20-F: Patria Investments Limited Files 20-F Annual Report for Fiscal Year Ended December 31, 2023

Sentiment:

Annual Report 26 April 2024 7:34 PM

Patria Investments Limited releases its 20-F annual report, detailing its financial performance and key activities for the fiscal year ended December 31, 2023.

Better than expectedThe company's AUM, FEAUM, FRE, and DE all increased year-over-year, indicating improved financial performance.The company's flagship private equity and infrastructure strategies outperformed their benchmarks, demonstrating strong investment management capabilities.

Summary

Patria Investments Limited has filed its 20-F annual report for the fiscal year ended December 31, 2023.
The report details the company's financial position, operating results, and cash flows in accordance with IFRS.
As of December 31, 2023, Patria's assets under management (AUM) reached US$31.8 billion, compared to US$27.2 billion in the previous year.
The company's fee earning AUM (FEAUM) stood at US$23.9 billion as of December 31, 2023, up from US$19.2 billion in 2022.
Fee Related Earnings (FRE) for 2023 amounted to US$147.7 million, an increase from US$130.0 million in 2022.
Distributable Earnings (DE) for 2023 were US$187.8 million, compared to US$147.1 million in 2022.
The company's net income for the year was US$120.8 million, a rise from US$94.1 million in the previous year.
The report also discusses the company's corporate structure, risk factors, and compliance with regulatory requirements.
The company has a dual-class share structure, with Class B shares holding significantly more voting power than Class A shares.
The company is subject to various market risks, including interest rate changes and foreign currency fluctuations.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and strategic growth initiatives, indicating a favorable investment environment.

Positives

Significant growth in AUM and FEAUM year-over-year.
Strong performance in key investment strategies, including private equity, infrastructure, credit, and public equities.
Successful integration of acquired businesses, contributing to revenue growth.
Effective risk management practices to mitigate market risks.
Commitment to ESG principles and sustainable investment practices.

Negatives

Exposure to market risks, including interest rate changes and foreign currency fluctuations.
Potential for fluctuations in revenue and net income due to reliance on performance-based fees.
Dependence on key personnel, with potential adverse effects from their departure.
Intense competition in the asset management industry.
Potential for litigation and regulatory actions.

Risks

Difficult market and geopolitical conditions can adversely affect the business.
Economic slowdown could contribute to adverse operating performance for certain fund investments.
Increase in interest rates and other changes in the debt financing markets could negatively impact the ability of funds and their portfolio companies to obtain attractive financing or refinancing.
Climate change can create transition risks, physical risks and other risks that could adversely affect the company.
Governments have a high degree of influence in Brazil, Chile and the other economies in which the company operates.
The ongoing economic uncertainty and political instability in Brazil, including as a result of ongoing corruption investigations, may harm the company and the price of its Class A common shares.
Exchange rate instability may have adverse effects on the Brazilian economy, the company's business and the trading price of its Class A common shares.
Patria Holdings owns the majority of the company's issued and outstanding Class B common shares, which represent approximately 83.2% of the voting power of the company's issued share capital, and controls all matters requiring shareholder approval.
The dual class structure of the company's share capital has the effect of concentrating voting control with Patria Holdings; this will limit or preclude your ability to influence corporate matters.
The company is a Cayman Islands exempted company with limited liability. The rights of the company's shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.

Future Outlook

The company aims to expand its leadership position in Latin America, increase its share of global commitments, and drive higher alternative investments penetration in the portfolios of Latin American investors.

Industry Context

The announcement reflects the ongoing trend of growth in the alternative investment industry, particularly in Latin America, with increasing demand for diverse investment products and strategies.

Comparison to Industry Standards

The company's flagship private equity strategy's 20-year net IRR in U.S. dollars was 20.3% as of December 31, 2023, outperforming the global Cambridge Associates benchmark by more than 380 bps as of September 30, 2023.
For the company's flagship infrastructure strategy, the pooled net IRR in U.S. dollars for the latest two vintages, or for the last decade, was 13.0% as of December 31, 2023, outperforming the Hamilton Lane Global Infrastructure Median and the Dow Jones Brookfield Global Infrastructure Index by 4.8% and 13.2% respectively.
For Credit, the company's Latin American High Yield, Latin American Local Currency and Chilean High Yield strategies have outperformed their benchmarks since inception by 370 bps, 110 bps and 229 bps respectively.
For Public Equities, the primary funds for the company's Chilean Equity, Latin Public Equities and Private Investment in Public Equity (PIPE) strategies show an annualized outperformance since inception versus the relevant benchmarks of 567 bps, 444 bps and 771 bps respectively as of December 31, 2023.
For Real Estate, all three main Real Estate Investment Trusts (REITs) acquired through VBI Real Estate have outperformed the benchmark since inception as of December 31, 2023.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director	Otavio Lopes Castello Branco Neto	Peter Paul Loreno Estermann	December 31, 2023	Resignation

