Patria Investments Limited · NASDAQ:PAX
Patria Investments — Investor Presentation (April 2021)
38 slides from Patria Investments's investor presentation, Apr 13, 2021
Slide 1: Patria Investments Investor Presentation April 2021
Patria Investments (Nasdaq:PAX) Investor Presentation APRIL 2021
Slide 2: Disclaimer
2 Disclaimer This presentation may contain forward - looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . You can identify these forward - looking statements by the use of words such a
Slide 3: Introduction to Patria
3 Introduction to Patria A LEADING LATIN AMERICAN PRIVATE MARKETS INVESTMENT FIRM WITH 30+ YEARS OF HISTORY Data as of December 31, 2020 1) Among Latin America - based private markets managers considering capital raised from 2009 to 2019. Source: Preqin . Internal Analysis. 2) Cash Weighted returns:
Slide 4: Patria's History & Investment Platform
4 8.6 4.7 1.1 Total AUM YE 2020 $14.4 Bn Patria’s History & Investment Platform USD 14+ BN IN AUM BUILT OVER 30+ YEARS OF HISTORY Foundation and partnership with Salomon Brothers 50%/50% First Private Equity Fund raised Partnership with Launch of Country - specific strategies 1997 2010 2014 2006 Lau
Slide 5: Investment Strategies Overview
5 Real Estate Investment Strategies Overview AUM ANCHORED BY FLAGSHIP FUNDS WITH ATTRACTIVE GROWTH POTENTIAL IN EMERGING STRATEGIES Private Equity Country - Specific Strategies Dedicated to consolidate small to mid - size companies in fragmented and resilient sectors Focus on structural bottlenecks
Slide 6: Strong Financial Profile Based on Key Industry Metrics
6 5.8 6.9 Strong Financial Profile Based on Key Industry Metrics FAST GROWING & STICKY FEE EARNING AUM, ATTRACTIVE MARGIN & SUBSTANTIAL PERFORMANCE FEE CAPACITY 13% YoY FRE growth with a margin among the best in the peer group 85% of Total AUM is eligible to performance fees 70+% of FEAUM has over 5
Slide 7: Proven Investment Approach
7 Proven Investment Approach WE HAVE DEVELOPED A REPLICABLE “INVESTMENT TECHNOLOGY” USED ACROSS ALL OUR PRODUCTS Ability to develop long - term relationships and partnerships with strategic players, founders and key industry executives Majority of deals sourced independently and outside open bidding
Slide 8: Our Strategy has Delivered Attractive Returns for our LPs
8 Our S trategy has Delivered Attractive Returns for our LPs FLAGSHIP FUNDS - ROBUST PERFORMANCE AT ATTRACTIVE PREMIUM TO LATAM & EMERGING MARKETS PUBLIC EQUITIES Cash Weighted 1 22% 13% Equal Weighted 2 31% 29% Pooled Net Returns (Private Equity + Infrastructure) Data as of December 31, 2020 1) Cas
Slide 9: Focus on Growing & Resilient Sectors Where We Generate Alpha
9 25.1% 4.4% 14.5% 10.9% Patria Log MSCI EM Log MSCI ACWI Log Russell 3000 Log 26.0% 3.6% 5.4% 7.1% Patria Agri MSCI EM Agri MSCI ACWI Agri Russell 3000 Agri 15.3% 4.2% 3.8% 6.6% Patria F&B MSCI EM F&B MSCI ACWI F&B Russell 3000 F&B 26.6% 11.4% 10.9% 12.1% Patria HC MSCI EM HC MSCI ACWI HC Russell 3
Slide 10: Seasoned Leadership Team with Demonstrated Succession
10 Seasoned Leadership Team with Demonstrated Succession DEEPLY INGRAINED CULTURE ATTRACTS AND RETAINS TOP INVESTMENT TALENT Talent Management & Development ▪ Distinctive brand offers a unique career path ▪ Patria Academy , our internship program, one of the entry level programs in our sector: ~100
Slide 11: Global Client Base Is a Key Driver of Our Growth Plan
11 OUR SOLID, DIVERSIFIED AND SOPHISTICATED GLOBAL CLIENT BASE IS A KEY DRIVER OF OUR GROWTH PLAN 300 + LPs 6 10 10 20 6 10 World’s largest sovereign wealth funds¹ World’s largest pension funds US’s largest pension funds Large, Influential & Sophisticated Clients supporting us through vintages and a
Slide 12: Fundraising Track Record Leads the Region
12 0.3 1.2 4.0 4.5 6.6 16.6 1997 - 2004 2005 - 2008 2009 - 2012 2013 - 2016 2017 - 2020 Total OUR ROBUST MARKETING & RELATIONSHIP MODEL HAS DRIVEN PROGRESSIVELY LARGER FUNDRAISING ACROSS VINTAGES Fundraising Track Record Leads the Region Patria is the market leader in fundraising for private markets
Slide 13: Macro Environment & Private Markets Opportunity in Latin America
