide 1: Investor Presentation February 2023
Investor Presentation February 2023
Slide 2: Disclaimer
Disclaimer This presentation contains forward - looking statements that can be identified by the use of words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others . By their nature, forward - looking statements are necessarily subje
Slide 3: Business Overview
Business Overview
Slide 4: We are a leading, full-service alternative asset manager in Brazil
4 We are a leading, full - service alternative asset manager in Brazil R$ 63 bn AUM¹ See notes and definitions at end of document 10 Business Strategies 31 98 127 232 248 2018 2019 2020 2021 2022 Adjusted DE ( R$mm ) 6.3% LTM Dividend Yield 4 US$0.17 4 Q’22 Dividend Per Share Our business has proven
Slide 5: We offer a complete portfolio of alternative investment products and solutions
5 We offer a complete portfolio of alternative investment products and solutions to both retail and institutional clients Research Risk Legal & Compliance Investor Relations Operations ESG Public Equities Long - term positions based on fundamental analysis of Brazilian publicly - traded companies Fi
Slide 6: Why VRS?
6 Why VRS? VRS launch to increase Vinci's exposure to the growing Pension Plan industry Brazilian complementary open - ended pension plan industry represents over R$1 trillion in total addressable market , growing at a double - digit rate in the last few years Secular trend of decentralization from
Slide 7: Vinci Retirement Services is expected to launch in early 2023
7 Vinci Retirement Services is expected to launch in early 2023 ▪ VRS will offer tailor made solutions designed to fit every investor profile and help individuals reach their retirement goals ▪ Costumers will have easy access to information to enhance the user experience and quick responses regardin
Slide 8: Our AUM is highly diversified across different strategies
8 Our AUM is highly diversified across different strategies Our AUM base favors alpha - driven strategies, while our revenue profile is management fee - centric See notes and definitions at end of document 27% 13% 7% 2% 4% 21% 15% 6% 5% Private Equity Real Estate Credit Vinci SPS Infrastructure IP&S
Slide 9: Our AUM funding base is mostly built upon our proprietary distribution channels
9 44% 38% 18% 39% 47% 8% 6% 37% 21% 18% 17% 6% AUM 4Q'22 34% 24% 23% 11% 8% Local Institutional HNWI Institutional Offshore Allocators & Distributors Public market vehicles Our AUM funding base is mostly built upon our proprietary distribution channels Private . Markets . ▪ Private Markets’ AUM base
Slide 10: Financial Highlights
Financial Highlights
Slide 11: We started a strong cycle for fundraising in Private Markets in 2022
11 We started a strong cycle for fundraising in Private Markets in 2022, that can drive growth for FRE results in the coming quarters Vinci Credit Infra Credit ▪ New strategy that aims to invest in incentivized infrastructure debentures, focusing on high - grade credit assets in accordance with supe
Slide 12: We have a resilient business model with high management fee centricity
12 361 372 67 22 428 393 FY'21 FY'22 99 80 81 85 22 25 18 18 219 208 FY'21 FY'22 Bonus compensation Corporate center Segment Personnel expenses Other G&A 92 100 20 4 112 104 4Q'21 4Q'22 Advisory fees Management fees We have a resilient business model with high management fee centricity Fee Related R
Slide 13: Vinci holds a strong position for future realization of performance fees
13 89% 11% Private Equity Infrastructure Vinci holds a strong position for future realization of performance fees in private market funds… ▪ Performance fee receivable increased to R$167.5 million in the 4Q'22, an 8% increase quarter - over - quarter, driven mostly by appr eciation in the VCP III st
Slide 14: Additional gains from our GP Investments and financial income
14 …and additional gains from our GP Investments and financial income ▪ Realized GP Investment¹ and Financial income² of R$17.7 million in the 4Q'22, down 18% year - over - year, driven by realizations in FIP Infra Transmissão, which occurred in the 4Q’21. ▪ Realized GP Investment income of R$7.5 mi
Slide 15: Highly visible recurring and profitable business model
15 186 189 36 8 (6) 222 192 FY'21 FY'22 43 52 11 1 (1) 54 51 4Q'21 4Q'22 FRE Asset Management FRE Advisory FRE VRS Which translates to a highly visible recurring and profitable business model See notes and definitions at end of document DE Margin ▪ Fee - Related Earnings (FRE) in the 4Q'22 was down
