PAX — Patria Investments Limited

Summary of PAX Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Assets Under Management (AUM): Exceeded $50 billion, up over 3.5x since the IPO in 2021.
• Organic Fundraising: $1.5 billion raised in Q3 2025, totaling $6 billion year-to-date, on track to exceed the revised target of $6.6 billion for the full year.
• Fee-Earning AUM: Grew to $38.8 billion, a 14% increase year-over-year and 4% sequentially.
• Fee-Related Earnings (FRE): Reported at $49.5 million, up 22% year-over-year and 7% sequentially; FRE margin improved to 58.5%.
• Distributable Earnings: $46.9 million or $0.30 per share, up 31% year-over-year and 22% sequentially.
• Performance-Related Earnings: No earnings reported for Q3, but expected to generate approximately $15 million in Q4 from recent monetization events.

2. Strategic Updates and Business Highlights

• Diversified Investment Platform: Transitioned from a Brazil-focused private equity manager to a multi-asset class manager serving global investors.
• Infrastructure Fund V: Successfully closed at $2.9 billion, marking a 40% increase from the previous vintage, becoming the largest dedicated infrastructure fund focused on Latin America.
• Credit Business Growth: Surpassed total fundraising for 2024 by 15%, reaching $1.6 billion year-to-date.
• Pending Fee-Earning AUM: Approximately $3.2 billion, expected to be deployed over the next 12-18 months primarily in infrastructure investments.
• Total Return Swap (TRS): Entered into a TRS to repurchase 1.5 million shares, with plans to retire them.

3. Forward Guidance and Outlook

• 2025 Fee-Related Earnings Target: Expected to be slightly above the lower end of the $200 million to $225 million range.
• 2026 Fee-Related Earnings Target: Introduced range of $225 million to $245 million, reflecting 15% year-over-year growth.
• Long-Term Fundraising Goals: Aiming for $21 billion from 2025 to 2027, with $6 billion in 2025, $7 billion in 2026, and $8 billion in 2027.

4. Bad News, Challenges, or Points of Concern

• Performance-Related Earnings: No earnings generated in Q3, raising concerns about reliance on future monetization events to meet earnings targets.
• Market Volatility: The global economic environment remains uncertain, which could impact fundraising and investment performance.
• Management Fee Rate: Expected to trend toward 90 basis points, indicating potential pressure on revenue margins.

5. Notable Q&A Insights

• Capital Deployment: Management indicated that the $3.2 billion in pending fee-earning AUM will be deployed over the next 12-18 months, primarily in infrastructure.
• Inorganic Growth Plans: No acquisitions planned for 2025, with a focus on organic growth and integration of past acquisitions before resuming M&A activities in 2026.
• Performance Fee Realizations: Anticipated realizations from Infrastructure Fund III, with potential for additional performance fees in Q4 2025.
• Cross-Selling Opportunities: Positive momentum in cross-selling GPMS products, with expectations for new product launches in the coming years.

Overall, PAX reported strong financial results and strategic progress in Q3 2025, with a positive outlook for future growth despite some challenges related to performance-related earnings and market conditions.