Vinci Partners (VINP) Q2 2025 Earnings Transcript

Image source: The Motley Fool. DATETuesday, August 12, 2025 at 5 p.m. ETCALL PARTICIPANTSChief Executive Officer — Alessandro HortaPresident of Finance and Operations — Bruno ZarembaChief Financial Officer — Sergio PassosInvestor Relations Officer — Anna CastroOperatorNeed a quote from a Motley Fool analyst? Email [email protected]TAKEAWAYSFee-Related Earnings (FRE)-- BRL65.2 million, or BRL1.03 per share in fee-related earnings (non-GAAP), with a 25% year-over-year growth in fee-related earnings after normalizing for net catch-up fees.Adjusted Distributable Earnings-- Adjusted distributable earnings were BRL75.8 million, or BRL1.20 per share, marking a 30% year-over-year increase in nominal termsAssets Under Management (AUM)-- Ended the period at BRL304 billionFee-Related Revenues-- Fee-related revenues totaled BRL85 million, up 85% year over year, attributed to both organic momentum and final closing of significant funds.Performance-Related Earnings (PRE)-- Performance-related earnings (PRE) rose 50% year over year, driven by net performance fees across credit, equities, public investment solutions, and real assets.AUM Growth Drivers-- BRL8 billion in portfolio appreciation and over BRL4 billion in capital formation; FX translation reduced AUM by approximately BRL4 billion, offsetting these gains.Dividend Declaration-- Quarterly dividend of $0.15 per common share, payable September 9 to shareholders of record as of August 25.Capital Formation in Credit Segment-- Over BRL2 billion in new capital formation and AUM appreciation within credit.Infrastructure Climate Change Fund (ICC)-- Final closing raised nearly BRL2 billion, primarily from development banks and sovereign wealth funds in Europe and Asia.Portfolio Company PerformanceOperational Integration-- Inaugurated a new office in São Paulo, integrating 133 employees and consolidating operations from multiple acquired units.Management Fee Impact from FX-- FX movement led to flat quarter-over-quarter management fees; Without the FX impact, revenues would have grown in the low- to mid-single digits quarter-over-quarter, with FRE growing an estimated additional 5%-6% if FX rates had remained constant.Escrowed Performance Fees-- BRL1.7 billion of fee premium performance fees remain on the balance sheet, tied to a 24-month escrow release schedule.Non-Recurring Expenses and Margin Outlook-- Non-recurring items, including retention plan provisions, are expected to conclude in Q4 2025; management expects a migration to low-30% fee-related earnings (FRE) margins by Q2 or Q3 2026, based on current bottom-up initiatives and excluding the continued acceleration of AUM growth, with further benefit as integration efficiencies realize.SUMMARYVinci Partners posted significant growth in fee-related earnings and adjusted distributable earnings, driven by robust capital formation, strong fund performance, and effective integration of new business units. The credit segment saw over BRL2 billion in new capital and AUM appreciation, while the infrastructure segment demonstrated fundraising strength with the ICC fund closing nearly BRL2 billion—capitalizing on inflows from sovereign wealth and development banks across Europe and Asia, primarily related to the final closing of the infrastructure climate change fund (ICC). The impact of Brazilian real appreciation cut into real-denominated AUM growth and flattened management fee revenues, but management emphasized this currency strength was accretive to dollar-based earnings and future carry realization. Operational enhancements—including a new São Paulo office and IT initiatives—are positioned to deliver measurable cost efficiencies and margin improvement over the next twelve to eighteen months.Chief Financial Officer Sergio Passos stated, "fee-related revenues, which totaled BRL85 million, up 85% year over year." reflecting both significant fundraising and fund closing activity.President of Finance and Operations Bruno Zaremba indicated that with a comparable amount still to be deployed, shaping management’s earnings trajectory over the next two to three yearsLiquid portfolio size stands around $550 million–$600 million, and is expected to decline over the next year as funds are committed to closed-end vehicles, which should begin to produce material distributable earnings as maturing investments return capital, targeting more significant distributions starting in 2027.The company completed high-profile exits—including the FIP Infra transmission fund and Camarada Camarao in Nordeste III—demonstrating traction in asset realizations across both infrastructure and private equity verticals.Bruno Zaremba projected the projected migration to a low-30% fee-related earnings (FRE) margin by the second or third quarter of 2026, based on current bottom-up initiatives and excluding the continued acceleration of AUM growth. with additional gains as system and retention plan costs roll off and operational integration matures by 2026.Geographically, Vinci Partners expanded its credit business across Latin America, with new fundraising initiatives in Peru, Chile, Colombia, and future plans for Mexico, alongside continued strength in Brazil.INDUSTRY GLOSSARYFRE (Fee-Related Earnings): Recurring profits generated from management and advisory fees, net of directly related expenses, excluding performance fee components.PRE (Performance-Related Earnings): Earnings attributable primarily to performance (incentive) fees, which are typically recognized upon realization or accrual of fund returns exceeding benchmarks or hurdles.TPD (Third-Party Distribution): Business vertical involving the distribution of alternative investment products managed by external managers or partners.ICC (Infrastructure Climate Change Fund): Vinci's infrastructure strategy focused on climate-related investments, including renewable energy and related assets.AUM (Assets Under Management): The total market value of assets that an investment management firm manages on behalf of clients.DE (Distributable Earnings): After-tax earnings available for distribution to shareholders, adjusted to exclude non-cash or non-recurring items.SPS: Proprietary Vinci credit strategy and fund family, predominantly Brazilian, referenced in conjunction with fundraising and product launches.CDI: Brazil’s benchmark interbank deposit rate, widely used as a local performance benchmark.FIAG structure: Brazilian legal structure providing tax-exempt status for certain investment vehicles, often catering to family offices and pension plans.Full Conference Call TranscriptAnna Castro: Thank you, and good evening, everyone. Joining us today are Alessandro Horta, Chief Executive Officer, Bruno Zaremba, President of Finance and Operations, and Sergio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and financial statements for the quarter, which are available on our website at ir.vincucompass.com. I'd like to remind you that today's call may include forward-looking statements which are uncertain and outside of the firm's control and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our 20-F.We will also refer to certain non-GAAP measures, and you'll find reconciliations in the release. