VINP

Operator: Good evening, and welcome to the Vinci Compass Fourth Quarter and Full 2024 Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Anna Castro, Investor Relations Manager. Please go ahead, Anna.

Anna 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 our financial statements for the quarter, which are available on our website at ir.vincipartners.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 Compass fund. On results, Vinci Compass generated fee-related earnings of R$79 million or R$1.23 per share and adjusted distributable earnings of R$73.9 million or R$1.15 per share for the fourth quarter 2024. For full year numbers, Vinci Compass posted fee-related earnings to R$148.4 million or R$4.42 per share and adjusted distributable earnings of R$239.1 million or R$4.26 per share. We declared a quarterly dividend of $0.15 on the dollar per common share payable on March 27 to shareholders of record as of March 13. 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 are delighted to be with you today as we announce results for the fourth quarter and full year 2024. As you all know, 2024 was a transformational year for our firm, marking the beginning of a new chapter with the successful completion of our combination with Compass, alongside two other strategic acquisitions, MAV and Lacan. These milestones have significantly expanded our platform, positioning Vinci Compass as the premier alternative investment in global solutions provider in Latin America. We are already seeing tangible benefits reflected in our financial performance, with strong AUM growth, FRE and PRE as well as the immediate scalability of our distribution capabilities and extension of our product offerings. Let's start with a brief overview of our results. Vinci Compass ended the year with R$327 billion in total assets under management and advisory driven by the combination with Compass, our acquisitions in the forestry and agribusiness sectors but also with continued strong organic growth. Our fundraising momentum remained robust across private equity, credit and real asset segments, contributing R$3.4 billion in capital subscriptions over the year, including R$1.4 billion in the fourth quarter alone. These results represent exceptional accomplishments in the current fundraising environment. We achieved a strong first closing for SPS IV, our latest opportunistic credit solutions vintage. The fund secured close to R$900 million in commitments, almost matching in this initial closing the total capital commitment of its previous vintage, driven mostly by re-ups from SPS per existing LP relationships across previous vintages, showcasing the appetite investors have to increase exposure in this strategy in Brazil. We will continue to fund raise for SPS IV in 2025, now targeting other investor channels such as, institutional investors in Brazil, Latin America and globally. Another highlight was the final closing of VCP IV, a remarkable achievement and a challenging scenario for private equity globally. The final closing of VCP IV was led by foreign institutional investors, which, as we anticipated, would come in stronger at the end of the fundraising process. With this final closing, VCP IV reached R$3.1 billion in total commitments, making it the largest private equity vintage in our history. One key aspect of this fundraising process was the increase of our investor base across the local institutional community in Brazil. Approximately of the investor base for VCP IV is now composed of domestic capital providers in comparison to a historical average of 30%. We have been consistently since our IPO, driving from the gradual shift to alternatives within the local institutional community in Brazil. And we still have plenty of room to grow. We were able to differentiate ourselves and still be able to raise capital in an environment with high interest rates, by demonstrating our ability to generate value in invested companies and correlated to the local markets performance. On top of this, the current macro scenario has created very attractive deployment opportunities that will likely position VCP IV in an advantageous, position as the Brazilian economy continues to grow. Another major achievement in 2024, was the exceptional performance observed across multiple segments, both Vince's pre-existing funds and Compass strategies have delivered significant results in the fourth quarter. Our strongest contribution to PRE came from a dedicated special opportunities fund to invest in Argentina, in our global IP&S segment, launched last year to capitalize on Argentina's economic resurgence. The country has undergone, a dramatic economic turnaround, driven by both fiscal adjustment, a sharp reduction in country risk and an improving macroeconomic outlook. The Argentine peso, previously under heavy pressure has now stabilized and even appreciated due to a controlled devaluation strategy and declining inflation, reinforcing investor confidence. With growing optimism about structural reforms and strengthening economic fundamentals, we benefited from strong asset repricing and capital inflows significantly boosting our performance revenues in this strategy. Turning to deployment activity, we had an active quarter for the private equity segment, deploying significant capital across our different strategies and funds. In November, we announced the acquisition of a controlled stake in outback steakhouse operations in Brazil through VCP IV. Outback currently possesses the most recognized casual dining brand in Brazil, and we are very excited to be partnering with Bloomin Brands and continue to develop the brand in the country. This investment builds on our proven track record in this sector, following our successful investments in Burger King, Domino's Brazil and Camarada Camarão. Additionally, our impact in return fund, VIR IV secured minority stakes in two high potential Brazilian companies, Overejao and DRS. With this latest additions, VIR IV has now invested in nine companies spanning critical sectors such as water and sanitation, health care and financial services, bringing the fund's total allocation to approximately 90% of its capital commitments. As we build on this momentum, we are excited to start the fundraising for VIR V in 2025, further expanding our impact investment strategy and unlocking new opportunities for innovation, growth and sustainable value creation in Latin America's dynamic market. 