Patria (PAX) Q1 2026 Earnings Call Transcript

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Date

Thursday, May 7, 2026 at 9 a.m. ET

Call participants

• Chief Executive Officer — Alex Saigh

• Chief Financial Officer — [Name not provided]

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Takeaways

• Fundraising — $2.1 billion in new capital raised, with guidance reaffirmed for $7 billion full-year and indicated upside potential versus the 2025 record of $7.7 billion.

• Fee-earning assets under management (AUM) — $45.8 billion, up 12% sequentially from fiscal fourth quarter 2025 (period ended Dec. 31, 2025) and 31% year over year, driven by organic growth and completed acquisitions; pro forma including WP Global Partners, AUM is $47.5 billion.

• Fee-related earnings (FRE) — $51 million for the quarter, up 19% year over year; company maintains full-year FRE guidance of $225 million to $245 million and a target margin of 58% to 60%.

• Total fee revenues — $92.6 million, up 20% year over year and 3% sequentially (excluding fiscal fourth quarter incentive fees), reflecting broad platform expansion and contribution from Solis and Brazilian REIT acquisitions.

• Margin performance — FRE margin was 54.6%, expected to improve steadily through the year as integration costs, compensation seasonality, and platform investments normalize; management reaffirms long-term margin target of 58% to 60%.

• Distributable earnings per share — $0.27, representing 14% year-over-year growth, primarily driven by fee-related earnings expansion.

• Permanant capital base — $10.7 billion representing roughly 23% of total fee-earning AUM is in permanent vehicles with little or no redemption risk.

• Pending fee-earning AUM — $3.3 billion, up 17%, with deployment anticipated in the coming quarters and an average fee rate around 90 basis points.

• Debt issuance — First $350 million fixed-rate long-term notes issued post-quarter, with maturities of five, seven, and ten years, average coupon 6.4%, average duration 8.5 years; offering was approximately three times oversubscribed.

• Net debt to FRE ratio — Pro forma for the notes, stands at approximately 0.8x, consistent with the firm’s 1x or less target.

• Credit vertical fundraising — Over $925 million raised in the quarter, with Solis contributing over $265 million and private credit strategies attracting significant institutional demand.

• Infrastructure fundraising — Over $545 million raised, with growing participation in large-scale SMAs and co-investment mandates, despite not being in a flagship fundraising cycle.

• Private equity fundraising — $275 million primarily through co-investment deals; management highlights progress on fundraising pipelines and diversification in local buyout and reforest funds.

• GPMS fundraising — $265 million in the quarter, including a $139 million first close of its inaugural commingled co-investment fund; SOF V has surpassed its $500 million target and may close near $600 million.

• Management fee rate — Last twelve months average fee rate was 87 basis points, with segment mix driving modest movement; no fee schedule reductions in private equity or infrastructure.

• Stock-based compensation — $10.1 million in the quarter; full-year 2026 and 2027 expected at 10%-11% of total fee revenues, attributed to deeper equity participation and competitive benchmarking.

• Tax rate — Effective rate was approximately 10%-13%, reflecting acquisition-driven country mix and business evolution.

• Share repurchases — 893,000 shares repurchased for $12.7 million; new total return swap initiated for 840,000 shares.

• Fund performance — Over 80% of fee-earning AUM (excluding SMAs and third-party managed funds) invested in funds outperforming benchmarks since inception; flagship Credit LATAM High Yield strategy posted 11% annualized net USD returns and outperformed its benchmark across all measured periods.

• Performance-related earnings (PRE) outlook — Cumulative PRE for fiscal fourth quarter 2024 through 2027 now projected at $80 million-$100 million (previously $120 million-$140 million), with realization timing now expected to extend past 2027.

• Business model shift — Management stated that about 70% of AUM now charges fees on market value (NAV), while around 30% remains in drawdown vehicles reliant on performance fees.

Summary

Patria Investments Limited (NASDAQ:PAX) reported sharply expanding platform scale and fundraising, with diversified growth across key asset classes and multiple new capital pools now contributing to both asset base and revenues. The recent $350 million long-term debt issuance extends the company’s maturity profile, secures multi-year balance sheet flexibility, and enables near-term retirement of short-term borrowings. AUM growth, new platforms, and persistent organic fundraising provide clear line of sight to further margin gains as acquisitions, front-loaded compensation, and expanded distribution infrastructure are absorbed. While performance-related earnings guidance was revised lower due to delayed realization in certain equity funds, management emphasized recurring, fee-based revenues from permanent capital and NAV-based products, diminishing reliance on variable income streams.