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Vinci Partners Investments Ltd. Fund. On results, Vinci Partners Investments Ltd. generated fee-related earnings of BRL65.2 million or BRL1.03 per share, and adjusted distributable earnings of BRL75.8 million or BRL1.20 per share for the second quarter of 2025. We declare a quarterly dividend of $0.15 per common share, payable on September 9 to shareholders of record as of August 25. With that, I'll turn the call over to Alessandro.Alessandro Horta: Thank you, Anna. Good evening and thank you all for joining our call. We appreciate you joining us. We are pleased to report another strong quarter for Vinci Partners Investments Ltd. marked by solid financial results, continued fundraising momentum, and the acceleration of key strategic initiatives across our platform. I'll let Bruno and Sergio dive into more details in our results for the quarter, but I wanted to take the time to summarize what I believe are the three key highlights for us and what they mean for our platform. When we take our distributable earnings, we can compose it by looking into three different components of value: FRE, PRE, and investment income.The second quarter posted healthy numbers for our FRE as we continue to bring in additional AUM from a diverse set of different strategies. Infrastructure, credit, and global IP and S being the highlights this time. Vinci Partners Investments Ltd. continues to grow by raising capital from an extremely diverse set of products, geographies, and investor channels. Shifting to PRE and investment income of our results, I'm very pleased to give attention to this because this is paramount to the value of the investments on our balance sheet and the future earnings powers this brings to Vinci Partners Investments Ltd.This quarter, in addition to the performance recognized across liquid funds in equities and credit, we had the realization of performance fees coming from one of our infra funds. FIP infra transmission is a fund that was formed back in 2017 before our IPO, in which we made a small commitment from the company's balance sheet at the time and has been collecting its realized returns since 2022. This is the same capital deployment that we have been conducting at a larger scale since our IPO, through commitments to proprietary funds using our balance sheet capital. First, we commit this capital to one of our funds, let's say, in private equity, infra credit, real estate strategies.We have a short-term impact on our FRE numbers with the fundraising leverage by this anchor commitment to the fund, which helps the product gain traction in the fundraising process and earn management fees for the company. Then we have a medium-term negative impact on our cash earnings as this cash, which was deployed into the fund, is not earning short-term financial income anymore because it has been deployed into this private market fund. Initially, the appreciation of the closed-end fund commitment is only seen in our net income results, not our distributable earnings.Finally, after the fund matures and returns capital to its LPs, we reap these benefits with capital return and capital gains and obviously, the performance fee recognized by the fund impacting our PRA. The consolidated impact of such events in FIP infra this quarter to our cash earnings was BRL50 million pretax. This quarter showed what this effect potentially means for our future. As we realized gains from a small commitment made in the past that was not that significant when we compare it to our cash allocation after the IPO. We believe this is a crucial part of the value of the business, and we hope this quarter helps enlighten this aspect in potential future results.This quarter brought significant accomplishments, and we are excited to share that we successfully executed a series of strategic exits across multiple verticals. Clear evidence of our ability to capture value and deliver results in diverse market conditions. A key highlight was the aforementioned full divestment of the remaining asset in FIP infra transmission within our real asset segment, which was concluded in May. These milestones marked the end of a cycle that began in 2017 with the inception of this fund and set the stage for its liquidation, expected to occur 24 months after the closing date pending release of escrow reserves.Still in real assets, we completed the full sale of another asset held by one of our infrastructure funds, the perpetual vehicle VIGT. The transaction was concluded at a value above the appraisal report and contributed directly to the deleveraging of the holding structure. In the private equity segment, we also announced the full exit of Camarada Camarao, a casual dining business held within our Nordeste III fund. This marks the fourth exit out of six investments in this vehicle, further reinforcing our strong track record of realizations within our private equity franchise. On the deployment front, we remain highly active.In July, we closed the third investment of VCP4 AGV, a company in the Temperature Control Logistics segment, bringing the fund's capital deployment to approximately 40% of total commitments. The team continues to be highly active in origination with numerous opportunities currently under evaluation. Our focus remains on sectors such as financial services, business services, technology, media and agribusiness, education, and healthcare. In parallel, we are closely monitoring opportunities in financially distressed companies, multinational carve-outs, and private equity portfolio businesses. Areas where we see meaningful potential for attractive entry points and valuations.Valuations across public and private markets remain compelling, and market multiples have remained suppressed, especially in Brazil, with the Ibovespa currently trading at just eight times forward earnings, well below historical averages. This valuation backdrop becomes even more interesting when considered alongside recent macro developments such as the improving outlook in Brazil. The country is currently at the peak