2024 was a landmark year for our company, marking one of the most significant milestones since our inception with the successful combination with Compass. Since the signing of our combination in March of 2024, we have been diligently working on the integration process, ensuring a seamless transition that strengthens our operations and capabilities and reinforce our commitment to delivering value to investors and shareholders. With the integration well underway, the team from Vinci and Compass are now working together as a unified Latin American company, leveraging our combined strengths to capitalize on market opportunities. Our focus remains on identifying and seizing growth avenues that will drive long-term value, while deepening our understanding of product demand from investors, so we can provide them with the best solutions always. As we move forward, it's essential to analyze the broader economic landscape, which continues to shape the dynamics of our industry and influence our strategic decisions. In 2024, macroeconomic conditions underwent significant adjustments, both globally and regionally. The US economy has shown remarkable resilience, leading the Federal Reserve to pause interest rate cuts. The current scenario for strong growth bodes well for emerging markets in general. Commodities prices have been on an uptrend recently. Meanwhile, in Chile, market sentiment has improved significantly, driven by a combination of factors, the implementation of a wide pension reform, the prospect of electing a more pro-market Presidential candidate and a decline in local interest rates. These developments have created a more favorable environment for alternative investments. In many ways, Chile's current momentum could serve as a reference for Brazil in 2026. As Brazil moved closer to Presidential actions, and we anticipate a monetary easing cycle starting in late 2025. For Vinci Compass, these dynamics translated into higher demand for alternative investments in global solutions, further reinforcing our strong market positions. We have reached a stage where the strength of our brand and the attractiveness of our platform have set us apart from other local and regional players. This evolution mirrors trends observed in the US and European alternative asset markets, where the industry has increasingly concentrated around leading firms. We are now seeing the same pattern emerge in Latin America, position Vinci Compass as a key beneficiary of this shift. As we enter the New Year, we are stepping in an environment full of opportunities to further expand our presence across Latin America and strengthen our fundraising efforts, both cross-border and our local to local basis. Our extensive footprint allows us to effectively drive cross-selling opportunities across the region, while leveraging the unique advantages of global markets. This geographical diversity enable us to offer tailored solutions to our clients, addressing their investment needs on a local, regional and global scale. Bruno will provide more insights into our exciting fundraising initiatives for 2025. To conclude, the strength and scalability of Vinci Compass platform will continue to propel us forward in 2025. We are very excited about the platform, our market position and the opportunities we see to continue providing solutions to our clients that address their financial allocation and investment needs, be it locally, regionally or on a global basis. 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 entering 2025 with an exceptionally strong fundraising pipeline, positioning Vinci Compass for another year of robust capital formation and growth. We will have a number of products in the market this year, with notable initiatives such as the development of our UCITS platform for listed equities, a number of new structured products in credit, real estate and IP&S, the continuing fundraising of flagship funds such as the ICC and VICC SPS and a complementary host of high-quality global strategies in third-party distribution. One of our strategic focuses in 2025 is credit, which remains a cornerstone of our platform. We see significant opportunities for expansion and market share growth and we are actively scaling multiple initiatives across diverse strategies and geographies, ensuring robust capital deployment opportunities. Let's begin with our local-to-local credit fundraising activities. In Brazil, we are advancing fundraising for our MAV 3 vintage in our open-ended credit products, including VCP, one of our flagship funds across our Brazilian private credit offering. In Peru and Chile, we are raising capital for additional funds in existing strategies, such as closed-end senior secured lending and public and private credit funds. While in Colombia and Mexico, we are preparing to launch new strategies and credit. In the former, we are currently structuring Copco 1, our first closed-end senior secured lending fund in the country. And in Mexico, we are currently setting up a structured private credit fund with an anchor local LP as our first confirming and factoring fund in the country. With this product, we will officially launch our credit vertical locally. On the cross-border fundraising front, we continue to gain traction. Our opportunistic credit solution strategy, SPS' fourth vintage secured nearly R$1 billion in the fourth quarter of 2024, and we anticipate continued capital raising across Latin America until early 2026. We also actively fundraising for two open-ended funds under Latin America corporate debt flagship, offering diversified exposure to high-quality credit assets in the region. Additionally, we're exploring new frontiers in private credit, including semi-liquid strategies and additional private credit opportunities. In total, we currently have over 20 credit products to be raised in 2025. And more are in the works for future years. Our credit platform, which originated from four distinct groups, Vinci Compass, MAV and SPS has evolved into a highly complementary diversified one-stop shop for credit