• Management clarified that “no fee pressure” exists in core private equity and infrastructure segments, attributing average fee-rate declines entirely to mix effects from SMA and co-investment mandates.

• CEO Saigh stated, “Performance fees are becoming less relevant to our business and results by strategy,” and highlighted a strategic move toward predictable, market-valued and permanent capital vehicles.

• Raised $2.1 billion in the quarter with all major verticals—credit, infrastructure, private equity, real estate, and GPMS—benefiting from both local and international institutional demand.

• Pending fee-earning AUM of $3.3 billion is expected to convert to active fee revenue at a roughly 90 basis point rate over the coming quarters, providing forward management fee visibility.

• Compensation expenses were elevated in the quarter due to acquisition integration, seasonality, and accelerated investment in distribution, but management expects improvement toward a 58% to 60% margin within this year.

• Debt capital raised at an average annual cost of 6.4% further strengthens liquidity, with pro forma net debt to FRE of 0.8x well within the company’s self-imposed ceiling.

• Buyout Fund VI has accumulated $237 million in net accrued carry positioned for future monetization, while Buyout Fund IV is not expected to yield any performance fees in the PRE period discussed.

• CEO Saigh directly ruled out further material U.S. expansion beyond GPMS, stating, “Our focus is LATAM and the U.K./Europe,” following the WP Global Partners acquisition.

• Share count remained controlled at 159.1 million, with targeted range reaffirmed at 158 million-160 million.

Industry glossary

• FRE (Fee-related earnings): Recurring profits derived exclusively from management fee revenue after operating costs, excluding nonrecurring gains or performance-based income.

• PRE (Performance-related earnings): Income linked to performance fees—typically carried interest or incentive fees—realized from investment returns above a specified benchmark in drawdown vehicles.

• SMA (Separately managed account): Custom investment fund structure managed on behalf of a single large investor, often with negotiated fees and terms.

• GPMS (Global Private Markets Solutions): Patria’s platform offering investment products and services across global primary, secondary, and co-investment opportunities in private markets.

• DPI (Distributions to paid-in): Private equity metric showing realized investor gains as a ratio of total capital invested in a fund.

• Carry (Carried interest): Portion of investment profits allocated to managers as performance compensation in private investment vehicles.

• REIT (Real estate investment trust): Public or private vehicles pooling investor capital to own and manage income-generating real estate assets, often providing liquidity through listed shares.

• TRS (Total return swap): Derivative contract earning the total return of an asset—here, used to manage share count and exposure.

Full Conference Call Transcript

Alex Saigh: Thank you, Andre. Good morning, everyone. We started 2026 with solid operating performance as we continue to make progress expanding the breadth and reach of our platform. Our results this quarter reflect three consistent drivers: continued organic fundraising momentum, growth in fee-earning AUM, and differentiated investment performance across our investment strategies. Before I turn to the quarter, I want to formally welcome our new CFO for his first earnings call in the role. He has been a partner of this firm since 2024 and has been closely involved in our financial operations. He knows our business well, and I am confident he will bring a fresh perspective to the role. Now turning to the quarter.

Fundraising totaled $2.1 billion, keeping us firmly on track to achieve our full-year guidance of $7 billion. We see upside potential as we work to beat our 2025 record fundraising of $7.7 billion, given the strength of investor demand we are seeing across the platform. Fee-earning AUM reached $45.8 billion, up approximately 12% from fourth quarter 2025 and 31% year-over-year, reflecting year-over-year organic growth and the closing of Solis, our Brazilian CLO platform, and three Brazilian REIT acquisitions, including RBR, Vectis, and Genial, which together added approximately $4.9 billion of fee-earning AUM. Pro forma for WP Global Partners, our co-investment platform in the United States, which closed on April 1, fee-earning AUM stands at approximately $47.5 billion.

The growth in fee-earning AUM drove fee-related earnings of approximately $51 million for the quarter, up 19% year-over-year, and we remain on a solid path to achieve our full-year FRE guidance of $225 million to $245 million. To put this progress into context, annualizing our first quarter FRE and adding the $10 million to $15 million of seasonal incentive fees that typically crystallize in the fourth quarter gets us to roughly $215 million to $220 million, even before considering the additional revenue growth and margin expansion versus first quarter 2026 that we expect to see over the balance of the year. Finally, distributable earnings per share of $0.27 rose 14% year-over-year.