Slide 16: Key Takeaways
16 Key Takeaways See notes and definitions at end of document 77 % FRE as % DE FY ’ 22 We operate a highly predictable business model with recurring revenues coming primarily from management fees 1 We see a relevant upside coming from potential future realization of performance fees R$167.5 m illion
Slide 17: Appendix – I Business Overview
Appendix – I Business Overview
Slide 18: We have scaled our platform significantly since our inception in 2009
18 2 6 11 15 17 18 20 19 21 24 35 47 54 60 50 58 63 0 10 20 30 40 50 60 70 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 AUM (R$bn) AUM DC¹ (R$bn) Brazil Interest Rates We have scaled our platform significantly since our inception in 2009… See notes and definitions at end of
Slide 19: We are pioneers among Brazilian firms in our commitment to ESG
19 We are pioneers among Brazilian firms in our commitment to ESG See notes and definitions at end of document Our ESG approach is a fundamental value that permeates throughout our investment strategies Vinci Energia Sustentavel (VES) - Credit Fund focused on private debt related to green energy fun
Slide 20: We place a strong emphasis on risk management
20 Risk management committee composed and supervised by senior executives including the addition of Julya Wellish as a partner and head of Legal & Compliance (Previously Chief Prosecutor at CVM 1 ) We place a strong emphasis on risk management, taking the utmost care of our clients ’ capital ▪ Manda
Slide 21: We are a leader in Brazilian alternative asset management
21 We are a leader in Brazilian alternative asset management with strong competitive advantages ~90% of AUM coming from proprietary distribution channels 53% of Net Revenues come from Private Market Strategies 6 51% of AUM committed for over 5 years Diversified business model 10 business units Partn
Slide 22: Appendix – II Segment summaries
Appendix – II Segment summaries
Slide 23: Financials by segment
23 59% 19% 19% 3% Private Markets Liquid Strategies IP&S Financial Advisory 56% 19% 21% 4% Financials by segment ▪ Fee Related Earnings (FRE), disregarding Vinci Retirement Services segment, were R$197.6 million over the FY'22, with 56% of FRE coming from Private Markets, followed by IP&S accounting
Slide 24: Complete and diversified platform: Private Equity and Real Estate
24 We offer a complete and diversified platform for alternative investments Private Equity – R$13.8bn AUM (48%) Real Estate – R$5.6bn AUM (20%) PRIVATE MARKETS R$29 BILLION AUM The real estate strategy invests through two subs - strategies : REITs : The real estate strategy currently manages eight R
Slide 25: Complete and diversified platform: Infrastructure and Credit
25 We offer a complete and diversified platform for alternative investments PRIVATE MARKETS R$29 BILLION AUM The Infrastructure strategy invests across two core sub - strategies : Sector - focused funds : The Infrastructure team manages closed - end funds as its flagship strategy, seeking exposure t
Slide 26: Private Markets segment results
26 Private Equity 48% Real Estate 20% Credit 18% Vinci SPS 7% Infrastructure 7% Private Markets' AUM (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 ∆ YoY (%) FY'21 FY'22 ∆ YoY (%) Net revenue from management fees 49,439 52,949 59,699 21% 194,483 207,061 6% Net revenue from advisory fees 1,684 56
Slide 27: Established liquid strategies platform
27 We have an established and widely recognized liquid strategies platform LIQUID STRATEGIES R$10 BILLION AUM Vinci Partners has a long track record and deep experience investing in public equities in Brazil . We focus on holding positions in companies for three to five years following deep analysis
Slide 28: Liquid Strategies segment results
28 Public Equities 72% Hedge Funds 28% Liquid Strategies' AUM (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 ∆ YoY (%) FY'21 FY'22 ∆ YoY (%) Net revenue from management fees 20,510 20,720 19,823 (3)% 86,786 81,325 (6)% Net revenue from advisory fees – – – N/A – – N/A Total Fee Related Revenues 2
Slide 29: Investment Products & Solutions
29 Commingled Funds – R$2.2bn AUM (9%) Our focused commingled funds are owned by multiple clients, from retail to institutional investors, and deploy capital in specific asset classes within defined investment strategies . Our flagship strategies are Vinci Valorem, focusing on fixed income assets, f
Slide 30: IP&S segment results