13 Macro Environment & Private Markets Opportunity in Latin America
Slide 14: Latin America Overview
14 4 8 18 21 Latin America Advanced Economies 46 65 50 33 Latin America Advanced Economies Latin America Overview HISTORICAL HIGH INTEREST RATES LED TO UNDERSERVED, UNDERPENETRATED AND FRAGMENTED MARKETS Source: International Monetary Fund, World Bank, and Patria Research Chile Argentina Peru Brazil
Slide 15: Latin America's Broadly Uncorrelated Growth Stories
15 Latin America’s (Broadly Uncorrelated) Growth Stories SELECTION OF CORE TARGETED SECTORS IN EACH COUNTRY CAN ALSO SHARPLY REDUCE IMPACT OF GDP VOLATILITY Indexed returns of Patria’s core targeted sectors vs. non - core sectors vs. real GDP Brazil, Dec 2007 – Dec 2020, index number Patria’s core t
Slide 16: Brazilian Private Markets
16 8.75 10.75 12.50 7.25 14.25 2.00 3.41 6.00 0.62 3.20 7.34 1.49 3.18 - 3.04 -4 -2 0 2 4 6 8 10 12 14 16 Jan-09 Jun-09 Nov-09 Apr-10 Sep-10 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Mar-13 Aug-13 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18 Jan-19 Jun-19 Nov-19 Apr-2
Slide 17: Global & Latin American Private Markets
17 Global & Latin American Private Markets STRONG GROWTH WORLDWIDE AND ALSO IN LATIN AMERICA, WHICH IS STILL UNDERPENETRATED Global Latin America (1) Source: Preqin . Does not consider Hedge Funds and Funds of Funds; (2) Preqin’s Data: Private Equity and Infrastructure are well represented in the ba
Slide 18: Key Drivers of Patria's Financial Growth
18 Key Drivers of Patria’s Financial Growth
Slide 19: Understanding Patria's P&L
19 Understanding Patria’s P&L FEE RELATED EARNINGS & DISTRIBUTABLE EARNINGS ARE KEY PROFITABILITY MEASURES FOR THE INDUSTRY FY 2020 Management Fees 112.9 Primary operating revenue stream – Contractual recurring fees based on Fee Earning AUM Incentive Fees 3.5 Earned on certain perpetual capital vehi
Slide 20: Patria's Key Business Drivers
20 1,215 206 Patria’s Key Business Drivers 2020 WAS AN ACTIVE YEAR IN EACH STAGE OF THE INVESTMENT LIFE CYCLE Fundraising Total Platform Deployment C losed - end F unds Realizations Closed - end Funds FY 2020 $1,422 million Data as of December 31 , 2020 Infrastructure Country - specific Strategies 1
Slide 21: Fee Related Earnings Growth is a Key Focus
21 Fee Related Earnings Growth is a Key Focus GOOD VISIBILITY ON NEAR TERM DRIVERS FOR THIS HIGHLY - VALUED EARNINGS STREAM Data as of December 31 , 2020 . Reflects management’s expectations as of April 1 , 2021 . Please see “Disclaimer” slide for information about the use of and reliance on project
Slide 22: Fee Earning Assets Under Management Are Highly Stable
22 Fee Earning Assets Under Management A re Highly Stable WE INVEST USING LONG - TERM OR PERPETUAL FUND STRUCTURES NOT SUBJECT TO QUARTERLY REDEMPTION 2019 2020 2018 2.7 3.0 3.3 2.4 3.2 3.3 0.8 0.7 1.0 5.8 6.9 7.7 Private Equity Country - specific Strategies Infrastructure ( US$ in billions) • Fee E
Slide 23: High Management Fee Revenue Visibility
23 High Management Fee Revenue Visibility NEAR - TERM FEE REVENUE GROWTH DRIVEN BY DEPLOYMENT Incentive Fees P erformance - based fees from perpetual capital funds which are received on a recurring basis and not dependent on a realization event $3.5 million in 2020 driven by Patria’s Constructivist
Slide 24: Operating Expenses are Largely Driven by People Costs
24 61% 34% 5% Operating Expenses are Largely Driven by People Costs FX EXPOSURE FOR FEE RELATED EARNINGS CURRENTLY MITIGATED WITH BALANCE BETWEEN REVENUE & EXPENSES • C ompensation & benefits account for the majority of our operating expenses, and more than half our compensation expense is variable
Slide 25: Performance Fees Can Drive Substantial Incremental Earnings
25 Performance Fees Can Drive Substantial Incremental Earnings STRONG PORTFOLIO PERFORMANCE SUPPORTS SIGNIFICANT ACCRUED VALUE FOR FUTURE MONETIZATION • Net Accrued Performance Fees of $276 million at December 31, 2020 reflects the balance that would be realized (net of related compensation) if all
Slide 26: Patria's Growth Strategy