of its real interest rate cycle with clear signs of an inflection. One-year real interest rates reached historically high levels of 11%, but have already begun to decline, driven by easing inflation and gradual improvements in fiscal fundamentals. While cuts to the Selic rate are expected toward the end of 2025, the yield curve has already begun to price lower rates.For instance, ten-year rates have fallen from above 15% to the low 14% range. The local equity market remains under-allocated, with equities representing just 8% of domestic portfolios, well below historical averages, suggesting ample room for reallocation as rate cuts take hold. We are also seeing a similar setup layout more broadly across Latin America. The recent weakening of the U.S. Dollar has contributed to a more dovish tone from central banks in several countries in our region. In Chile and Colombia, policymakers are actively discussing or initiating interest rate cuts. In Mexico, the Central Bank has continued to lower rates with no indication of a pause at this point.The combination of improving inflation expectations and easing policy is helping to strengthen the macro landscape across Latin America, creating a favorable backdrop for alternative investments. A strong reflection of this environment is the performance of one of our LatAm equity funds, which delivered consistent results in the first half of the year, ranking in the top quartile. This is particularly meaningful as the fund represents a core fundraising priority for the equities team over the coming years, given both the size of the opportunity and our current market share, which remains below what we consider our fair share. This is especially true among Chilean pension funds, which have historically been key investors in this strategy.Adding to this momentum, there is growing optimism around pro-market candidates gaining traction ahead of upcoming elections across South America, further reinforcing the outlook for equity markets in the region. We believe our credit segment is also well-positioned to keep benefiting from this environment across both local and regional strategies. This quarter alone, we posted over BRL2 billion in new capital formation and AUM appreciation within this segment. By capital formation, we are referring to a combination of net inflows and capital subscriptions, with contributions coming from a range of sub-strategies and geographies, reinforcing the strength and scalability of the platform we are building.Still on the fundraising front, we are delighted to announce the final closing of our infrastructure climate change fund, the ICC, raising close to BRL2 billion. The fund was launched after winning a public call for proposals by the Brazilian Development Bank, BNDS, with the remaining capital being raised primarily from reputable international institutions such as development banks and sovereign wealth funds from both Europe and Asia. Our deployment plan is to expand investments in the segment to reach 100 megawatts of distributed solar generation. We also intend to invest in larger-scale renewable energy projects and are currently in discussion about a potential utility-scale solar initiative.Other sectors currently on the fund's radar include energy storage, energy transmission, energy efficiency, five tower infrastructure, and data centers powered by renewable energy sources. On the corporate side, we recently inaugurated our new office in Sao Paulo, allowing Vinci Partners Investments Ltd.'s 133 team members based in the city to effectively be part of a virtual second headquarters office for the firm. This move follows the acquisitions of SPS, MAV, Lakan, and the combination with Compass Brazilian office, all based in Sao Paulo over the past few years. By fully integrating our teams and aligning daily operations, we can maximize collaboration and deliver the value these combinations were designed to create for our clients and stakeholders.We invite our clients to visit the new space when convenient. Before closing, I'd like to extend a warm invitation to our Investor Day, which we will host on October 7, at the NASDAQ headquarters in New York. This will be a great opportunity for us, including the heads of our strategies, to share a deeper look at our business units, long-term positioning, and key performance expectations for Vinci Partners Investments Ltd. going forward. We look forward to seeing you there. To wrap up, we believe we are exceptionally well-positioned to navigate today's dynamic environment on behalf of our investors. Our portfolios remain in excellent shape, and we continue to execute with discipline and focus across all fronts.Thank you again for joining our call. With that, I'll turn it over to Bruno.Bruno Zaremba: Thank you, Alessandro, and good evening, everyone. We are proud to share that we had BRL12 billion in capital formation appreciation during this quarter across different strategies, underscoring the breadth of our multi-strategy approach and the scalability of our distribution capabilities. Let's start with our global P and S business. As we had predicted in our first quarter call, outflows seen in the previous quarter were a passing trend and in the second quarter turned into positive and strong inflows totaling BRL2.3 billion. The main drivers were TPD liquid and alternative strategies, with a notable contribution from Asian liquid managers funds, which attracted significant inflows from investors in Chile, Peru, and Colombia.We are also seeing growing interest in semi-liquid TPD funds, particularly among retail investors through the intermediaries channel. These funds are increasingly viewed as transformative and as an excellent entry point into alternative investments. They offer lower entry barriers, operational simplicity by eliminating repeated capital calls, and a balanced liquidity profile, sitting between open-ended daily liquidity and long-term lockups. We expect this trend to continue gaining traction in the upcoming quarters in the region. In addition to semi-liquid, we believe private debt and middle market funds will remain highly attractive to more sophisticated investors. Within TPD alternative, demand remains robust, and we believe this segment will deliver a strong year.Moving on to liquid credits, we saw continued strength in both our LatAm and Brazilian strategies during the quarter. Our LatAm strategy surpassed BRL7.2 billion in AUM, supported by strong inflows from institutional clients in Chile and Europe. We've been highlighting since our last call the growing client interest in geographically diversified credit portfolios. This trend has accelerated