Vinci Partners Investments Ltd Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ricardo Buchpiguel - Banco BTG Pactual - Analyst : I have two here on my side. So first I wanted to hear your thoughts on what should we expect about the evolution of FRE margin throughout this year, right? So there's any you guys did like a very big M&A here with Compass so just to understand a little bit better the pace and the evolution of the improvement as you. Tackle the synergies of this transaction. And secondly, if you could also talk about pay. What should we expect in terms of student payout for 2025? I should we expect some somewhere close due to 90% or 95%. It will also be helpful. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 10:00PM, VINP.OQ - Q4 2024 Vinci Partners Investments Ltd Earnings Call

Question: Ricardo Buchpiguel - Banco BTG Pactual - Analyst : And just another question that I have. I was looking at the AUM variation, from one quarter to another and there was a big relevant effect related to FX, right? I understand that Compass have their AUM mostly in USD and given the BRL depreciation had a positive effect on our AUM. But why would it be the number that helped in terms of revenues, right? Just to understand a little bit the effect on the P&L of this currency fluctuation. Bruno Zaremba - Vinci Partners Investments Ltd - President of Finance and Operations of Private Equity, Investor Relations Yeah, I think Sergio mentioned that as well, right? Today we have about 30% of the -- of our revenue in dollars and and and other breakdowns in the other currencies rise is about 40%, 30% in dollars, and the balance of the results are in Chilean pesos, Argentinian pesos, and so on and so forth. So, I mean, having that depreciation impact on AUM now, we would like, I mean, we would see the, from the dollar standpoint, the impact on that 30% revenue that we have in dollars and depending on relative terms for the other currencies, the rest of the impacts as the other currencies move against the real. But in this quarter, the most significant impact was from the dollar variation, which is that 30%. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 10:00PM, VINP.OQ - Q4 2024 Vinci Partners Investments Ltd Earnings Call

Question: Guilherme Grespan - JPMorgan - Analyst : Congratulations on results and good luck on the new chapter. Two questions on my side. One, starting to insist on the effects, but now the $160 million that you guys mentioned on the releases, as the impact from US debt. Just remind us a little bit, what exactly is this debt and is this unhatched and is expected to continue to be unhatched in the P&L? And then my second question is related to performance fees. It seems that, and correct me if I'm wrong here, but it seems that a large portion, the largest was, IPNS, right, the contribution from this segment. Just remind us if it should be recurring or not, the contribution to performance from this side of the business. I understand there's also in Argentina and the results on Peru. But I think the largest chunk here of performance was IPNS and just want to understand if we're going to see this every quarter. Thank you. Bruno Zaremba - Vinci Partners Investments Ltd - President of Finance and Operations of Private Equity, Investor Relations Okay, this one, this is room again. Thank for the questions. In regards to the exchange rate, the exposure that we have on the that side is the pre the convertible preferred with Aries, right? That's the exposure that we have put a target of having a small exposure to that fluctuation over time. And obviously this quarter was, significant, exposure on the at least on the income statements, because we have a little bit of the exposure that is on hedge and will continue to be on hedged. We have not hedged it fully, but the squatter with the valuation of the currency, the impact was higher. The reason why we don't have a full hedge is because our business is already partially in dollars. So, we're going to recover over the next few quarters, the cash flow from this loss, but on a momentaneous basis, given that the devaluation was very strong in the fourth quarter, we have this mismatch. But if the currency stayed at 615, which was the I think around the currency around the level where it finished 2024, we would earn this these results back on the FRE given the net exposure that we have to dollars. So that's the rationale that we did. We look at the cash flow profile, the dollar revenue that we have in the business. And look at that, on an ongoing basis to see what kind of exposure we are comfortable in having. And nowadays, we figured that the exposure is between four and six quarters of FRE, to fully offset the impact that we have, on the mark to market of the death position. In regards to PRE. The PRE actually was quite diversified. I was reading through the notes here. In 2024, we had, more or less 20 different products paying PRE. So it was quite diversified, the impact on most of those obviously in the fourth quarter. There were two, there was one, bigger beneficiary to that line which was Argentina. Peru was also, an important impact, but Argentina, I think was the one that really stood out a little bit. It's difficult to say, I mean, obviously Argentina will not be such a con, we don't expect Argentina to be such a contributor, in future quarters, but hopefully that will go to another fund, right, given that we had 20 different funds contributing to PRE, hopefully that role that Argentina had in 204 for us will be taken over by another fund in '25, and we're able to repeat the level of period that we had in 2024, but it's difficult to anticipate, so I wouldn't want to commit to repeating this number going forward depends on markets. The performance of the funds, but hopefully we're going to get some good results in '25.

