Patria Investments Surpasses Fundraising Goals Amid Growth

Patria Investments Ltd. ((PAX)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call of Patria Investments Ltd. presented a largely positive outlook for the company, overshadowing some challenges it faced in the past year. With strong fundraising achievements and growth in fee-related earnings, the company is well-positioned for future success, despite encountering obstacles such as increased operating expenses and a decline in net accrued performance fees.

Exceeded Fundraising Target

Patria Investments Ltd. made headlines by surpassing its fundraising target for 2024. The company raised $5.5 billion, exceeding the $5 billion goal. This remarkable achievement includes $300 million raised through their advisory business, showcasing Patria’s impressive capability in attracting investments even during challenging economic times.

Fee Related Earnings Growth

The company achieved its 2024 fee-related earnings target of $170 million, marking an increase of 15% from 2023. The per share earnings saw a rise to $1.12, up by 13%. This growth indicates the company’s effective strategies in enhancing revenue streams and maintaining a strong financial position.

Strong Performance Related Earnings

Patria generated more than $41 million in performance-related earnings, primarily from the successful sale of the Chilean project Aguas Pacifico. This transaction underscores Patria’s ability to execute profitable projects that contribute substantially to its earnings.

Increase in Fee Earning Assets Under Management

The fee-earning assets under management (AUM) of Patria grew to $33 billion, reflecting a 38% year-over-year increase. Despite a 3% sequential decline due to dollar appreciation, this growth highlights the company’s robust asset management capabilities and its resilience in navigating currency fluctuations.

Successful Diversification and Resilience

Patria has made significant strides in diversifying its platform, with 70% of its 2024 fundraising stemming from local investors in local products. This diversification strategy reflects Patria’s adaptability and resilience in an ever-evolving market landscape.

Decline in Net Accrued Performance Fees

The company faced a challenge with a 30% decline in net accrued performance fees, attributed to dollar appreciation and lower marks on publicly traded holdings. This decline highlights the potential vulnerability in the performance fee structure, necessitating strategic adjustments.

Public Equities Outflow

Despite positive performance in other segments, Patria continues to experience outflow pressure from public equities, which affects overall net inflows. This trend suggests a need for strategic realignment to mitigate the impact of equity market fluctuations.

Increased Operating Expenses

Patria’s operating expenses saw a rise due to acquisitions, salary increases, and inflationary pressures. These increased costs have impacted the company’s financials, prompting a focus on cost management and operational efficiency.

Forward-Looking Guidance

Looking ahead, Patria Investments Ltd. has set ambitious targets for 2025. The company aims for a full-year fee-related earnings (FRE) target of $200 million to $225 million, or $1.27 to $1.43 per share. They also project cumulative performance-related earnings of $120 million to $140 million through 2027. Additionally, Patria plans to reach a fundraising target of $6 billion for 2025, demonstrating confidence in its continued growth and expansion efforts.

In summary, Patria Investments Ltd.’s earnings call highlighted a robust performance in 2024, with significant achievements in fundraising and earnings growth. While challenges such as increased operating expenses and a decline in performance fees were noted, the overall sentiment remains positive, with strategic plans in place for continued growth and diversification in 2025.