Prepared remarks
Ladies and gentlemen, thank you for standing by. Welcome to Patria's Second Quarter 2026 Earnings Call. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Andre Medina, Investor Relations Director. Please go ahead.
Good morning, everyone. Welcome to Patria's Second Quarter 2026 Earnings Call. Speaking today are our Chief Executive Officer, Alex Saigh; and our Chief Financial Officer, Raphael Denadai. This morning, we issued a press release and earnings presentation available on our Investor Relations website and on Form 6-K furnished to the SEC. A replay will be available on our IR website. As a reminder, today's call contains forward-looking statements, including statements relating to our guidance and targets, which are subject to risks and uncertainties, do not guarantee future performance and undue reliance should not be placed on them. Please refer to the forward-looking statements disclaimer and risk factors in our most recent Form 20-F. Patria reports under IFRS and will reference certain non-IFRS measures. Definitions and reconciliations to the most directly comparable IFRS measures are in the earnings presentation. With that, I'll hand it over to Alex.
Thank you, Andre. Good morning, everyone. Our second quarter results reflect continued strong fundraising momentum, supported by consistent investment performance across our diversified platform. Fundraising in the quarter totaled $2.3 billion, bringing the year-to-date total to $4.5 billion and keeping us on track to exceed our full year fundraising target of $7 billion. Given the strong momentum in investor demand, we continue to believe fundraising can surpass our 2025 all-time record of $7.7 billion, and we are on pace to exceed our 3-year fundraising target of $21 billion from 2025 through 2027. Fee-earning AUM reached $48.9 billion, up approximately 7% from first quarter '26 and 32% from 1 year ago, reflecting year-over-year organic growth, the closing of 3 acquisitions and positive investment performance, primarily in credit, real estate, public equities and GPMS. The growth in fee-earning AUM drove fee-related earnings of $57.1 million for the quarter, up 13% sequentially and 24% year-over-year, and we remain on track to achieve our full year FRE guidance of $225 million to $245 million. Finally, distributable earnings per share of $0.32 rose 19% sequentially and 31% year-over-year. Raphael will take you through our financials in more detail. Investment performance. Our investment performance remains consistent and continues to support fundraising across the platform. Over 85% of our current fee-earning AUM, excluding SMAs and third-party managed funds, which are not reported, are invested in funds performing at or above their benchmarks since inception. In credit, our flagship LatAm high-yield strategy with over $5.5 billion in fee-earning AUM has generated 11% annualized net returns in U.S. dollars since its inception 26 years ago, outperforming its benchmark by more than 360 basis points. As you can see in our earnings presentation, this strategy is outperforming its benchmark for all periods presented, including year-to-date 1, 3 and 5 years. In infrastructure, the pooled return of our latest 3 vintages, which are our active funds, exceeds the benchmark by more than 750 basis points. In Global Private Markets Solutions, our two active and more mature commingled secondary funds, SOF III and SOF IV, are outperforming their benchmarks by 650 and 560 basis points, respectively. For further information on our investment performance, please refer to Pages 17 to 21 of our second quarter '26 Earnings Presentation. Now in private equity, two of our older active vintages, our buyout Funds IV and V, which together represent under $2 billion of AUM or under $1.3 billion of fee-earning AUM have, as previously disclosed, not performed well, and we have marked these funds down in the quarter. Among other things, these funds have been seeking divestments through an atypically long period of high interest rates in Brazil and several of their investments were severely affected by long-standing macroeconomic adversities in the aftermath of COVID as well as by sector-specific shocks. These challenges and our focus on accelerating divestments from these funds to expedite the return of capital to investors are now reflected in their marks. Importantly, the management fees for our private equity drawdown funds, funds in which committed capital is deployed gradually into investments, are not impacted by portfolio markdowns or markups as fees are charged on invested cost. In addition, Fund IV has not generated management fees for the last 2 years and both Funds IV and V have no accrued performance fees since the fourth quarter of '25. So these markdowns do not impact our net accrued performance fees. These two older private equity vintages do not describe our private equity franchise today. We have made significant changes to our private equity team and strategy over the past few years and Funds VI and VII were invested in a different macro environment. Of note, portfolio companies in Funds VI and VII have little to no leverage and have been performing well, growing EBITDA by approximately 10.5% on average over the past 2 years. It is important to note that while approximately 30% of our fee-earning AUM, which are mainly in drawdown funds and earn fees predominantly on invested capital at cost, approximately 70% of our fee-earning AUM are in funds, mostly in credit, real estate and public equities that charge fees on the market value of traded securities, and where, therefore, investment performance directly translates into revenue growth. Fundraising. Now, let