Our CFO will take you through the financials in detail. I also want to highlight that subsequent to the quarter, Patria Investments Limited reached an important milestone as we completed our first issuance of $350 million of fixed-rate long-term debt. The notes were placed with a diversified group of institutional investors primarily in the United States, and the offering was approximately three times oversubscribed. This transaction extends our maturity profile, reduces our reliance on short-term credit facilities, and provides additional balance sheet flexibility. The notes include a mix of five-, seven-, and ten-year maturities with fixed coupons ranging from 6% to 6.6%, resulting in an average duration of 8.5 years and an average cost of 6.4% per year.

Proceeds are being used to retire our existing revolving credit facilities, with the balance available to fund future growth initiatives. Pro forma for the offering, our net debt to FRE ratio stands at approximately 0.8x, consistent with our long-term target of 1x or less. Our CFO will provide more detail on our capital management outlook in his remarks. Of course, the bedrock of our ability to grow the business is investment performance, and we continue to generate attractive returns across our platform.

As shown in our earnings presentation, the vast majority of our funds have historically outperformed their relevant benchmarks, with over 80% of our current fee-earning AUM, excluding SMAs and third-party managed funds, invested in funds that have exceeded their benchmarks since inception. This reflects the consistency of our investment process across cycles and strategies and remains the foundation of our LP relationships and our capacity to raise capital. I invite you to take a look at the return pages of our earnings presentation.

For example, our largest strategy, Credit LATAM High Yield, with over $5 billion in fee-earning AUM, has generated 11% annualized net returns in U.S. dollars since inception 26 years ago, outperforming its benchmark by over 360 basis points, and it is outperforming its benchmark for all periods analyzed—year-to-date, one, three, and five years. Investment performance, of course, directly translates into revenue growth, as over 70% of our fee-earning AUM—mainly in credit, real estate, GPMS, and public equities—grows as our funds deliver positive performance according to their underlying market value. As a reminder, our drawdown vehicles charge fees on a cost basis, so marks in underlying portfolios do not affect management fees.

Moving on, we are very pleased with our fundraising in the quarter, which reflected our continued momentum across multiple verticals. Our credit vertical continues to stand out, as we raised over $925 million across various strategies that keep attracting strong demand from local investors and, depending on the strategy, global investors as well. Of note, Solis contributed over $265 million in the quarter, quickly highlighting how this business is additive to our overall platform. The integration of Solis is progressing well and is expanding our capabilities in private structured credit, particularly in the Brazilian CLO market. This positions us to benefit from the continued development of non-bank financing in Brazil, which we view as a structural multiyear growth opportunity.

We are also seeing strong interest in our dollar-denominated Private Credit LATAM Fund II from international investors and expect this to be a meaningful contributor to fundraising throughout the year. Infrastructure continues to attract sustained demand from global institutional investors and raised over $545 million in the quarter, particularly notable as we are not currently raising a flagship fund. We are seeing growing interest in large-scale SMA and co-investment mandates. Many of these mandates are targeted to specific initiatives, such as the data center project we announced in partnership with ByteDance that is now advancing through its construction phase, and we are in active conversations on additional transactions of comparable scale.

This represents the kind of fee-generating structured mandate we expect to see with greater regularity as our product offering continues to develop. In addition, we continue to expand the breadth of our infrastructure platform into new strategies such as infrastructure core. In private equity, we raised $275 million through a co-investment opportunity and continue to develop a pipeline of additional co-investment and SMA transactions. We are also seeing growing traction in our local buyout Colombian fund and our high-growth reforest fund. Our ability to raise capital for co-investments reflects continued LP confidence in our origination capabilities, even considering the DPI challenge facing the more mature vintages of our flagship private equity buyout funds, Fund V and especially Fund IV.

The DPI profile of our buyout funds reflects a slower realization environment as well as company-specific challenges. While lower interest rates would support improved exit activity, the new interest rate environment has not yet materialized. To address the challenges of that part of our business, we have recently appointed the leader of our value creation team to focus primarily on divestments, while the existing leader of our private active vertical will focus on investing our Buyout Fund VII and various SMAs and co-investment opportunities. Meanwhile, Buyout Fund VI and Buyout Fund VII portfolio companies are performing well, having generated an average EBITDA growth of 17% last year.

