Patria Investments Limited (PAX) Earnings

Management highlights

- Started 2026 with solid operating performance, driven by organic fundraising momentum, growth in fee-earning AUM, and differentiated investment performance. - Welcomed new CFO. - Fundraising of $2.1 billion, on track for full-year $7 billion guidance. - Fee-earning AUM at $45.8 billion, up Y/Y. - Fee-related earnings up 19% YOY. - Completed $350 million fixed-rate long-term debt issuance, extending maturity profile. - Investment performance strong, with over 80% of fee-earning AUM in funds exceeding benchmarks since inception. - Credit vertical raised over $925 million, Solis contribution noted. - Infrastructure raised $545 million, growing interest in SMA and co-investment mandates. - Private equity raised $275 million through co-investment. - GPMS fundraising includes $139 million first close for co-investment vehicle and progress on Secondaries Opportunity Fund V. - Real estate fundraising outlook strong with contracted capital. - Permanent capital base at $10.7 billion, pending fee-earning AUM up 17% to $3.3 billion. - PRE expectations updated with timing change.

Guidance

- Reaffirming full-year 2026 FRE guidance of $225 million to $245 million, or $1.42 to $1.54 per share, ~15% to 16% growth from 2025. - Maintaining 2027 FRE target of $260 million to $290 million. - Fundraising on track to achieve full-year $7 billion guidance with upside potential to beat 2025 record of $7.7 billion. - PRE realization expected to take longer, contributions more likely beyond 2027 rather than within original time frame, but cumulative PRE for 4Q24 through 4Q27 period can reach $80 million to $100 million with upside if markets improve and divestment activity accelerates.

Segment performance

Fundraising totaled $2.1 billion. Fee-earning AUM reached $45.8 billion, up ~12% from Q4 2025 and 31% YOY. Fee-related earnings for the quarter were approximately $51 million, up 19% YOY. Credit LATAM High Yield, with over $5 billion in fee-earning AUM, has generated 11% annualized net returns in USD since inception 26 years ago. First-quarter fundraising for GPMS totaled around $265 million. Real estate fundraising outlook remains strong with over $100 million of capital already contracted for two large Brazilian REITs.

Risks & headwinds

- Geopolitical developments could impact the business. - Higher inflation and interest rate environment under Lula's government could affect the asset management industry and Patria's credit business. - DPI challenge facing more mature vintages of private equity buyout funds, with slower realization environment and company-specific challenges. - Timing of PRE realization, which is a timing issue not a value issue.

Analyst Q&A

• Q: 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?

  A: 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. 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.

• Q: 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.

  A: 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.

• Q: 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.

  A: 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.

• Q: 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?

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

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

  A: 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.

• Q: 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?

  A: 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.

• Q: 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?

  A: 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.