me provide some additional color on fundraising. A key highlight of the quarter was a new $1-billion commitment from an existing sovereign wealth fund client to a multi-asset separately managed account. This mandate significantly expands our relationship with the client and reflects the growing demand for Patria's solutions-oriented approach, allowing capital to be deployed flexibly across asset classes and strategies. We believe this type of mandate is particularly attractive given its stable, long-duration capital profile and its ability to deepen strategic partnerships with investors. Now, on credit. Focusing more specifically on our asset classes, credit remained a strong contributor to fundraising with over $650 million raised in the quarter, bringing the year-to-date total to approximately $1.6 billion. Demand momentum continues, driven by the aforementioned strong performance across our public credit strategies, the growing interest in dollar-denominated private credit funds and the multiple structural growth drivers, namely banking disintermediation and the broader financial deepening, which are supporting the growth of Solis, our recently acquired CLO business in Brazil. Solis has raised over $500 million since we closed the transaction at the start of the year. Now, on Global Private Markets Solutions. For Global Private Markets Solutions, the fundraising highlight of the quarter was the final close of SOF V, our fifth-vintage flagship secondaries commingled fund. Total commitments to this fund reached $676 million, exceeding our original fundraising target of $500 million by approximately 35%. Re-up investors represented approximately 36% of commitments with the balance comprising a combination of existing and new investor relationships. The fund attracted capital from five regions with North America representing over 50% of capital commitments, followed by Europe at approximately 40%, together with additional commitments from investors across Latin America, the Middle East and APAC. Of course, a key focus for GPMS during the quarter was the closing on April 1 and onboarding of our WP Global Partners acquisition, which expands our lower-middle-market private equity solutions platform in the U.S. We are pleased with the progress we have made to date, with the WP team successfully integrated into our New York office and already contributing to investment activity across the GPMS platform. Now, on infrastructure. In infrastructure, we are excited about our Infra Core strategy and are targeting a first closing later this year alongside its inaugural deal. This strategy focuses on a pipeline of mature infrastructure assets in Latin America with contracted U.S. dollar revenues, mainly in Chile, Colombia and Brazil and seeks an attractive return premium versus similar global funds. Infrastructure also represents one of the primary areas of interest within our SMAs, and we expect a significant portion of the capital associated with our recently secured $1 billion multi-asset mandate to be allocated to this asset class. Of note, during the first half of the year through the deployment of capital sourced from a variety of fee-paying SMAs and co-investments, infrastructure added $5 million of annual recurring net revenues to Patria. We continue to see significant opportunities to deploy our growing base of dry powder over the coming years into sizable projects such as our Data Center initiative, and we have visible line of sight to deploy its approximately $1 billion of pending fee-earning AUM. Now, on AUM quality. Our fundraising success continues to reflect the evolution of Patria's platform. Since our IPO, we have expanded from 2 flagship strategies with the capacity to raise more than $1 billion per vintage to at least 10 flagship strategies. This diversification has strengthened both the quality and resilience of our earnings base with approximately 90% of fee-earning AUM invested in vehicles with limited or no redemption rights and approximately $11 billion of permanent capital, representing roughly 22% of total fee-earning AUM. Pending fee-earning AUM increased approximately 20% in the quarter to $4 billion, supported in part by our new multi-asset SMA mandate, providing meaningful visibility into future fee growth. Now, on macro context. With respect to the broader operating environment, our view remains unchanged. The geopolitical backdrop continues to be supportive of Latin America and particularly of South America, where we are seeing a meaningful shift toward more market-friendly governments. Institutional investors across Asia and Europe continue to engage with us across a wider range of strategies than historically, while existing clients are further deepening their relationships with the firm as evidenced by the recently closed $1 billion multi-asset mandate. In summary, our execution remains very consistent. Fundraising momentum continues. And with $4.5 billion raised year-to-date, we see a clear pathway to potentially yet another record year of fundraising. With our capital formation and asset growth increasingly driven by long-duration vehicles, we conclude the quarter with even greater confidence in our ability to achieve both our 2026 financial objectives and the longer-term goals outlined in our 2027 vision. For example, our year-to-date FRE totaled $108 million. If we simply annualize this figure and include the same incentive fees we reported in 2025, our FRE would be more than $225 million, already at our target range, even before accounting for incremental growth in fee-earning AUM and fees we are seeing quarter-over-quarter. With that, I will hand the call to Raphael. Thank you.