Question: William Pareja - Itau BBA - Analyst : My question here is regarding the consolidated business and if there is any new seasonality effects that we should be aware of, be it in terms of fundraising, fees, even performance and expenses, if there's something here we should be aware of, so, we could put it into our models, it would be very helpful. Bruno Zaremba - Vinci Partners Investments Ltd - President of Finance and Operations of Private Equity, Investor Relations Okay, William, this is Bruno again. I think the main seasonality that I would expect for us to have is that we are more than doubling our advisory fee line, right? So, we had, as a stand-alone company, the corporate advisory segments, which was difficult to forecast on a quarter to quarter basis because it depends on when the deals closed and when our advisory fees would come in. With the incorporation of Compass, this exposure now is more than double of what we had, on a stand-alone basis. The advisory fees from Compass, they depend on the timing of the closings of the funds that we are distributing our third party distribution business. So they also vary from quarter to quarter. So I would expect on a go forward basis, this line specifically the advisory fee line. To be the line that we would have more seasonality throughout the year depending on the timing of the closing of the transactions, the case of corporate advisory, which we already had, and now depending on the timing of the closing of the funds that we are raising on third party distribution, also affecting on the -- on a quarter to quarter basis, right? Those are the two main aspects that I would expect to have some. A bigger seasonality going forward.

Question: Tito Labarta - Goldman Sachs & Co. - Analyst : My question, following up a little bit on the advisory fees, I guess, particularly for IPNS cause you mentioned some of those are one time. Just to understand how much of the advisory feees should we consider as one time and I think that you also mentioned that you may have some other one-time advisory fees just to think of. About what's recurring. I understand there's some seasonality there that you just mentioned, Bruno, but what's recurring and what's one time. And then somewhat related to that, if on the IPNS, if we look at the fees, the management fee that the percentage of the fee earning AUM, we expected that to come down given the incorporation of Compass, but it is the level we saw this quarter. Is that the right level to think about going REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 10:00PM, VINP.OQ - Q4 2024 Vinci Partners Investments Ltd Earnings Call forward? And I understand you only included two months of compass, right? So it'll probably be a little bit higher, but just to think about the management fee as a percentage of AUM, particularly for IPNS, how do we think about that going forward?

Question: Tito Labarta - Goldman Sachs & Co. - Analyst : Okay, great. I think that's clear, Bruno, thanks for that. So we should consider those advisory revenue fees as recurring. There will be, and it's not necessarily seasonality, it depends more when the funds close, not because you get more than 4Q versus 2Q. It's more when the funds close. Bruno Zaremba - Vinci Partners Investments Ltd - President of Finance and Operations of Private Equity, Investor Relations Exactly. So we had a good fourth quarter. I think fourth quarter was a good number like from a a sustainable level basis I would say probably towards the upper ends. But we expect the advisory contribution, from third party distribution as I made a comment in the prior answer, to more than REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 26, 2025 / 10:00PM, VINP.OQ - Q4 2024 Vinci Partners Investments Ltd Earnings Call double the advisory fees for us on a combined basis. If you add the corporate advisory, what we had before and add the advisory coming from third party distribution. That's going to be more than 2x what we had before. Obviously, it will fall in different quarters, but it's going to be a much bigger number going forward for sure.