Performance has also been strong for our growth equity and venture capital strategies, with flagship funds generating a net IRR in U.S. dollars of 13% and 17%, respectively. Now with respect to GPMS, first-quarter fundraising totaled around $265 million, and we anticipate that 2026 should be a good year for several reasons. First, this quarter’s fundraising includes a $139 million first close for our inaugural commingled co-investment vehicle, the Patria Co-Investment Partnership Fund. This highlights our ability to develop new products on top of acquired platforms. Second, we expect to complete the fundraise for our Secondaries Opportunity Fund V, or SOF V, in the coming months.

We can share that SOF V has already received commitments in excess of its initial target of $500 million, and we believe the fund could reach close to $600 million by its final close, which would make it approximately 50% larger than its predecessor. This highlights our ability to enhance the commercial performance of existing products within acquired platforms. Finally, we are particularly pleased to see that our European program is seeing increased interest from a broad range of institutional investors, including local institutional clients in Latin America, as well as North American and Asian investors who are already part of Patria Investments Limited’s global client base.

This is an important development I want to highlight: the incremental demand from existing investors who have partnered with us in Latin America and are now expanding their engagement with us into new strategies and, most notably, into new regions. Furthermore, the WP Global Partners acquisition, which closed on April 1, further strengthens our position in the U.S. lower middle market, adding a local institutional presence and origination network in a segment where track record and relationships are the primary competitive differentiators. Real estate fundraising outlook remains strong. Take two of our largest Brazilian REITs in logistics and urban retail, for example.

They have over $100 million of capital already contracted, which should flow into fee-earning AUM in the coming quarters, highlighting what we believe to be one of our structural competitive advantages. The scale of our listed vehicles allows us to operate our asset exchange model, through which property owners transfer illiquid assets in exchange for shares of our large, liquid listed funds as a way to monetize their portfolios. This asset exchange program is generating an attractive fundraising pipeline that we believe is not only less dependent on the interest-rate environment than traditional fundraising, but also potentially less costly to originate as well.

The RBR acquisition further enhances our scale and structural advantage, as we expect real estate—which is currently over 90% in permanent capital vehicles—to be a strong contributor to fundraising over the balance of the year. Reflecting on the growth and fundraising that we are experiencing across our platform, it is clear to us that we have significantly diversified our firm’s investment and distribution capabilities both organically and inorganically. We believe we now have at least 10 investment strategies with flagship funds with the potential to raise more than $1 billion each per fund, up from just two flagship funds at the time of our IPO.

All of our fundraising initiatives reinforce and support the high quality of our asset base, as over 85% of our fee-earning AUM is in vehicles with no or limited redemptions, and our permanent capital base now stands at $10.7 billion, or roughly 23% of total fee-earning AUM. In addition, pending fee-earning AUM—capital committed that would earn fees as deployed—increased about 17% to approximately $3.3 billion in the quarter, providing additional visibility into future management fee revenues. At our December 2024 Investor Day, we set a three-year cumulative performance-related earnings, or PRE, target of $120 million to $140 million for the period from fourth quarter 2024 through year-end 2027.

Having generated approximately $62 million through 1Q26, Infrastructure Fund III continues to support this progress, with about $19 million of net accrued carry well positioned for monetization this year. As we approach the midterm of our guidance period, and gain greater visibility into Private Active Fund VI, which has $237 million of net accrued carry, we now expect PRE realization to take longer, making contributions more likely beyond 2027 rather than within our original time frame. Importantly, this is a timing issue, not a value one, and Private Equity Buyout Fund VI is well positioned to be a significant PRE contributor in 2028 and beyond.

Meanwhile, we are encouraged by the expansion of our PRE sources across growth, venture, real estate, and credit, which together have about $13 million of growing net accrued carry, some of which could generate PRE in 2027. Taking it all together, we believe cumulative PRE for the 4Q24 through 4Q27 period can reach $80 million to $100 million, with upside potential if markets improve and divestment activity accelerates. Now let me share a brief perspective on the operating macro environment. Having invested across Latin America through multiple cycles for nearly 40 years, we bring long-term perspective, deep local knowledge, and resilience that few can match.

We continue to believe the region’s exposure to commodities, its evolving renewable energy mix, and its significant infrastructure needs make it an area of sustained structural interest for global capital well beyond short-term market dynamics. Given the recent geopolitical developments you are well aware of, we are seeing growing engagement from global investors, with institutional allocators across Asia and Europe increasingly turning their attention to Latin America and engaging with us across a broader and more diversified set of strategies than has historically been the case. This reflects not just interest in the region, but confidence in our integrated platform, scale, and execution capabilities.