solutions. We are committed to deepening information synergies and fostering knowledge sharing across all of our strategies ensuring greater efficiency, enhanced execution and stronger investment outcomes. One of our key medium-term strategic agendas is the development of more local to local strategies across all our asset classes. I think the development of Vinci Compass Credit Group has shown how to combine organic and inorganic efforts to develop a strong market position. As we continue to grow our presence regionally, we will remain open to opportunities to partner with leading regional leaders or to develop the required capability in-house, depending on the situation. We also have an ambitious agenda for our global IP&S in 2025 with conviction that our third-party distribution strategy will drive strong inflows through a diversified and dynamic product offering. Our road map includes a comprehensive schedule of on-site meetings, event sponsorships and roadshows across key markets in Latin America and the U.S., ensuring deep engagement with investors and reinforcing our commitment to expanding best-in-class solutions to our clients. In terms of net flows, we anticipate substantial inflows across all asset classes partnering with world-class GPs and top-tier asset managers. Our offering spans traditional assets, alternative drawdown funds and semi-liquid alternatives, each contributing to a well-balanced diversified mix of third-party distribution products. These solutions allow our clients to complement our proprietary best-in-class local and regional products with exposure to the best global managers in their respective strategies, creating a true one-stop shop for capital providers in Latin America. Still within Global IP&S, we are preparing to launch two new proprietary funds in the VSP family building on the strong momentum of our inaugural VSP funds. Following its success, we will introduce VSP2 of fund of funds focusing on primary and secondary opportunities as well as co-investments in Brazil. Additionally, we will launch the VSP semi-liquid funds, our first alternative semi-liquid funds designed to capture primary and secondary opportunities in developed markets. This innovative structure aligns with a growing global trend, offering enhanced liquidity while maintaining exposure to high-quality alternative assets, a model we believe will be highly attractive to clients. We plan to kick off fundraising for both funds in the first half of the year, further strengthening our global IP&S platform by leveraging cross-selling opportunities with our proprietary funds. In the private equity segment, as Alessandro mentioned, we are thrilled to announce the final closing of VCP IV, marking a significant milestone for our platform. With a strong pipeline of opportunities, the team is fully focused on deploying our dry powder strategically, ensuring we capitalize on high-quality investment opportunities. At the same time, we are currently actively structuring VIR V, our next vintage impact private equity fund with a targeted fundraising period spanning from the second quarter of 2025 to the latter half of 2026. Shifting to the Real Asset segment, which encompasses our infrastructure, real estate and forestry strategies, we continue to make significant strides across all verticals. On the infrastructure side, we are approaching the final close of our climate change infrastructure fund, VICC. To date, we have already raised approximately 70% of the total target and continue to see strong interest from international investors. The ability to combine strong investment returns with strict investment guidelines across climate transition strategies has allowed the fund to garner substantial LP interest, and we continue to be optimistic about reaching the target size of the fund. Turning to real estate. We are preparing to raise capital for two new products in the first half of the year in the industrial warehouse and residential sectors in Brazil. We are also looking into opportunistic investment opportunities in the real estate sector in general through club deals, while public markets in Brazil are not favorable for fundraising across our listed REITs. Additionally, our Brazilian and Uruguayan real estate teams are now fully integrated, working seamlessly to strengthen our footprint and looking to opportunities to expand the real estate practice outside of Brazil. We continue to research new investment themes, including data centers, a rapidly growing sector that is drawing global attention from alternative asset managers. As part of our ongoing market analysis, we're studying the evolving demand for digital infrastructure and cloud services. While still in the early stages, we're evaluating how Vinci Compass could potentially position itself in this space in the future. As was the case with our residential development and logistic infrastructure strategy within real estate, we believe this could potentially be an added strategy to our real estate vertical. To round out our fundraising pipeline, we are also raising Lacan's fourth vintage fund within our forestry strategy with a final closing expected by the end of the year. To put in perspective, Lacan III was approximately BRL 500 million in commitments, and we are targeting a bigger number for Fund IV. In the fourth vintage, we are going to be able to incorporate carbon credit returns into the fund, which should not only boost underlying returns for the fund, but also potentially attract more climate transition capital into the strategy. With all of these initiatives in motion, we are poised for an outstanding year. We are confident that 2025 will be a landmark year, further solidifying our leadership in alternative investments across Latin America. The breadth and multitude of opportunities at Vinci Compass from a geographic and investment strategy standpoint means that we have flexibility to grow our business, while also bringing outstanding investment solutions to our clients. Our commitment to innovation, disciplined capital deployment, and thoughtful expansion should continue to drive our success, creating long-term value for all of our stakeholders. With that, I'll turn it over to Sergio to go through our results.