30 Separate Mandates 66% Pension Plans 14% International 11% Commingled Funds 9% IP&S AUM (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 ∆ YoY (%) FY'21 FY'22 ∆ YoY (%) Net revenue from management fees 21,645 21,692 20,119 (7)% 79,799 83,114 4% Net revenue from advisory fees 7 7 7 3% 54 28 (48)%
Slide 31: We have a leading financial advisory business
31 We have a leading financial advisory business About our Financial Advisory team Our financial advisory services team provides financial and strategic services to business owners, senior corporate management teams and boards of directors, focusing mostly on pre - IPO and M&A advisory services for
Slide 32: Financial Advisory results
32 Financial Advisory ▪ Fee related earnings (FRE) of R$0.6 million in the quarter, down 94% year - over - year. ▪ FRE was R$8.2 million over the FY'22, a decrease of 77% when compared to the FY'21, due to a stronger deal environment in 202 1. ▪ Segment Distributable Earnings over the FY'22 were R$8
Slide 33: Vinci Retirement Services segment results
33 (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 ∆ YoY (%) 4Q'21 YTD 4Q'22 YTD ∆ (%) Net revenue from management fees – – – – – – – Net revenue from advisory fees – – – – – – – Total Fee Related Revenues – – – – – – – Segment personnel expenses – (386) (334) N/A – (1,125) N/A Other G&A expenses
Slide 34: Appendix – III Financial statements
Appendix – III Financial statements
Slide 35: How to analyze Vinci Partners' financial model
35 How to analyze Vinci Partners’ financial model Fee Related Earnings (FRE) (+) Management fees: our main source of revenues, derived from fees charged over our Fee - Earning AUM (+) Advisory fees: fees charged over advisory services provided by our financial advisory and management teams ( - ) Ope
Slide 36: Total fee related earnings
36 (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 ∆ YoY(%) FY’21 FY’22 ∆ YoY(%) Net revenue from management fees 91,594 95,361 99,640 9% 361,070 371,501 3% Net revenue from advisory fees 20,148 7,267 4,394 (78)% 66,755 21,994 (67)% Total Fee Related Revenues 111,742 102,628 104,034 (7)% 427,825
Slide 37: Income statement
37 (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 ∆ YoY (%) FY'21 FY'22 ∆ (%) REVENUES Net revenue from management fees 91,594 95,361 99,640 9% 361,070 371,501 3% Net revenue from performance fees 3,448 31 7,558 119% 37,633 14,600 (61)% Realized performance fees 13,614 2,602 9,241 (32)% 45,348 1
Slide 38: FRE and distributable earnings reconciliation
38 (R$ thousands, unless mentioned) 4Q'21 3Q'22 4Q'22 FY'21 FY'22 OPERATING PROFIT 56,349 49,023 55,321 246,130 199,616 ( - ) Net revenue from realized performance fees (13,614) (2,602) (9,241) (45,348) (18,218) ( - ) Net revenue from unrealized performance fees 10,166 2,571 1,683 7,715 3,618 (+) Co
Slide 39: Effective tax rate reconciliation
39 Effective tax rate reconciliation See notes and definitions at end of document (R$ thousands, unless mentioned) 4Q'21 4Q'22 FY21 FY'22 Profit (loss) before income taxes 66,516 76,381 257,842 271,814 Combined statutory income taxes rate - % 34% 34% 34% 34% Income tax benefit (Expense) at statutory
Slide 40: General and Administrative Expenses
40 General and Administrative Expenses 4Q 2021 (R$mm) 4Q 2022 (R$mm) Lease and condominium Other Personnel Bonus related to Mgmt. and Adv. fees Performance based compensation Third party expenses D&A R$58.8 mm Personnel Bonus related to Mgmt. and Adv. fees Performance based compensation Third party
Slide 41: Liabilities and equity
41 Liabilities and equity 9/30/2022 12/30/2022 Current liabilities Trade payables 768 1,247 Deferred Revenue 16,713 – Leases 22,293 24,147 Accounts payable 6,761 7,328 Labor and social security obligations 66,208 87,732 Loans and Obligations 10,171 13,168 Taxes and contributions payable 19,474 22,29
Slide 42: Supplement Details
Supplement Details
Slide 43: AUM and Fee-Earning AUM Rollforward
43 AUM and Fee - Earning AUM Rollforward Assets Under Management (AUM) – R$ millions Fee - Earning Assets Under Management (FEAUM) – R$ millions For the Three Months Ended December 30, 2022 For the Three Months Ended December 30, 2022 For the Twelve Months Ended December 30, 2022 For the Twelve Mont
Slide 44: Fund NAV and performance
44 Fund Segment NAV¹ (R$ millions) 4Q’22 YTD 12 M 24 M Market Comparison Index Rate Vinci Multiestratégia FIM Hedge Funds 468.5 2.5% 11.8% 11.8% 14.8% CDI 4 CDI 4 Atlas Strategy² Hedge Funds 438.7 (1.5)% 8.2% 8.2% 3.9% CDI 4 CDI 4 Vinci Total Return Hedge Funds 218.0 (5.3)% 3.3% 3.3% 20.9% IPCA 6 +