We are continuing to invest in our ability to meet this demand, and we believe we are uniquely positioned to capture these opportunities. In summary, we are executing consistently across the business. Fundraising is on track. Our asset base is predominantly long-duration and non-redeemable. Our investment performance is solid, and we remain confident in our ability to achieve our full-year objectives. With that, I will hand the call to our CFO. Thank you.

Unknown Speaker: Thank you, Alex. Good morning, everyone. I am pleased to be here for my first earnings call as CFO. I have been deeply involved with Patria Investments Limited since 2023, and I aim to bring continued transparency, a focus on the quality of our earnings, and, over time, improvements in the clarity of our financial disclosures. Now let me take you through the first quarter results. Total fee revenues for the first quarter were approximately $92.6 million, up 20% year-over-year from $77.3 million in first quarter 2025 and up 3% sequentially from fourth quarter 2025 excluding the incentive fees that typically crystallize in the fourth quarter.

The year-over-year growth reflects the full-quarter contribution of Solis and the Brazilian REITs acquired through 2025, two months of RBR, organic fee AUM growth, and the net FX and performance effect. Our last-twelve-months management fee rate was approximately 87 basis points in the quarter, reflecting the full-quarter impact of Solis in first quarter as well as stronger growth in credit, real estate, GPMS, and various co-investments and SMAs over recent quarters. Independently of fluctuations in average fee rates—and as evidenced by our margin outlook to be discussed in a few moments—the economics of these products remain very attractive given their open, high incremental margin and the sticky and long-duration structure of the mandates, which can include permanent capital vehicles.

Regarding expenses, total compensation and operating expenses for the quarter were $42 million, up 14% sequentially from fourth quarter 2025. The increase reflects integration of recent acquisitions, planned investments in distribution and investment capabilities, and the seasonal reset of compensation programs at the start of the year. Fee-related earnings for the quarter were approximately $50.5 million, up 19% year-over-year, showing an FRE margin of 54.6%. The margin reflects the contribution of the acquisitions closed in the quarter, platform investments, and seasonal compensation timing, all consistent with our prior guidance on quarterly phasing. We expect the margin to improve progressively through the year as management fee growth continues, integration work evolves, and expense growth moderates.

We remain comfortable with our long-term FRE margin of 58% to 60%. Overall, we are reaffirming full-year 2026 FRE guidance of $225 million to $245 million, or $1.42 to $1.54 per share, approximately 15% to 16% growth from last year’s $202.5 million. We are also maintaining our 2027 FRE target of $260 million to $290 million. Total distributable earnings for the quarter were $42.4 million, or $0.27 per share, up 14% year-over-year on a per-share basis. Growth was driven primarily by FRE. Alex has updated you on our PRE expectations, so let me turn to stock-based compensation. Stock-based compensation in the quarter was $10.1 million.

Based on current programs, we expect full-year 2026 and 2027 stock-based compensation to represent between 10% to 11% of total fee revenues, respectively. The expected nominal increase reflects an intentional expansion of equity ownership deeper into the organization and a higher proportion of total compensation delivered in equity for key employees. When benchmarked against listed alternative manager peers, we believe our stock-based compensation profile is consistent with the group. Finally, we believe that over the long term, our stock-based compensation will moderate as a percent of net revenues as our business scales. Now a brief note on taxes. The first-quarter effective rate was approximately 10% to 13%, reflecting our evolving business mix and consistent with our guidance.

This is driven by country mix as we engage in acquisitions with higher tax burden, which increase the total tax expense. Regarding the balance sheet, I want to take the opportunity to help you understand Patria Investments Limited’s updated liquidity profile following the completion of our debt private placement, which, as Alex noted, extends our maturity profile, eliminates reliance on revolving credit facilities, and provides fixed-rate capital for future business development. To facilitate this, we have added a specific slide to the reconciliation and disclosures sections of our earnings presentation available on our website.

Between proceeds from the debt offering and cash generation, we expect to have ample capacity to meet all of our obligations, pay out dividends, reinvest in the business, and buy back shares while maintaining a conservatively structured balance sheet. In this context, share count for the quarter was 159.1 million shares, inclusive of 893 thousand shares repurchased directly in the market for $12.7 million and the initial implementation of a new total return swap, or TRS, of an additional 840 thousand shares. It remains our goal to maintain the share count in the 158 million to 160 million range. To summarize, our financial picture is straightforward.