Sergio Passos: Thank you, Bruno. Let's start by covering our revenues. Fee-related revenues totaled R$218 million in the fourth quarter, reflecting an 84% year-over-year increase. Focusing first on management fees, which totaled R$170 million, representing a 70% increase year-over-year. The Private Equity segment was the largest contributor accounting for 27% of total management fees, primarily driven by the successful final closing of VCP IV and the retroactive fees associated with these final commitments. Excluding catch-up fees from the last quarters of 2023 and 2024, management fees still grew by 65% year-over-year, underscoring the strong revenue generation from our latest acquisitions and the continued momentum in securing new commitments for our closed end funds. Turning to advisory fees. We reported R$40 million in this quarter, with a particularly strong contribution of R$19 million from our corporate advisory segment. For the full year, this segment posted R$43 million in advisory fees, exceeding our annual target by 43%. Despite the challenging IPO environment, our corporate advisory business has continued to deliver exceptional results, demonstrating its resilience and strength. Still within advisory fees, the third-party distribution for alternative products, part of our global IP&S segment contributed with R$18 million in just the last two months of the year after the Compass closing at the end of October. It's important to highlight that the majority of our global IP&S advisory fees come from one-time upfront fees charged on third-party alternative commitments. We anticipate that further upfront fees could materialize throughout 2025, directly associated with the fundraising pipeline for alternative drawn down and semiliquid funds, which Bruno mentioned earlier, and it continues to progress. Starting this quarter, we have introduced a new revenue line, other revenues, which includes brokerage fees in the U.S. and Chile and fund service fees in Mexico. On the brokerage front, we serve both high net worth individuals and institutional clients. For retail clients, we offer a comprehensive service not only executing trades on their behalf, but also assisting in the construction of investment portfolio still to their financial objectives. For institutional clients, our role is primarily execution focused, providing full trading execution service or mini prime accounts, depending on their needs. Meanwhile, fund service fees related to the operational service we provide for funds in Mexico. Unlike brokerage fee, which are transaction-based, fund service fees are recurring, though they are subject to foreign exchange fluctuations. This quarter, fund service fees totaled R$4.7 million Another important aspect to highlight is the composition of our fee-related revenues by currency. Approximately 30% of our revenue was received in US dollars in the fourth quarter, underscoring the global reach and natural currency diversification of our business. Turning to fee-related earnings. Fourth quarter fee related to earnings totaled R$79 million, reflecting 38% year-over-year increase, supported by higher management and advisory fee. For the full year 2024, FRE reached R$248 million or R$4.42 per share, up 15% on a per share basis. We anticipate continued momentum in FRE growth for 2025 driven by strong fundraising pipeline and the full contribution of Compass and Lacan revenues and FRE, which are now fully consolidated into our results. From a margin standpoint, the fourth quarter was a strong quarter as both our corporate advisory and third party distribution business had strong revenues. In addition, to strong catch-up fees from VCP IV, helping us dilute more efficiently our fixed costs. We believe a more normalized FRE margin run rate at the current time would be in the low 30%. We continue to work diligently to leverage the combined business and drive margins higher over time. As part of our income state presentation this quarter, you will notice a new line item, placement fee amortization and rebates. These reflect fees paid to distributors that due to accounting procedures are not deducted from net management fees, unlike certain other distributor fees that directly impacted the line. We introduced this change following our combination with Compass, where these expenses are more significant particularly in the Credit and P&S segments. Prior to the merger, our exposure to placement fee amortization was minimal, primarily within the private equity segment. While this adjustment has only a slight effect on our consolidated FRE margin in segments like Credit and P&S where these costs are more material relative to revenue. It