Thank you, Alex. Good morning, everyone. I will now take you through the second quarter results. Fee revenue and expenses. Total fee revenues for the quarter were approximately $105.8 million, up 30% year-over-year and 14% sequentially. Fee revenues in the quarter include $1.5 million of catch-up fees related to the final closing of SOF V. Growth in fee revenues was driven by fee-earning AUM growth of 32% year-over-year and 7% sequentially, supported by net organic inflows, positive investment performance and the three acquisitions completed this year. Incentive fees of $2.5 million in the second quarter were attributable to real estate and Solis, which earns incentive fees semiannually. Solis also contributed $0.4 million of structuring fees, which are included in Other Fee Revenues. These fees are a regular feature of our private credit business. And although the specific timing and size of the structuring fees are difficult to forecast, we expect that over time they will be an attractive source of incremental fee revenues. Our last 12 months average management fee rate in the quarter was approximately 86 basis points, reflecting the impact of the WP transaction as well as the continued growth in Credit, Real Estate, GPMS and various co-investments and SMAs over the recent quarters. FRE & Margin. Our fee-related earnings in the second quarter of 2026 were approximately $57.1 million, up 24% year-over-year and 13% sequentially, driven by the strong growth in our net fee revenues, partially offset by 16% sequential growth in expenses. Our FRE margin came in at 54% compared to 54.6% in the prior quarter. Among other things, our FRE margin reflects the short-term impact of acquisitions, which occurred at a faster pace and larger AUM volume than expected as of our original guidance, and also the impacts of FX, normal expense growth, including annual promotions, and ongoing investment in our platform. Indeed, given the evident success we have been having in our fundraising initiatives, we have been steadily focused on continuing to invest in our platform as we expand our global marketing, distribution and product capabilities. In light of these factors, we now expect our FRE margin for the full year 2026 to fall modestly below our 58% to 60% target, although we remain confident in our 58% to 60% target for 2027 and onwards. Now while the FRE margin is a key byproduct of our financial results, it's important to highlight that our focus is primarily on FRE, not simply the FRE margin. And in that regard, as Alex noted, we remain confident that we are on track to meet our 2026 FRE objective of $225 million to $245 million or $1.42 to $1.54 per share, representing approximately 11% to 21% growth from last year's $202.5 million. We are also maintaining our 2027 FRE target of $260 million to $290 million or $1.60 to $1.80 per share. Distributable earnings. Total distributable earnings for the quarter were $50.7 million or $0.32 per share, up 31% year-over-year and 19% sequentially on a per share basis. This growth was driven primarily by the increase in FRE as we generate no performance-related earnings in the quarter. In addition, our net financial expense of $1.5 million benefited from $2.9 million of contribution from Tria, our trading platform as well as higher investment income, which was partially offset by higher interest expenses related to the $350 million bond offering we successfully completed early in the quarter. While the contribution from Tria is difficult to forecast and can vary sharply quarter-to-quarter, over the past 6 quarters, the contribution from Tria has averaged about $1.4 million per quarter. Over time, we expect the contribution from Tria to grow as the business continues to expand its capabilities. Stock-based compensation. Stock-based compensation in the quarter was $13.5 million, totaling $23.6 million year-to-date or 12% of total fee revenues, consistent with our recent guidance. Tax. Now with regards to taxes, the second quarter 2026 effective rate was approximately 9%, reflecting our evolving business mix and also consistent with our guidance. Balance Sheet & Capital Management. Regarding the balance sheet, as previously mentioned, we completed our $350 million bond offering early in the quarter, the proceeds from which we paid our outstanding credit facility with the remaining cash available to fund various M&A-related payments, share repurchases and growth initiatives. Also, as previously reported, we completed a second TRS facility in which we repurchased a total of 1.5 million shares for a total cost of $18.3 million. This facility matures in the second quarter of 2027. We also are in the process of refinancing and slightly increase the size of our first TRS facility by an additional 1.3 million shares to 2.8 million shares, which we expect will total approximately $31 million and mature in the third quarter of 2027. We updated the slide we introduced last quarter in the reconciliations and disclosures section of our earnings presentation, which highlights our incurred liabilities through 2028, so you can continue to have a clear picture of our future obligations. Supported by the debt offering proceeds, expected cash generation and our available undrawn credit facility, we believe we have ample liquidity to meet all obligations, fund dividends, reinvest in the business and repurchase shares while maintaining a conservative balance sheet. In this context, share count for the quarter was 159.5 million shares, and it remains our long-term goal to maintain the share count in the 158 million to 160 million range. To summarize, we believe our financial position remains strong. We continue to generate growing, durable cash flows from a highly diversified and long-duration asset base. Strong fundraising momentum and growing fee-related earnings reinforce our confidence in achieving our growth objectives, while our balance sheet remains well positioned to support future growth. We look forward to your questions.
Questions and answers
And our first question is going to come from Tito Labarta with Goldman Sachs.