Legal Proceedings

The company is involved in several legal proceedings, including civil, labor, and tax matters, but believes these are unlikely to have a material adverse impact on its operational results or financial condition.

Related Party Transactions

The company has engaged in related party transactions, including compensation payments to directors and officers, carried interest allocations, and a sale of a long-term investment to Patria Holdings Limited.

Stakeholder Impact

Shareholders: The company's strong financial performance and commitment to paying dividends are expected to benefit shareholders.
Employees: The company's equity incentive programs and long-term bonus plans are designed to attract and retain talent.
Investors: The company's diverse product offerings and strong investment track record are expected to attract new investors and increase capital commitments.
Portfolio Companies: The company's operational value creation approach and sector specialization are expected to benefit portfolio companies.

Next Steps

Continue to monitor and manage market risks, including interest rate changes and foreign currency fluctuations.
Focus on attracting new capital and investors to sustain AUM growth.
Successfully deploy capital and realize investments to generate attractive returns.
Continue to expand the product portfolio and geographic reach.
Maintain a strong focus on ESG principles and sustainable investment practices.

Key Dates

Date	Description
2007-07-06	Patria Investments Limited was incorporated in Bermuda.
2010-10-01	Shareholders agreement entered into with Patria Holdings Limited and Blackstone PAT Holdings IV, L.L.C.
2020-10-12	Patria changed its jurisdiction of incorporation to the Cayman Islands.
2020-12-01	Purchase agreement entered into with Blackstone and certain of its affiliates, the Founders, and certain entities affiliated with the Founders, and Patria Brazil, as part of a corporate reorganization.
2021-01-06	Purchase closed as part of the corporate reorganization.
2021-01-13	Share split of 117.0:1 was carried out.
2021-01-21	Registration statement on Form F-1 relating to the initial public offering was declared effective by the SEC.
2021-01-26	Initial public offering closed, with Class A common shares beginning trading on the Nasdaq Global Select Market.
2021-07-24	Roll-Up closed as part of the corporate reorganization.
2021-12-01	Combination with Moneda Asset Management completed.
2022-02-01	First tranche of the acquisition of Kamaroopin was signed on December 8, 2021 and closed on February 1, 2022.
2022-03-14	Patria Latin American Opportunity Acquisition Corp. announced the closing of its initial public offering.
2022-07-01	Agreement to acquire VBI Real Estate closed with the acquisition of 50% of VBI.
2022-11-30	Agreement to acquire Igah Ventures completed.
2023-04-03	VBI acquired BlueMacaw Asset Management Ltda.
2023-04-12	Second tranche of the acquisition of Kamaroopin was signed on March 16, 2023 and closed on April 12, 2023.
2023-06-12	The SPAC held an extraordinary general meeting of its shareholders.
2023-07-05	Business arrangement with Bancolombia announced.
2023-09-01	VBI acquired Bari Gesto de Recursos Ltda.
2023-10-16	Agreement to acquire private equity solutions business from abrdn announced.
2023-11-01	Business arrangement with Bancolombia closed.
2023-11-03	VBI acquired Move Capital S.A. and Morc Gestora de Recursos de Crdito Ltda.
2023-12-06	Agreement to acquire Credit Suisses Real Estate business in Brazil announced.
2024-01-10	1,879,977 Class A common shares issued to entities controlled by certain Moneda partners as deferred compensation.
2024-02-06	Board of directors approved a dividend of US$ 0.399 per share.
2024-03-08	Acquisition of Credit Suisses Real Estate business in Brazil closed.

Keywords

Assets Under Management, Private Equity, Infrastructure, Credit, Real Estate, Alternative Investments, Latin America, Financial Performance, Distributable Earnings, Fee Related Earnings, Investment Management

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