as investors increasingly recognize the strategic appeal of Latin America, particularly given the region's insulation from the geopolitical conflict unfolding in Europe, Asia, and The Middle East. In this global environment, marked by elevated uncertainty and volatility, Latin America corporates stand out. We're seeing robust fundamentals across the region, with companies exhibiting low leverage, strong liquidity, and limited refinancing risk.These balance sheet dynamics, especially in strategically important sectors, are creating a compelling pipeline of investment opportunities for our team. In Brazil, our open-ended credit funds continue to gain traction with retail investors, particularly through intermediaries and private pension plans, across both liquid public debt and private credit strategies. On the closed-end front, we received new commitments across multiple strategies, including confirming unstructured credit vehicles, PEPCO two within diversified private credit, MAV three in agribusiness, and Credit Infra in infrastructure credits. As anticipated, SPS four did not receive additional commitments this quarter due to the timing of the closings. However, we are already seeing very encouraging feedback from both global and Brazilian investors for 2025.This stronger engagement is underpinned by the growing appeal of alternative liquidity solutions, such as the monetization of contingent legal assets, which has been translated into increased use flow in the pipeline. At the same time, the overall risk environment has intensified, leading us to further elevate our due diligence standards. We are prioritizing transactions with stronger collateral structures, lower loan-to-value ratios, and exposure to more resilient sectors and business models. For the second half of the year, we expect continued growth from our credit segments. As we witnessed in the first half, we plan to launch a LATAM fixed maturity corporate debt fund in Peru, the first of its kind, in partnership with a local multifamily office.In addition, we will introduce DaVinci Special Opportunities Fund, managed by our hedge fund team, with most of the capital coming from the recycling of Argentina fund, which delivered an impressive track record and generated significant value to clients. More than 70% of the AUM in this new vehicle is expected to come from re-ups by clients of the Argentina funds. We're also preparing to launch a global USD conservative fund in Chile targeting high-net-worth clients. Shifting to private equity, as many of you know, our VIR team is preparing to launch the fifth vintage of our flagship strategy in 2025.We're encouraged by the early feedback from existing LPs, many of whom have already expressed interest in re-upping their commitments. In addition, as Alessandro mentioned earlier, Nordeste III of the VR Family Fund announced the full exit of Camarada. Maintaining an active pace of realizations both for Nordeste III and VII IV remains a priority for 2025. In our VCP strategy, the aggregate performance of our portfolio companies delivered over 20% year-over-year revenue growth and over 30% year-over-year EBITDA growth in 2025. A standout highlight was Agibank from Fund III, which achieved over BRL350 million in net income, representing over 60% year-on-year increase and setting a new quarterly record.These results underscore the strength of our disciplined investment process in generating sustainable and transformative growth at portfolio companies. As expected and discussed in our prior earnings call, we're seeing recovery of the gross accrued performance fees in our offshore vehicles, which had experienced a temporary negative impact from the depreciation of the Brazilian real. In the real asset segment, on top of the final closing of the ICC within infrastructure, we received capital subscriptions both in La an four within forestry and in our opportunistic real estate funds. The primary focus for our forestry vintage remains in international markets, DFIs in particular, of which we expect most of the commitments to come in the second half of the year.We also established a new Far C sub-strategy in addition to La Confor, designed to capitalize on wood supply-demand imbalances. This vehicle targets Brazilian multi and single-family offices, and pension funds through a tax-exempt FIAG structure. To support our extensive fundraising pipeline, and in line with the DNA of Vinci Partners Investments Ltd., we continue to strengthen relationships through our proprietary LP distribution channel. In June, we hosted the Vinci Partners Investments Ltd. alternative week, bringing a delegation of single-family offices from Brazil, Colombia, Mexico, Peru, and The Dominican Republic to New York, for a curated agenda of meetings with leading alternative asset and technology firms.The program aimed to provide insights into global investment trends and opportunities across private equity, credit, real assets infrastructure, and secondaries. The trip fostered meaningful dialogue between Latin American investors and sophisticated global asset managers, offering valuable perspectives on navigating global markets and effectively allocating capital across alternative strategies. Discussions focused on portfolio construction, diversification, and identifying long-term opportunities in an increasingly complex and dynamic environment. Finally, I would like to briefly update you on our recent operational advances. As Alessandro mentioned, we recently inaugurated our new office in Sao Paulo, now fully operational and providing enhanced technology to our teams.We also implemented cloud backup solutions for offices with local server infrastructure, such as a few that were brought in through the Compass combination, improving security and reducing operational risk. In addition, we completed the identification of our combined company Bloomberg accounts under a single contract, enabling better management and cost efficiencies. These are just some small examples of what has been done across finance, operations, and IT, and initiatives like these are expected to generate positive margin impact over the next twelve to eighteen months. There are several such initiatives ongoing, and we will continue to update you as they take shape.Our original rich platform committed to technological evolution positions us to grow with discipline and lead an increasingly dynamic and expansive market landscape. As we look to the remainder of 2025, we remain focused on delivering high-quality investment outcomes for our clients while reinforcing our role as a premier partner for investments and global solutions in Latin