Slide 45: Private markets fund returns
45 Fund Segment Vintage year Committed Capital Invested Capital Realized or Unrealized Total Value Gross MOIC Gross MOIC Gross IRR Gross IRR Partially Realized (R$mm) (R$mm) (R$mm) (R$mm) (R$mm) (BRL) (USD) (BRL) (USD) Fund 1 Private Equity 2004 1,415 1,206 5,065 213 5,278 4.4x 4.0x 71.5% 77.2% VCP
Slide 46: Shareholder Dividends
46 Shareholder Dividends ($ in thousands) 1H21 3Q ' 21 4Q'21 1Q'22 2Q'22 3Q’22 4Q’22 Distributable Earnings (R$) 101,976 61,743 68,515 53,255 60,435 72,842 55,792 Distributable Earnings (US$)¹ 19,397 11,377 13,637 10,615 11,795 14,281 10,618 DE per Common Share (US$)² 0.34 0.20 0.24 0.19 0.21 0.26 0
Slide 47: Share Summary
47 Share Summary ▪ Common Shares Outstanding as of quarter end of 55,080,736 shares. x Repurchased 278,122 common shares in the quarter, with an average share price of US$10.0. x Repurchased 1,832,852 common shares since the announcement of the first share repurchase plan, with an average share pric
Slide 48: Capital commitments and investments
48 (R$ millions, unless mentioned) Segment 4Q’22 Commitments Total Capital Committed 4Q’22 Capital Called Total Capital Called Capital Returned/Dividends Paid (4Q'22) Accumulated Capital Returned/Dividends Paid Fair value of investments Nordeste III Private Equity – 5.0 0.0 3.1 – 1.6 2.4 VCP III Pri
Slide 49: Performance fee eligible AUM
49 30% 21% 16% 9% 10% 7% 4% 3% Private Equity IP&S Public Equities Real Estate Credit Hedge Funds Infrastructure Vinci SPS PERFORMANCE FEE ELIGIBLE AUM (PEAUM) Strategy/Fund AUM R$mm Index type Index Rate Status Offshore Vehicles 3,737 Preferred Return w/ Catch - Up² USD + 8% Within investment perio
Slide 50: Notes and Definitions
50 ▪ Notes to page 4 (1) AUM is calculated as consolidated with double counting, due to funds from one segment investing in other segments and it ´ s eliminated on consolidation and excluding double counting from co - managed funds between our segments. (2) As of FY’22. (3) CAGR is calculated consid
Slide 51: Notes and Definitions (cont'd)
51 Notes and Definitions (cont’d) ▪ Notes to page 19 (1) Fund commitment and related co - investments. ▪ Notes to page 20 (1) CVM ( Comissão de Valores Mobiliários ) is the Brazilian equivalent to the SEC. ▪ Notes to page 21 (1) Independent asset manager classification excludes any managers that are
Slide 52: Notes and Definitions (cont'd)
52 Notes and Definitions (cont’d) ▪ Notes to page 39 (1) Brazilian tax law establishes that companies that generate gross revenues of up to R$ 78,000.00 in the prior fiscal year may calculate income taxes as a percentage of gross revenue, using the presumed profit income tax regime. The Entity's sub
Slide 53: Notes and Definitions (cont'd)
53 Notes and Definitions (cont’d) ▪ Notes to page 46 (1) US$ Distributable Earnings was calculated considering the exchange rate from USD to BRL of 5.2546, as of February 10, 202 3, when dividends were approved by our Board of Directors. (2) Per Share calculations are based on end of period Particip
Slide 54: Notes and Definitions (cont'd.)
54 Notes and Definitions (cont’d.) ▪ “Fee related earnings”, or “FRE”, is a metric to monitor the baseline performance of, and trends in, our business, in a manne r t hat does not include performance fees or investment income. We calculate FRE as operating profit less (a) net revenue from realized p
Slide 55: Notes and Definitions (cont'd.)
55 Notes and Definitions (cont’d.) ▪ “Net revenue from Fund Management and Advisory” is a performance measure that we use to assess our ability to generate profit s f rom our fund management and advisory business without measuring for the outcomes from funds above their respective benchmarks. We cal
Slide 56: Funds/strategies' descriptions
56 Funds/strategies’ descriptions ▪ Vinci Multiestratégia : The fund seeks to achieve long - term returns by investing in fixed income assets, through strategies that imply interest rates and currency risks. ▪ Vinci Atlas: The fund seeks to achieve long - term returns by investing across all strateg
Slide 57: Office addresses
Rio de Janeiro 55 21 2159 6000 Av. Bartolomeu Mitre, 336 Leblon - 22431 - 002 São Paulo 55 11 3572 3700 Av. Brigadeiro Faria Lima, 2.277 14 o andar Jardim Paulistano - 01452 - 000 Recife 55 81 3204 6811 Av. República do Líbano, 251 - Sala 301 Torre A - Pina - 51110 - 160 Nova York 1 646 559 8000 780
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