We have a business generating growing, sticky cash flows from a highly diversified and predominantly long-duration and non-redeemable asset base. Our fundraising momentum continues and fee-related earnings are growing, giving us confidence that we are on track to meet our objectives. In addition, the balance sheet remains strong and positioned to support future growth initiatives. We look forward to your questions. Thank you.

Operator: At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Craig Siegenthaler from Bank of America. Your line is now open.

Craig Siegenthaler: Good morning, Alessandra. Hope everyone is doing well. Hi, Alex. Thanks for taking my questions. You have a big election coming up in Brazil. I was wondering if you could talk about what the outcomes could mean for the asset management industry in Brazil and Patria Investments Limited, even though I know Brazil has been a shrinking part of your overall business given your diversification?

Alex Saigh: Yes, of course. As you know, it is pretty tight between the two runner-ups, the current president, Lula, and the son of Mr. Bolsonaro, the ex-president, under the name of Flavio. It is very hard to say which way it is going to go. A scenario of having a fourth mandate of Mr. Lula is more of the same, and in our view we would see an environment with higher inflation and therefore higher interest rates driven by fiscal indiscipline that is currently the trademark of Mr. Lula’s government. The main difference for the asset management industry, Craig, is a higher inflation, higher interest rate environment under Mr. Lula’s government, and a lower inflation, lower interest rate environment under Mr.

Bolsonaro’s. Even though in the first moment it would be hard for Mr. Bolsonaro to reduce the deficits immediately, projections would show that he would work on that deficit, and the yield curve would start showing a decline in interest rates during his four-year mandate. Under Lula, we think the environment will be more likely higher rates. Where does Patria Investments Limited stand in that? Our credit business will continue to perform extremely well, as it is right now, as you saw in fundraising over the last years and the last quarter—record fundraising for our credit products. We are expanding our credit portfolio mainly in Brazil. The acquisition of Solis positions us well.

Non-bank financing in Brazil is a huge, multiyear opportunity. We want to place Patria Investments Limited in credit the same way we placed the firm in the REITs business in Brazil. Today, we are the number one leader of a R$250 billion-plus industry that is growing at double digits. In 2025, it was the first year that capital markets’ non-bank financing surpassed bank financing for corporations in Brazil. Due to regulation and Basel restrictions, banks are lending less, and capital markets surpassed banks in lending for the first time. For individuals, the same dynamic will happen. The right structures are through Solis and our FIIs focused on real estate credit. The opportunity is immense.

We are positioning ourselves to continue expanding our credit business and our real estate business that does not relate to credit. On the other side, equities might continue to suffer given a high-rate environment under Lula. Under Bolsonaro, credit would continue to be a major source of income for us, and while it would take some time to reduce inflation and rates, the yield curve would project a decrease; brick-and-mortar real estate and equities would fare better. Given our 40-year experience in Brazil, we are maintaining a broad spectrum of products, with a strong bet on private credit and non-bank financing as an engine of growth, followed by real estate. GPMS is growing a lot outside LatAm for us.

Infrastructure is inflation-hedged; with a higher inflation environment under Lula, that also should benefit. During his prior three terms, Lula promoted one of the largest concession programs in the world—toll roads, water and sanitation, etc.—and we are benefiting a lot through our infrastructure vertical, which has contracted revenues indexed to inflation. That should favor infrastructure under Lula as well. I hope that answers your question, Craig.

Craig Siegenthaler: Great, very comprehensive. For my follow-up, Brazilian public equities have been very strong over the last 12-plus months. How has this impacted your realization outlook, which should make IPO exits easier? I am especially looking at some of your older vintage private equity funds like Fund IV and V.

Alex Saigh: Yes, all true. Listed securities benefited first from flows to the region, even with Lula’s fiscal imbalance concerns, and we saw strong appreciation. Last year, our public equities funds returned from 40% to 60% in reais and even more in U.S. dollars. Our credit funds with listed securities also saw market value gains. We are now seeing some of that flow into private markets—it takes a bit longer to ripple down. We are using this momentum to exit most of our companies in our Private Equity Fund IV, Private Equity Fund V, Infrastructure Fund II, and Infrastructure Fund III, and using this momentum to clean our portfolio and send money back to investors.

Even with exits under execution, we do not expect performance fees for Private Active Fund IV. Private Active Fund V might generate performance fees, but Private Active Fund IV will not. Infrastructure Fund II will not generate performance fees, but Infrastructure Fund III will, and it has been paying performance over the last years; we see it continuing to pay performance fees in 2026. Thank you.