America. As discussed so far, the level of product and solutions diversification available to our clients is second to none. As we can provide capital allocation opportunities in Latin American countries in regional mandates and present curated global solutions, be it non-discretionary or on a non-discretionary basis.With this breadth of solutions available to our clients, we believe Vinci Partners Investments Ltd. to be the partner of choice in the region. With that, I'll turn it over to Sergio to walk us through the financial results.Sergio Passos: Thank you, Bruno. Let me start with AUM and the impact of FX variation. We ended the second quarter with BRL304 billion. As Bruno mentioned, we are very pleased with the BRL8 billion in portfolio appreciation delivered by our strategies, along with more than BRL4 billion in capital formation. However, because the global IP and S segment is almost entirely priced in U.S. Dollar, the 5% appreciation of the Brazilian real against the U.S. Dollar during the quarter created a currency headwind to our reals AUM figure.This impact was partially mitigated by the fact that our other strategies are denominated in Brazilian reals, helping to smooth the overall effect in our AUM hold forward to a 4% FX rate variation. Even so, it generated approximately BRL4 billion in negative variation, which offset the appreciation and capital formation achieved during the period. When we look into our AUM in U.S. Dollar, we ended the first quarter with $53 billion, expanding to $56 billion at the end of 2025. Turning now to fee-related revenues, which totaled BRL85 million in the quarter, up 85% year over year.This growth reflects our strong strategic inorganic growth and organic momentum with the final closing of VICC and positive inflows in the quarter across credit and global P and S. Advisory fees totaled BRL26 million, comprising upfront fees charged for third-party distribution alternative commitments in the global P and S as well as fees from our corporate advisory business. The corporate adviser segment delivered revenues in line with our expectations, posting a more normalized quarter with over BRL80 million in advertising revenues as we had anticipated in prior communications. Moving from the top line to expense, our total fee-related expenses were broadly in line with the prior quarter, which already reflect a full period including Compass.For a more meaningful comparison of our fee-related earnings, we excluded net catch-up fees. In the second quarter of 2024, these fees were more elevated due to the fundraiser cycle of VCP four. Excluding them from both quarters, FRE grew 25% year over year on a nominal basis. For the second half of the year, while we expect catch-up fees from SPS four as new commitments are signed, we do not anticipate them to be as significant as those in 2024, which reflects two years of charge since the inception of VCP four.Turning now to our performance-related earnings, our PRE recorded a 50% increase on a year-over-year basis with net performance fees recognized across credit, equities, lower P and S, and real assets. Within real assets, the exit of the FIP transmission asset generated realized performance fees in the quarter. However, there was no PRE impact since those fees had already been booked as unrealized in prior periods in accordance with accounting standards. On the other hand, our distributable earnings did benefit from the transactions. For context, as noted in the presentation, BRL1.7 billion of fee premium performance fees remain on the balance sheet at quarter-end, tied to the escrow release expected over the next 24 months.Below the line, realized GP investment and financial income totaled BRL49 million, a 49% increase year over year driven by capital return from our proprietary commitments in FIP transmission and Nordeste III and also solid results from our liquid portfolio. Let me take a moment to remind you that due to our GP commitments and the nature of the business, the exceptional performance of our funds creates value in three ways. First, fee-related earnings driven by leveraging the capital raise. Second, through carry and organized upon realization of performance fees. And finally, capital gains at the GP investment level, which flows through financial income.Finally, putting it all together, adjusted distributable earnings totaled BRL70 million or BRL1.20 per share, representing a 30% increase year over year on a nominal basis and 9% growth on a per-share basis. We are very pleased to be delivering what we believe reflects our true value proposition, ensuring that every marginal dollar of free cash flow generates the maximum possible long-term earnings per share. We remain focused on disciplined growth, margin expansion over time, and prudent capital allocation. The 2025 delivered solid progress despite FX headwinds, and with strong fundraise visibility and execution across strategies, we are well-positioned for continued growth in the second half of the year.With that, I would like to close our remarks and open the call for questions. Once again, I would like to thank you for joining our call. Please, Operator, you may proceed with the questions. Thank you.Operator: We are going to start the question and answer for investors and analysts. Our first question comes from Guilherme Grespan with JPMorgan.Guilherme Grespan: Hello, Alessandro, Bruno, and team. Thank you for the call. Congratulations on the results. Two questions on my side. The first one is related to fundraising. Strong numbers this quarter. I tried to adjust here for the upfront TPD. In my math, it was stronger, adjusting for that. But my question is more looking towards the second half. What level do you think it's reasonable to assume in terms of net inflow if we can continue to see those levels of net inflow into the second half? And if basically, if you can remind us, well, I think you have some relevant money to be deployed from VCP four, from VICC.If you have a rough number of how much AUM we still have to be deployed into fear in AUM. Then my second question is related to GP commitments and financial income. You put some light on this discussion. When I do my math, you have a little bit more than BRL1 billion in gross cash. If you apply Selic, you were supposed to be generating, I think, even more than you printed this quarter, which was already strong. So my question is, how should we think about forecasting this line? Is there kind of a timeline or a trajectory you think we can forecast GP income and financial results?Because as you said, there's a J curve, but for us, it's hard to know when those investments are gonna