26 Inorganic Opportunities Latin American private capital industry is ripe for M&A We believe that a liquid public equity currency allows Patria to more aggressively participate in industry consolidation Patria’s Growth Strategy OUR PLATFORM IS WELL - POSITIONED TO CONTINUE GROWING THROUGH ORGANIC A
Slide 27: Growth Strategy: Continue to Scale Flagship Products
27 Growth Strategy: Continue to Scale Flagship Products PRIVATE EQUITY & INFRASTRUCTURE FUNDS SCALED OVER MULITPLE VINTAGES…AND WE BELIEVE THIS CAN CONTINUE 3% 22% 53% 29% 0% 25% 50% 75% 100% Private Equity Fund VI (2019) Infra Fund IV (2019) Latest Vintage Fund Progress Reserved 1 Deployed 51% 56%
Slide 28: Growth Strategy: Capitalize In Country-Specific Strategies
28 Growth Strategy: Capitalize In Country - Specific Strategies FINANCIAL DEEPENING IN LATIN AMERICA DRIVES INCREASING DEMAND FOR YIELD Listed Equities (CEF) Real Estate Credit Patria ´ s Competitive Edge Current AUM BRL 1.3 Bn USD 0.3 Bn ▪ 36% BRL net compounded annualized return in 2020 ▪ Ability
Slide 29: Growth Strategy: Pursue Strategic M&A Opportunities
29 Growth Strategy: Pursue Strategic M&A Opportunities PATRIA IS WELL - POSITIONED TO DRIVE CONSOLIDATION IN THE LATIN AMERICAN PRIVATE CAPITAL SPACE $USD # Managers 1 from 1 Bn to 3 Bn 15 from 500 Mn to 1 Bn 22 from 200 Mn to 500 Mn 44 Less than 200 Mn 160 240+ Capital raised from 2009 to 2019 Besi
Slide 30: Key Takeaways for Patria Shareholders
30 10 Key Takeaways for Patria Shareholders • Patria is a leader in private markets investing in Latin America , with a global investor base and 30+ years of history • Private markets continue to benefit from tailwinds globally …and there is enhanced opportunity in Latin America • Patria is generati
Slide 31: Appendix
Appendix PATRIA
Slide 32: Income Statement (US$ in millions)
32 (US$ in millions) 4Q19 4Q20 (4Q20 vs. 4Q19) 2019 2020 (2020 vs. 2019) Revenue from management fees 26.8 29.7 2.9 104.9 112.9 8.0 Revenue from incentive fees 5.1 3.3 (1.8) 18.1 3.5 (14.6) Revenue from performance fees 4.8 - (4.8) 4.9 - (4.9) Revenue from M&A and monitoring fees 0.2 0.2 (0.1) 1.0 2
Slide 33: Fee Related Earnings and Distributable Earnings Reconciliation
33 (US$ in millions) 4Q19 4Q20 (4Q20 vs. 4Q19) 2019 2020 (2020 vs. 2019) Management Fees 26.8 29.7 2.9 104.9 112.9 8.0 (+) Incentive Fees 5.1 3.3 (1.8) 18.1 3.5 (14.6) (+) Advisory Fees and Other Revenues 0.2 0.2 (0.1) 1.0 2.5 1.5 (–) Taxes on Revenues (1) (1.3) (1.4) (0.1) (5.0) (3.8) 1.2 Total Fee
Slide 34: FRE and DE Reconciliation
34 (US$ in millions) 4Q19 4Q20 (4Q20 vs. 4Q19) 2019 2020 (2020 vs. 2019) Management Fees 26.8 29.7 2.9 104.9 112.9 8.0 (+) Incentive Fees 5.1 3.3 (1.8) 18.1 3.5 (14.6) (+) Advisory Fees and Other Revenues 0.2 0.2 (0.1) 1.0 2.5 1.5 (–) Taxes on Revenues (1.3) (1.4) (0.1) (5.0) (3.8) 1.2 Total Fee Rev
Slide 35: IFRS Balance Sheet Results
35 IFRS Balance Sheet Results Notes : The decrease in Short term investments is related to the payment of Dividends of USD 25 . 0 settled in December 28 , 2020 . Accounts receivable presented an increase mainly related to management fees receivable from fund Private Equity IV to be received in annua
Slide 36: Total AUM & FEAUM Roll Forward
36 Total AUM & FEAUM Roll Forward (Unaudited) 1) Inflows for FEAUM during the period reflect new fundraising for funds charging fees based on committed capital, plus deployed (or reserved) capital for funds charging fees based on deployed capital 2) Outflows for FEAUM during the period reflect the i
Slide 37: Closed-End Funds Investment Record as of 4Q20
37 Closed - End Funds Investment Record as of 4Q20 Deployed + Reserved Total Invested Unrealized Investments Realized Investments Fund (Vintage) Total (USD) % Value (USD) Value (USD) Value (USD) Value (USD) Gross MOIC (USD) Net IRR (USD) Net IRR (BRL) Private Equity PE I (1997) 234,000 163,812 - 278
Slide 38: Definitions
38 Definitions • Distributable Earnings (DE) is used to assess our performance and capabilities to distribute dividends to shareholders . DE is calculated as FRE deducted by current income tax expense, plus net realized performance fees, net financial income/(expenses), and other income/(expenses) .
Patria Investments — Investor Presentation (April 2021) on 6ix