Craig Siegenthaler: Thank you, Alex.

Operator: Our next question comes from the line of Lindsey Marie Shema from Goldman Sachs. Your line is now open.

Lindsey Marie Shema: Hi. Good morning, Alex and Andre, and welcome to the new CFO—looking forward to working with you. Maybe following up on the private equity outlook and performance fees. On the last call you mentioned that the not-official accrued but Private Equity Fund V performance fees were running around $40 million. Is that still the case? What has changed since then to take it out of carry? I know it is volatile, but please update us on the outlook there. And then more broadly, what do you really need to see? I know rates are a factor and you mentioned momentum from inflows into Brazil.

You now have a person entirely focused on divestments—so is the upside really just on rates, or is there more momentum? Please help us understand the factors that led to revising down guidance and what could be upside there.

Alex Saigh: Thank you, Lindsey. As mentioned, we do not expect performance fees coming from Private Active Fund IV. We are selling companies from Fund IV and generating DPI for investors, but not enough for carry—not even close. For Private Active Fund V, we are conservatively valuing companies across the portfolio. The upside is that if we can sell companies above our current marks, then it would generate performance fees, but today I prefer to be conservative and not have expectations of performance fees from Private Active Fund V either. Fund IV—pretty sure no carry. Fund V—we are being conservative.

Private Active Fund VI has over $230 million of net accrued carry, and Fund VII is too early, but companies are performing very well. Our growth equity funds are performing very well. We have a large asset in Growth I—PetLove, the online pet business and market leader in Brazil—that is now a sizable investment and can generate sizable performance fees. We do not see it within the 2027 range; upside could be 2027, which is why we reduced expectations for the 2027 period. Venture also is shaping extremely well with high DPI. Plus, performance fees can come from other asset classes like real estate and credit.

Lastly, even if we generate $80 million to $100 million of performance fees versus the prior $120 million to $140 million, the difference of $40 million to $60 million over three years is roughly $13 million to $20 million per year added to DE. Given our FRE projection of $225 million to $245 million this year and $260 million to $290 million next year, an additional $13 million to $20 million is relatively small in percentage terms.

Performance fees are becoming less relevant to our business and results by strategy: we have moved more to NAV- and market-valued funds—REITs, public equities, credit, GPMS—where about 70% of our fee-earning AUM charges fees on market value, and 30% are drawdown funds with performance fees. Looking to 2030, our 2030 vision will continue that path—expanding permanent capital and listed funds charging on market value—making performance fees even less relevant and our results more predictable and visible. That predictability is what bond investors and rating agencies appreciated in our recent notes offering. I hope that answers your question.

Lindsey Marie Shema: That was great—heard you on the strategy moving more towards market-valued assets. One more question, more specific to this year: On expense growth in the quarter, could you break down by magnitude—how much was acquisition related, how much was investment, how much was comp resetting, how much was FX? How much can margin expand throughout the year? Could you reach your longer-term FRE margin target this year, or is that more of a 2027 topic?

Alex Saigh: Short answer—yes, we can reach the 58% to 60% FRE margin this year. I will pass to our CFO for the breakdown.

Unknown Speaker: Hello, Lindsey, and thank you for the question. We have three temporary factors that explain the first-quarter margin. First, integration costs from the Solis and RBR closings. Second, the seasonal compensation reset at the start of the year. Third, platform investments that were front-loaded. The path to the 58% to 60% margin is supported by simple math. Moving the margin from 54.6% to 58% on our $45.8 billion fee-earning AUM base generates approximately $50 million of additional FRE before any new fundraising contribution. On top of that, our $3.3 billion of pending fee AUM converts to fee-paying status through the year, and we expect $10 million to $15 million of seasonal incentive fees in the fourth quarter.

Annualizing first-quarter FRE plus those incentive fees gets us to roughly $250 million, and the margin expansion plus organic growth reaches the rest. Regarding FX, we did have an impact on expenses in the first quarter, but remember we also have a positive impact on revenues; when viewed together, it nets through the bridge I just mentioned.

Lindsey Marie Shema: Perfect. And just confirming, the $3.3 billion of pending fee AUM—is that all to be deployed this year, or only part?

Alex Saigh: The plan is to deploy within a year, and at roughly 90 basis points average fee rate you can see around $25 million coming from there. Our expectation—and investors’ expectation—is to see the money on the ground being deployed in the next quarters.

Lindsey Marie Shema: Okay. Perfect. Thank you so much.

Alex Saigh: Thank you.