mature. So if you can help us just how to think about this line going forward.Bruno Zaremba: Okay, Guilherme, this is Bruno. Thanks for the questions. I'm going to give a first shot here, and Alessandro and Sergio can complement me. So the financial income, I think Sergio mentioned that in his remarks. We are going to see a gradual reduction of the financial income line over time. There might be a handoff effect from the liquid funds to the closed-end funds. Right? So as we invest the rest of the liquid portfolio in closed-end funds, there's likely gonna be a transition from financial income to the net income line of the income statement. So from DE to the net income line.And once we start realizing or returning capital from the closed-end funds, this will come back to earnings numbers like we did have the impact of CPM for this quarter. So it is, let's say, it's not a very easy dynamic, I understand, because we're not in a steady rate yet because we're still deploying the capital from the balance sheet to the closed-end funds, from the liquid funds to the closed-end funds. We are gonna touch on this with a lot of detail in the Investor Day on October 7 that Alessandro invited everyone to participate.I would say, at least in the short term, until we get there and explain this in more detail, how you should think about this is the following. We expect over the next year to have, I think the number is around $200-$300 million of additional commitments flowing from the liquid funds into the closed-end funds and going to the net income line, let's say. Today, I think the liquid portfolio is about $600 million or a little bit less than that, $550 million, if I'm mistaken. So this should drop as we continue to invest in the closed-end side.And then once these funds start returning capital, we should start happening in a more significant way, probably starting in 2027. We should see the impact that we saw from FIP for this quarter. So it's a flow-through from the year to income statements and then back to DE once the funds start realizing and returning capital to us. But as I said, we should go into more detail in this accounting during the investor day to give you more detail. In the second quarter specifically, the impacts that we had were that the liquid portfolio had a very strong result. So we had significantly above CDI return in the second quarter in the side of the portfolio.And on top of that, we had strong closed-end performance not only from the REITs that pay us dividends but also from the realization of the FIP for funds. So that's the explanation of the second quarter specifically. Going back to the first question, starting the year, we had the view that we could grow AUM this year by, on an FX adjusted basis, by double digits. So that would mean a number, let's say, around $30 billion between inflows and appreciation. The first quarter was not as strong. We had negative TPD liquid, so that put us a little bit behind on that goal. But the second quarter, as we had expected, was already better.And the third quarter started strong as well. So looking at the numbers from July, we see that the flows continue to be good. So it's tough to say if we're going to be able to recover 100% of what we were expecting at the beginning of the year, given mainly the back step that we had in the first quarter. But the second quarter and the start of the third quarter are looking very good. We still have several funds open. We have a lot of strategies in credit in Brazil, SPS, other strategies. We have LACANFOR open.We have, obviously, all of our commingle funds that are open, pension plans, the TPD products, we still continue to see a good flow and a calendar for TPD alternatives in the second half. So we should see good news coming from that side as well. So it continues to be constructive. Hopefully, we can come back to that double-digit growth on an FX adjusted basis. But have in mind that the first quarter was a little bit slower than we were expecting initially.Alessandro Horta: And, Guilherme, here is Alessandro. Just to complement what Bruno said to your first question of fundraising. Basically, two verticals we are very constructive in terms of traction, credit in general terms, both are more liquid credit up to SPS that's still in fundraising mode. And the TPD, of course, with the recovery of the overall sentiment of the international market and the S and P going up, etcetera. We are seeing a more constructive fundraising second half for these two main strategies here at Vinci Partners Investments Ltd.Guilherme Grespan: That's clear. Thank you.Operator: Our next question comes from Lindsay Shima with Goldman Sachs.Lindsay Shima: Hi. Good evening, and thank you for taking my question. We saw the FRE margin fall in this quarter. So my main question here is just, at what point should we start to see the FRE margin expand to that low thirties percent run rate that you had mentioned previously? You expect that by the end of this year? And then what kind of levers do you expect to pull? Is it all gonna be the cost control initiatives that you've recently enacted, and how much of an impact should we see from those? And then second question is just a quick follow-up on Guilherme's question.Was wondering when it comes to the theory realizations that you were mentioning, I know it's kind of hard to have visibility into that. But how should we think about the path of those going into 2027? Is it not gonna happen until 2027, or do you still expect some realizations up until then? Thank you.Bruno Zaremba: Okay, Lindsay. Thank you for the questions. This is Bruno again. I'm gonna try to cover both of them. So on the margin, the way that we are seeing this at this point is the following. We have, as I mentioned, we had a tougher first quarter from a flow standpoint than what we expected. I think the second quarter, things got better on track. Clearly, obviously, revenue is something that helps us and is one of the drivers of the long-term margin expansion of the company. However, we are seeing at a place today that I feel that we have some sort of comfort level already.That we should be able to migrate to that low 30s rate by, I would say, probably the second or third quarter of next year with the initiatives that we have that are ongoing from a bottom-up standpoint, so without taking into account the continued acceleration of the AUM growth. There are several drivers behind that. I think a lot of things on the IT side, a lot of things on corporate restructuring, a lot of things regarding projects and programs that we are optimizing as a combined company. So mostly on the system