can significantly impact segment margins. As a result, the reported FRE margins for these segments may not fully reflect the underlying operation performance of the business. Although, realized financial income delivered a strong investment returns during the quarter, it was generated from a smaller investment portfolio, as cash was allocated towards capital costs from closed-end funds and payments related to acquisitions. As a result, we observed a decline compared to the previous quarter, reflecting our active capital deployment strategy. Regarding the other items line, this quarter, we experienced an FX impact on Vinci and Compass net debt position in US dollar, which impacts our debt position in dollars from the convertible preferred structure refries. The Brazilian real suffered from a 14% depreciation against the dollar during the fourth quarter resulted in a negative impact of approximately R$16 million on adjusted distributable earnings. However, it's important to highlight that as of the third week of February, the Brazilian real had already appreciated by 9% compared to its exchange rate at year-end. Therefore, if the Brazilian real continues this appreciation trend, we expect to gradually offset this impact in the coming quarters with most of this effect coming already in the first quarter of 2025. Regarding non-operational expense, as previously anticipated, we incurred expenses related to the close of the Compass combination along with associated transaction expense and costs from the acquisition of Lacan. We remain committed to transparency, and I want to assure our investors that this line includes only these items, reinforcing the non-recurring nature of these expenses. Turning to performance-related earnings. As Alessandro mentioned, we delivered strong results this quarter with R$16.5 million in PRE, marking a 478% year-over-year increase. This strong performance was driven by recognitions across our global IP&S, real assets and credit segments, reinforcing the strength and diversification of our platform. In Global IP&S, which was the largest contributor to PRE this quarter, our results were driven by third-party distribution liquid, global solutions and comingle funded strategy with a notable highlight to the Vinci Argentina fund. In real assets, the largest contribution came from real estate in Peru, reflecting the robust performance of our real estate investment in the region. Finally, in credit, Key highlights included the VHG fund, which benefits from our confirming and its structured credit strategy and Compass yield 30 which delivered strong results within the local currency high-grade credit strategy, further strengthening the resilience and brief of our credit vertical. Speaking of performance, I'd like to highlight the gross accrued performance fees in closed end funds totaled BRL 437 million by the fourth quarter, up 17% quarter-over-quarter, driven by the mark-to-market appreciation in December in our onshore Brazilian funds. Our offshore funds, however, experienced a delay in markup recognition as the quarterly reevaluation follows a 60-day disclosure time line set by the fund administrator. Looking ahead, given the FX depreciation of the full year of 2024, we anticipate that our offshore funds may face a temporary negative impact on gross accrued performance fees in the next quarter. To wrap up, I would like to cover our distributable earnings. Adjusted distributable earnings totaled BRL 73.9 million in the fourth quarter or BRL 1.15 per share, representing a 16% year-over-year increase on a nominal basis. On a per share basis, adjusted DE showed a slight 2% decline, entirely driven by the impact of FX depreciation during the quarter. Excluding the BRL 16 million of FX exchange rate impact, adjusted distributable earnings would have totaled BRL 90 million with adjusted DE per share reaching BRL 1.40 per share, reflecting a 19% year-over-year increase on a per share basis. It's important to emphasize that without the FX effect, both our nominal and per share figures would have shown significant growth, further reinforcing accretion from our organic and inorganic growth initiatives to our shareholders. In closing, I'd like to once again emphasize the strong momentum we continue to experience as a firm. We remain fully committed to generating long-term shareholder value, leveraging both organic growth initiatives and strategic inorganic growth opportunities to further expand our platform. With that, I would like to close our remarks and open the call for questions. Once again, we'd like to thank you for joining our call. Please, operator, you can proceed with the questions. Thank you.