Operator: Thank you. Our next question comes from the line of Guilherme F. Grespan from JPMorgan. Your line is now open.

Guilherme F. Grespan: Thank you so much. Good morning, Alex and team. First question was answered regarding the pending AUM. Second question is on the average management fee rate. On the consolidated view there was a step down, mostly related to mix. On a per-segment basis for private equity and infrastructure—where there was no M&A—we saw a small step down. Can you confirm there was no step down or change to fee schedules for PE and Infra?

Alex Saigh: Thanks, Guilherme—great question. Short answer: no fee pressure in private equity or infrastructure. What happens is mix. When we raise a flagship fund—which we are not doing this year—those post higher fee rates: private equity at 1.75% and 20%, infrastructure at roughly 1.5% to 1.6% and 15%. When we raise SMAs—like the data center SMA with ByteDance, or the toll road SMA we did with PIF and GIC—those are more in the 1% and 10% range. This year we are seeing SMAs, not flagship funds, so you see some lower average fee-rate movement. Private equity also raised an SMA for a large healthcare deal in Colombia and Chile related to assets formerly owned by UnitedHealthcare.

We raised over $500 million there—about $200 million in first quarter, with another $200 million expected in second quarter. That SMA is 1% and 15% in private equity. So during years without flagship fundraising, you will see some mix-driven movements—no fee pressure. Large LPs that pay full fees in the flagship often co-invest at 1% and 10% as a way to get a blended discount, which is standard industry practice for the last 20 years. We do not reduce fees for flagship funds; we provide co-invest opportunities with lower fees. I hope that answers your question.

Guilherme F. Grespan: Yes, super clear. Thank you, Alex.

Operator: Our next question comes from the line of Nicolas Vaysselier from BNP Paribas. Your line is now open.

Nicolas Vaysselier: Hello, hope you can hear me. Two questions. First, on co-invest in infrastructure and private equity—do you charge anything at all in terms of fees, or is it purely at zero? I understand it is necessary in the industry, but wondering if there is any revenue impact. Second, regarding your last acquisition in mid-market secondaries—would future M&A be focused on developed market capacities? You have talked about the United States quite a bit recently—will that be a focus near term?

Alex Saigh: Nicolas, thank you. We do charge fees on co-investment vehicles, but there is typically a dollar-for-dollar match for very large investors. Example: if a large investor commits $300 million to a flagship fund, they often require that the first $300 million of co-invests be no fee, no carry. After that one-to-one threshold, we charge the standard co-invest fees—typically 1% and 10% in infrastructure, and 1% and 15% in private equity. If an investor is not in the main fund, they go straight to 1% and 10% (infra) or 1% and 15% (PE). I am generalizing, but that gives you the right picture; this is standard industry practice.

On the United States and the WP acquisition: short answer, we do not intend to expand in the U.S. in a big way beyond GPMS. The WP acquisition was targeted to enhance our GPMS capabilities—primaries, secondaries, and co-invests—where two-thirds of our portfolio is European focused and our investors asked for a more global approach that includes a stronger U.S. presence in the lower middle market. Beyond strengthening GPMS, our focus is not expansion in the U.S. Our focus is LATAM and the U.K./Europe. The U.K. is effectively our second-largest alternative market opportunity (China is technically second globally, but harder for us to access). The U.K. market is very fragmented compared to the U.S., which has consolidated.

We can see ourselves—through organic growth and acquisitions—becoming one of the top three to five alternative managers in the U.K., and therefore in Europe, across credit, GPMS, and real estate. So we will continue expanding where we already are: the U.K./Europe and LATAM—not the U.S., besides the GPMS enhancement. I hope that answers your question.

Nicolas Vaysselier: Very clear, and thank you for the clarification. That was very useful.

Alex Saigh: Thank you.

Operator: I am showing no further questions at this time. This concludes our Q&A. I would like to turn it back to Alex Saigh for closing remarks.

Alex Saigh: Thank you very much for your participation. It was a great quarter for us—strong performance starting with our funds, flowing through to fundraising of $2.1 billion for the quarter. We see upside on our $7 billion guidance and even the potential to beat the $7.7 billion record fundraising we had in 2025. Very strong FRE growth for us, confirming the $225 million to $245 million FRE for 2026 and a 58% to 60% FRE margin. Thank you for your participation. We hope to see you in person soon, and have a very good day.

Operator: Thank you all for your participation in today’s conference. This does conclude the program. You may now disconnect.

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