side. There are certain expenses that are flowing through our FRE today that are not recurring in nature, but we chose to not adjust the FRE.So we are treating them as recurring. But part of that is not gonna recur next year. I'll give you an example of that. For instance, there is a retention plan that was signed alongside with the Compass transaction for which we are building provisions every month. That ends in the fourth quarter of this year. Right? And this is something that's flowing through our income statement, but it's not recurring because it has time to end. Right? So these things are gonna start cycling. Not only these nonrecurrences that we're having but also the benefit of integrating the two companies.And the outlook that we have for this full benefit is something between two and three points of margin on an annualized basis, right, which we expect to be fully ongoing by the third quarter. At some point in 2026. And obviously, on top of that, we are working hard to leverage the business and the verticals and the fundraising because, at the end of the day, fundraising is what gonna allow us to really drive this margin to much higher places than this initial benefit from the combination on the productivity side, on the cost side, on a bottom-up standpoint. In regards to PRE, I think there are a couple of factors there.Just going back to Guilherme's question for a second. One thing is the PRE. So PRE in our business, it has two components. Right? So we have a lot of our liquid funds that pay pure. So we have credit funds. We have investment solution funds. We have equity funds. That means with market improvement, and we had some of that already in the second quarter. We should fully expect them to continue to generate for us. So when we close the second quarter numbers, just to give an example, our equity funds were very close or already around or above the high watermark. So it meant that we were in a position to generate more meaningful PRE.The market was at the highest level of the last several years. And now it is actually going back to that level, but at that time, it was at the highest level. So we are in a position to start generating more meaningful PRE on the equity side. And the credit side, with the growth of the credit business, continued growth and as Alessandro mentioned, one of the areas that we expect to continue to grow, this is an area that generates more recurring PRE for us. It's more, let's say, visible, more recurring. It's not as volatile as the equity security.So it's something that should also help in the short to medium term to continue to generate this liquid side and allocation side PRE for us. And then you have the PRE from the closed-end funds. Right? So we like the one that we realized this quarter from FIP Infra. Right? So on this side, and it goes again to Guilherme's question. These are the investments that we are starting to fund from the balance sheet with the capital from the IPO. We have funded so far, I think the number is around BRL700 million at this point in time. There's still another BRL600 to BRL700 million to fund. And these funds, they have a different characteristic.Because given that these are most of them closed-end funds, and we're talking about private equity funds, we're talking about infra funds, they have the typical J curve effect. So in the first few years, you don't see a lot of contribution from the performance of these funds because they still don't have enough assets inside them to generate returns in excess of the costs. And we're now starting to get out of these J curves. In the VCP four fund, for instance, we expect that to happen in 2026. And, also, for VICC, SPS has a quicker J curve, so that should also come out of the J curve in 2026 as well.So in the first part of the investment cycle of these funds, what we are going to see if everything goes right is a bigger impact on our net income. So as these funds start to appreciate, the shares that we own on these funds as an LP, they're going to start impacting our net income. And we have one slide in the investor presentation where we show the accumulated or the accrued gain that we have on these funds. Right? So that's the first part, right, of the capital creation on these funds, right? We should start seeing that impact net income. The net income impact is going to start happening probably next year.We expect it to be more meaningful starting already in 2026. For this net income to become distributable earnings, the funds need to start distributing capital to LPs. So this is the next step. Once we have VCP4, SPS4, VICC, and other commitments that we have made. These are probably, at this point in time, the biggest ones that we have. When they start to realize and return capital, we're going to start recognizing that as earnings as an LP. Right? That fund is going to flow back into our liquid portfolio. We're going to recognize the gain as a distributed earnings gain and risk either short-term in a liquid fund and medium, long-term into another closed-end fund. Right?And the third part of the equation is the PRE. The PRE should be the last part. Right? So once the fund returns all the capital adjusted by the hurdle, because our funds are all of them are European waterfall funds. So we return the initial capital. We return the hurdle. And then at that point in time, we start charging PRE. Right? So this is gonna be the last part of the cycle. So in that last part of the cycle, we will have the impact like we did with CPM. We're gonna charge PRE and have the impact from the GP commitment at the same time.So the full cycle, right, you're gonna have an initial net income impact as these funds appreciate, but don't generate cash earnings for us, then we have a distributable earnings impact when the funds start realizing and returning capital to LPs, and we're going to start having the gain on this initial flow of capital return. And finally, the combined impact of PRE and financial income when we get in carry mode in these funds. And those two things start happening at the same time. In terms of timing, for the third part of the equation to start happening, I would expect that to happen probably starting in 2028.So we're gonna start having PRE and financial income probably together in 2028. And then probably around 2027, we should start seeing some distributable earnings, I would guess. And then certainly, everything goes right in 2026, we should start seeing these funds impacting net income as they appreciate. And just to wrap up, to go back to a question that Guilherme made that we did not answer, an unactivated capital in our AUM, we don't have a lot of