Operator: We are going to start the questions-and-answer session for investors and analysts. [Operator Instructions] Our first question comes from Ricardo Buchpiguel with BTG. You can open your microphone.

Ricardo Buchpiguel: Hi, everyone, and thank you for the opportunity to make questions. I have two here on my side. So first, I wanted to hear your thoughts on why should we expect about the evolution of FRE margin throughout this year, right? So you guys see like a very big M&A here with comp. So just trying to understand a little bit better the pace and the evolution of the improvement as you tackle the synergies of this transaction? And secondly, if you could also talk about, what should we expect in terms of dividend payout for 2025? Should we expect somewhere close to 90% or 95% is what would be helpful? Thank you.

Alessandro Horta: Okay. Ricardo, thank you for your question. It's Alessandro. Good evening everybody. I will start with the first question about the evolution of the FRE margin. We expect to regain margin FRE moving forward, basically with two main actions that's quite simple, and we already identified that we can deploy them over time. First would be efficiencies in terms of cost and structure. We already did inspire doing our previous work with bank when we define the integration process, but moving forward, we already saw after a few months of integration that we really have a lot of opportunities to really gain a lot of efficiencies in our cost structure. And second, one of the main pillars of this deal were the complementarity of the two companies. And we have these two main levers in this complementarity that we explore that will translate in higher margins. First, a larger amount of top distribution in Brazil where Compass was, and Vinci, of course, was very not very relevant. And the second would be to introduce still higher margin products in other countries in Latin America, initiatives that are already starting to happen, especially in private credit and other alternative asset class, in other countries in Latin America, take advantage of the track record of Vinci where we are tapping local markets in other Latin America countries, where Compass had a very good presence and, of course, a very good LP base.

Bruno Zaremba: Ricardo, this is Bruno. Just to add on the first FRE margin question. Alessandro you made a comment -- in his prepared remarks, talking about the expected level going forward. So we had a number of about 36% in the fourth quarter and for a recurring basis, we were mentioned in the call, we mentioned a number in the low 30%, which I think is what we expect to do at least for the first year of the new entity of the new combined entity. So I think that's a good level to shoot for into the expectations for 2025. And in regards to the payout, at this point, we don't see any change in what we have been doing. So the target has been historically to pay something around 80% of distributable earnings. At this point in time, we're going to keep the same target, which was approximately what we did in this quarter. And looking forward, I think at least for the time being, we're going to keep the same percentage targets. So nothing changes on that side.

Ricardo Buchpiguel: Very clear. And just another question that I have, I was looking at AUM variation from one quarter to another, and there was a big relevant fact related to FX impacts, right? I understand that Compass have their AUM mostly in USD and given the BRL depreciation had a positive effect on our – your AUM. But what would beat the number that helped in terms of revenues, right? Just to understand a little bit the effect on the P&L of this currency filtration?

Alessandro Horta: Yes. I think, Sergio mentioned that as well, right? Today, we have about 30% of the -- of our revenue in dollars and other breakdowns in the other currencies, real is about 40%, 30% in dollars, and the balance of the results are in Chilean pesos, Argentinian pesos and so on and so forth. So I mean, having that depreciation impact on AUM now we would like -- I mean, we would see the -- from the dollar standpoint, the impact on that 30% revenue that we have in dollars. And depending on relative terms for the other currencies, the rest of the impacts as the other currencies move against the real. But in this quarter, the most significant impact was from the dollar variation, which is at 30%.

Ricardo Buchpiguel: That’s correct. Thank you.

Operator: Our next question comes from Guilherme Grespan with JPMorgan. You can open your microphone.

Guilherme Grespan: Thank you, Alessandro and team. Congratulations on results, and good luck on the new chapter. Two questions on my side. One, sorry to insist on the FX, but now the BRL 16 million that you guys mentioned in the release as the impact from US debt. Just remind us a little bit what exactly is this debt? And is this unhedged? And is it expected to continue to be unhedged in the P&L? And then my second question is related to performance fees. It seems that -- and correct me if I'm wrong here, but it seems that a large portion, the largest was IP&S, right, the contribution from this segment. Just remind us if should be recurring or not the contribution to performance from this side of the business. I understand there result in Argentina and the result in Peru. But I think the largest chunk of performance was IP&S. And I just want to understand if we're going to see this every quarter? Thank you.

