Strategic Execution and Performance Drivers
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Achieved record quarterly fee-related earnings (FRE) of BRL 96 million, driven by the full consolidation of Verde and sustained organic growth in Credit and Global IP&S segments.
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Strategic combination with BACS Asset Management in Argentina aims to capture rapid financial system transformation and growing demand for mutual funds and alternative investments.
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Integration with Verde is yielding tangible benefits, specifically through the launch of the VIVE FI-Infra product and strong cultural complementarity between teams.
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Private Equity segment demonstrated successful value creation with the exit of Mundo do Cabeleireiro, marking the fifth exit from the Nordeste III fund and supporting the launch of VIR V.
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Management attributes regional resilience to Latin America's status as a geopolitically neutral and stable region, attracting inflows as investors diversify away from U.S.-centric exposures.
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Identified a 'hidden asset' in the balance sheet with BRL 868 million in proprietary long-term funds that are not yet contributing to cash earnings but are expected to realize substantial value in coming years.
Outlook and Strategic Initiatives
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Expects a BRL 100 million indemnification payment related to the Galeão airport concession to positively impact distributable earnings in the second half of 2026.
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Anticipates BRL 300 million to BRL 400 million in capital calls for IRE commitments by year-end 2026, which will temporarily reduce financial income before entering the realization cycle.
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Fundraising momentum is expected to accelerate for SPS IV and VIR V, with first closings for the latter anticipated in the next few quarters.
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Strategic focus remains on scaling private credit strategies across Chile, Colombia, Brazil, and Peru to address high demand for local-to-local and cross-border solutions.
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Management plans to internationalize the Corporate Advisory segment to other Latin American markets to offset current softness in the Brazilian deal environment.
Operational Context and Risk Factors
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Corporate Advisory fees declined 35% year-over-year due to slow deal activity influenced by high interest rates and election uncertainty in Brazil.
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The effective tax rate is expected to shift to the low-20s (approximately 21-22%) following the full consolidation of Verde, which operates under a real tax regime.
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Performance-related earnings (PRE) showed seasonal normalization, as liquid funds typically recognize performance in the second and fourth quarters.
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AI adoption has reached a critical mass with 70% of employees using custom agents, resulting in significant productivity gains and accelerated software development timelines.
Q&A Session Highlights
Accretion and strategic rationale for the BACS transaction in Argentina
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The deal is expected to be high-single-digit accretive on a local basis, though the impact on total firm-wide numbers will be small in the short term.
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The primary value lies in gaining access to Banco Hipotecario's extensive retail distribution network to scale alternative investment products.
Sustainability of equity inflows and market sentiment
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Recent inflows were driven by new UCITS platforms for Brazil and LatAm strategies, primarily from international LPs.
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Management expects local flows to return once domestic allocations recover from historical lows, supported by strong active management performance.
Impact of Brazilian elections on market stability and operations
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Management expressed a lack of concern regarding election outcomes, noting that the market has already priced in current political leadership and fiscal uncertainties.
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The focus remains on the structural scarcity of capital in the region, which provides a favorable environment for deploying new funds regardless of political shifts.
Future M&A and product expansion priorities in Latin America
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Infrastructure and private credit are the top priorities for regional expansion, with plans to roll out local-to-local products in Chile.
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There is significant interest from European and U.S. LPs in Latin American infrastructure, which management intends to capture through its broadening regional footprint.