debt in our AUM. So today, most of our funds charge management fees on a percentage of committed capital. There are some small exceptions.In the case of SPS, we charge the commitments, but when we allocate the capital, there is a step-up in rates. So in the case of SPS four, we're going to have an impact. But if you think about the overall size of the company, probably it's not going to be that material. And then there are some credit funds on the closed-end side where we have many high grades, where we have capital commitments that do not charge management fees. And once we allocate, they start charging. But, again, if you think about the overall size of the company, it's not a relevant impact that would move the needle for us.So those are the points I would like to make.Operator: Our next question comes from Ricardo Buchpiguel with BTG.Ricardo Buchpiguel: Hi, everyone. Only one question here. During the quarter, we saw that management fees stood flat quarter over quarter, pretty much in line with the AUM, which was also flat. When we look at the bridge of the AUM expansion, the main drag was related to the FX variation. My question is, is it fair to say that the flattish management fee is also related to this FX change? And if so, do you have an estimate of how much the FRE or management fee would have grown if it wasn't for this effect? Thank you.Bruno Zaremba: Okay, Ricardo. This is Bruno. Yes. When we look at the quarter-over-quarter revenue number, the main explanation is the FX. Right? So we lost mainly on the revenue side, I would say, in the FPNS, right, where we have the impact from TPD. So in that vertical, we did suffer a drop in the FX, and it's a very big vertical. Right? So it's a vertical that does have a significant impact on us. I would say, I mean, if the FX stayed flat in the quarter, probably we would have grown revenues, I would say, in the low to mid-single digits would be the growth. And the FRE would be able to dilute a little bit of the cost.So probably we would have grown FRE a little bit more than we did. I would say probably about five to six percentage points more if we had a constant FX. But at the end of the day, Ricardo, one thing that is important to mention is that although the impact on the revenue was negative, right, from the FX, and likely, was a small impact as well on the margin, we did generate more value to shareholders in dollars when you look at the DE. Right? So there is an impact on our reals balance sheet and income statements.But from a constant currency or dollar-based DE standpoint per share, the regional currencies being stronger, I would say, mostly the reals being stronger, for the business as a whole, looking at the bottom line is better. Right? We have better dollar per share profitability. We have more potential future carry realization because we have international LPs in the funds, and they have dollar-based carry hurdles. So if the reals appreciate, that means more future carry for the business. So the local currency appreciating for us overall is good, although it might have a top-line and an FRE impact. On a bottom-line level, it's positive for us.Ricardo Buchpiguel: Very clear. Thank you.Operator: Our next question comes from Pedro Leduc with Itau BBA.Pedro Leduc: Hi, guys. Thank you so much. Two quick ones, please. On credit again, you mentioned some optimism there. We saw some nice inflows. Could you elaborate a little bit on how this portfolio that we're seeing today is spread out to regions if it's new products? Geographies that you're getting new business in. And if that's a pace indeed that we should see accelerating, we see you still got little market share in this big market. And then second question, you briefly mentioned Argentina. Just trying to get a little more detail on what opportunities you're seeing there and how are you seeing it playing out for the next few quarters? Thank you.Alessandro Horta: Okay, Pedro. That's Alessandro. Thank you for the question. Talking a little bit more detail about credit, you can notice that we reached a little bit over 10% of our total AUM in credit because this is one of the growth avenues that we are seeing. We have been able to spot this growth opportunity and execute it in several different fronts, okay, and in different geographies. We are growing our credit business in LatAm as a whole since we have in this vertical products that cover the overall region, okay, with stable currency, so we have dollar-denominated funds in credit with Latin mandates. This is growing. And we are having very healthy flows in this specific strategy inside credit.As you know, we have been able also to raise money in Brazil with SPS, with MAV, and with our more liquid credit funds. We also have been able to see interest in private credit in Colombia and Peru. We are seeing possibilities of fundraising moving forward in Chile and also in Mexico, a little bit shorter horizon than Chile. And finally, for your question in Argentina, the majority of our asset management business in Argentina locally is related to credit and fixed income. And of course, with the recovery of the confidence and everything that we know in the macroeconomic side. Of course, we'll have soon legislative elections there.We are positive that we can see more inflows within also this geography. But, summarizing to your question, credit is really very widespread in terms of geography. So almost all the countries that we are exposed to, we are with some initiatives, or happening right now or with a very short-term horizon. And, also, as I said, we have a regional strategy for credit that has been very successful in fundraising.Pedro Leduc: Thank you so much, Alessandro. Good success.Operator: Please hold while we poll for questions. I would like to turn the floor back to Mr. Alessandro Horta for the closing remarks. Please, Mr. Horta, you can proceed.Alessandro Horta: Thank you all again for your support and your interest in our developments. As we said during this call, we are very, very happy with what we have been seeing of the dynamics within the firm. We also have been very happy with the fruitful integration between all of the companies that we have been merging within our combined Vinci Partners Investments Ltd. partnership. And we expect to very soon provide even better news to you since we are seeing the strategy evolving, moving forward, and the market becoming a little bit more benign for our fundraising and investment activities. So thank you very, very much, and have a good evening.Operator: This does conclude today's presentation. Thank you all for your participation and wish you a very good evening.