Bruno Zaremba: Okay. Grespan, this is Bruno again. Thanks for the question. In regards to the exchange rate, the exposure that we have on the debt side is the convertible preferred with Ares, right? That's the exposure that we have. We have put a target of having a small exposure to that fluctuation over time. And obviously, this quarter was a significant exposure on the -- at least on the income statement because we have a little bit of the exposure that is unhedged and will continue to be unhedged. We have not hedged it fully. But this quarter with the devaluation of the currency, the impact was higher. The reason why we don't have a full hedged is because our business is already partially in dollars. So we're going to recover over the next few quarters, the cash flow from this loss. But on a momentaneous basis, given that the devaluation was very strong in the fourth quarter, we have this mismatch. But if the currency stayed at 615, which was the -- I think around the currency around the level where it finished 2024, we would earn these results back on the FRE given the net exposure that we have to dollar. So that's the rationale that we did. We look at the cash flow profile, the dollar revenue that we have in the business and look at that on an ongoing basis to see what kind of exposure we are comfortable in having and nowadays, we figured that the exposure is between four and six quarters of to fully offset the impact that we have on the mark-to-market of the debt position. In regards to the PRE [ph], PRE actually was quite diversified. I was reading through the notes here. In 2024, we had more or less 20 different products paying PRE so it was quite diversified, the impact and most of those, obviously, in the fourth quarter. There were two -- there was one bigger beneficiary to that line, which was Argentina. Peru was also an important impact, but Argentina think was the one that really stood out a little bit. It's difficult to say, I mean, obviously, Argentina will not be such -- we don't expect Argentina to be such a contributor in future quarters. But hopefully, that will go to another fund, right, given that we had 20 different funds contributing to PRE. Hopefully, that that role that Argentina had in '24 for us will be taken over by another fund in '25, and we're able to repeat the level of PRE that we had in '24, but it's difficult to anticipate. So I wouldn't want to commit to repeating this number going forward. It depends on markets, the performance of the funds, but hopefully, we're going to get same good results in '25.

Guilherme Grespan: That's clear. And just one follow-up, just to confirm, Compass is 100% in the quarter, right? It's full three months.

Alessandro Horta : No. It's just November and December. So we had two months of this quarter.

Guilherme Grespan: Two months.

Alessandro Horta : Yes. Although the contribution from Compass was -- it was good because the upfront that we collected in this quarter were strong. So they were stronger than I would expect like a normal in a normalized basis. The fourth quarter, these two months that we had they were strong because of timing of the upfront collection. So they had a good impact to the numbers in the fourth quarter despite that two months

Guilherme Grespan: Okay. Super clear. Thank you.

Operator: Our next question comes from William Barranjard with Itaú BBA. You can open your microphone.

William Barranjard: Thank you everyone. Good nights. My question here is regarding the consolidated business and if there is any new seasonality effects that we should be aware of, be it in terms of fundraising fees, even performance and expenses. If there's something here, we should be aware of so we could put it into our models, it would be very, very helpful.

Bruno Zaremba : Okay. William, this is Bruno again. I think the main seasonality that I would expect first to have is that we are more than doubling our advisory fee line, right? So we had, as a stand-alone company, the corporate advisory segment, which was difficult to forecast on a quarter-to-quarter basis because it depends on when the deals close and when our advisory fees would come in. With the incorporation of Compass, this exposure now is more than double of what we had on a standalone basis. The advisory fees from Compass, they depend on the timing of the closings of the funds that we are attributing our third-party distribution business. So they also vary from quarter-to-quarter. So I would expect, on a go-forward basis, this line, specifically the advisory fee line to be the line that we would have more seasonality throughout the year, depending on the timing of the closing of the transactions, the case of corporate advisory, which we already had. And now depending on the timing of the closing of the funds that we are raising on third-party distribution, also affecting on a quarter-to-quarter basis, right? Those are the two main aspects I would expect to have some bigger seasonality going forward.

William Barranjard: That is clear. Thank you, guys.

Operator: Our next question comes from Tito Labarta with Goldman Sachs. You can open your microphone.

Tito Labarta: Hi. Good evening, Alessandro, Bruno, Sergio. Thank you for the call and taking my questions. My question following up a little bit on the advisory fees, I guess, particularly for IP&S, because you mentioned some of those are one-time. Just to understand, how much of this advisory fee should we consider as one-time? And I think Sergio you also mentioned that you may have some other one-time advisory fees just to think about what's recurring. I understand, there's some seasonality there that you just mentioned, Bruno, but what's recurring and what's one-time? And then, somewhat related to that, on the IP&S, if we look at the fees, the management fee as the percentage of the fee earning AUM. We expected that to come down, given the incorporation of Compass. But is the level we saw this quarter? Is that the right level to think about going forward? And I understand you only included two months of Compass, right? So it will probably be a little bit higher. But just to think about the management fee as a percentage of AUM, particularly for IP&S. How do we think about that going forward? Thank you.

Bruno Zaremba: Yes, Tito, lets Alessandro, take the last question.

Alessandro Horta: Yes. Of course, taking in consideration that we just incorporated two months of Compass, we expect this fee level will be the stable level. If you take out the one-times that are more upfront are related to more drawdown funds that we distribute through our third-party distribution business. So this is the level of recurring. So this is taking into consideration again for the two months, not the three months that would be around the percentage level that we should expect moving forward. I let Bruno, to talk a little bit more in detail about the one-times.

Bruno Zaremba: Yeah. Tito, it’s good to talk to you. I think what Sergio, mentioned in his remarks, the nonrecurring nature, are the advisory fees that we paid as costs regarding the close of the transaction. So we had a Compass and Lacan this quarter, and there were fees associated with those two transactions, due diligence fees and also advisory fees for those deals, which we have separated in our income statements. And those are non-recurring in nature, because they are 100% M&A related, right? So those fees are paid and will no longer happen. In the case of the revenues from advisory fees in Global P&S, they are recurring. They are part of the business, right? So the business in third-party distribution, we have two options, let's say, of receiving revenues in that business. For the liquid third-party distribution business, we receive a fee on the average AUM or average revenue over time. So it's a more normalized level of fees because it depends on the AUM and revenue that we have in a certain quarter. They are measured, and we received those revenues. And they enter into our management fee numbers. So they are not carved out into advisory fees. What we book into the advisory fees is the other type of revenue that we received from third-party distribution, which is related to the closed-end funds that we market. So when we market a fund, which is not liquid and people have commitments for a long term like a private equity fund or a real estate fund that has a typical drawdown structure. We charge fees on the placement of these funds that depend on the amount of capital that we raised and each fund has a different percentage, right, negotiated with the partner. These fees, they are not -- they are recurring. So they are part of the business as long as we have drawdown funds being distributed. We are going to charge these fees, but they are less -- they are less stable, right, because they depend on the timing of the close of the products. So usually, we charge at the time of the close. It's a percentage of the AUM that we raised, depending on the funds. But it's a recurring revenue stream. It's not stable quarter-to-quarter because it's a little bit lumpier because it depends on when the fund is closed. But it's a part of the business. So we expect it to continue going forward as part of our third-party distribution business.

Tito Labarta: Okay. Great. I think that's clear, Bruno. Thanks for that. So we should consider those advisory revenue fees as recurring, there will be -- and it's not necessarily seasonality, it depends more when the funds close, not because you get more in 4Q versus 2Q when the funds close?

Bruno Zaremba: Exactly. So we had a good fourth quarter. I think fourth quarter was a good number, like from a sustainable level basis, I would say, probably towards the upper end. But we expect the advisor contribution from third-party distribution, as I made a comment in the prior answer to more than double the advisory fees for us on a combined basis. If you add the corporate advisory, what we had before and add the adviser coming from third-party distribution, that's going to be more than 2x what we had before. Obviously, it will fall in different quarters, but it's going to be a much bigger number going forward for sure.

Tito Labarta: Okay. Very clear. Thanks, Bruno.

Operator: I would now like to turn the floor back to Mr. Alessandro Horta for the closing remarks. Please, Mr. Horta, you can proceed.

Alessandro Horta: So we'd like to thank you again for continuous interest and support. And to let you know that, we are very optimistic and update with the prospects of our business moving forward. This is the first call of the combined numbers, and we are certain that we have a very good future for Vinci Compass. So thank you again, and good night.

Operator: This does conclude today's presentation. We thank you all for your participation and wish you a very good evening.