Congratulations on the results. My question on the fees, very strong performance on fees in general. First on the management fees as a percent of AUM has come down a little bit. Just given the changing mix a little bit, do you expect any further pressure on that? How do you think about the mix and how that will impact sort of the management fees as a percent of the fee-earning AUM? And then also, you had a good quarter on the other fees, I guess, M&A, other advisory fees. Anything there to highlight? How should we think about that going forward from here?
Tito, this is Alex here. Thanks for your question. Thanks, of course, for participating in our call. No pressure on fees on a product-by-product basis. So I don't see any pressure on that side. Of course, when our management fees over revenues change, it is more related to mix than to pressure on a specific product or strategy. As we did buy and incorporate Solis at the beginning of 2026, we were expecting to do it by the end of '26 in our projections and guidance together with WP, the GPMS extension in the U.S. plus the RBR, which is a real estate investment trust here in Brazil; these three acquisitions come in with a lower fee base. They have a lower FRE in that sense, but they also have a lower ROA. In that case, because of mix that pushes our ROA slightly down. But the 90%, 92% range, that's what we're getting to, should not change. It's minor, minor changes. So I don't see, again, no pressure on fees on a product-specific or strategy-specific basis. Fees as a percentage of net revenues are changing because of mix. We did incorporate Solis and the other acquisitions that I mentioned at the beginning of the year. They have a lower ROA, and that's why fees have changed a little bit. But we don't see going forward any significant change. On the advisory fees, part of the Solis business, which is a CLO business here in Brazil, is a structuring advisory service that they do for their clients. So when Solis is structuring a CLO for one of their clients, they charge a structuring fee or sometimes a consulting fee. So this line, "Other revenues," has advisory fees embedded. It's not M&A fees. It will come from these structuring/consulting fees that Solis charges; it is part of their business model. They do originate these CLOs with several originators. They have around 100 originators. Of course, by the 80/20 rule, around 20 originators are significant for Solis. These 100 originators bring the opportunities to Solis in order to buy receivables, asset-backed receivables, or structure a new CLO. And when Solis has structured this new CLO, it charges the structuring fees that I mentioned to you. So going forward, I think we have normally other fees of around $1.5 million to $2.5 million. I think we're going to add to that moving forward another $2 million coming from the Solis structuring fees per quarter. But it's part of Solis' business model, so it's going to be a recurrent fee for us. I hope I answered your question.
Yes. No, very helpful, Alex. I guess — so we should think of this new level of around $7 million is more recurring, particularly with the Solis business now going forward. And then also just with the incorporation of Solis and all the other businesses, right, the FRE margin was lower, it will be a little bit lower for the year, but should normalize maybe in the future years to the 58% to 60%. How are the margins and, I guess, these incentive fees? And was it also just mix impacting the margin or anything else? Like what's it going to take to get the margin back up to that 58% to 60% in future years?
Yes. Straight answer here. We see it coming back to the 58%–60% range. I don't see any major issues there. It's just a timing issue. We did incorporate these acquisitions at the beginning of '26 versus in our budget guidance for the end of '26, plus the point that these acquisitions came in before, so revenues and, of course, fee-related earnings, et cetera. But these acquisitions were operating at a lower margin than us. We operate at a 58%–60% FRE margin; they were operating at close to 30% FRE margin, very similar to other acquisitions that we have already done in GPMS, the real estate investment trust in Brazil, et cetera. After we integrate these businesses, we start managing their costs, we gain synergies, scale, and drive the margins back to 58%–60%. So it's just a timing issue. You will probably see margins going up quarter-over-quarter as we reach the end of '26. But the overall yearly margin will be slightly down versus the 58%–60% range because we incorporated these lower-margin businesses at the start of '26. So going into 2027 we will already be in a good margin pace increase, which is why we are comfortable with the 58%–60% FRE margin for 2027. Regarding incentive fees, it's just mix. There's nothing structural to comment on besides mix: sometimes you have incentive fees that one fund performs better in one quarter versus another. So there are very slight changes, $1 million here or there, relative to total revenues of over $100 million. So these are minor quarter-to-quarter changes driven by which strategy outperformed the benchmark in that period. Nothing structural. Very confident on the 58%–60% margin; it's a timing issue due to the acquisitions. The business is very solid. As we diversify into more asset classes and countries, fundraising remains strong, $4.5 billion year-to-date against a $7 billion guidance. If we do another strong quarter, we could reach the guidance or beat last year's record. We are raising across diverse strategies and asset classes—credit, infrastructure, real estate—so the business we built is resilient. Thank you, Tito.
The next question will come from Ricardo Buchpiguel with BTG.
Could you please comment to which regions and clients the increased fundraising is coming from? And are they mainly new clients? Or are they existing ones? And for my second question, could you comment on what we should expect in terms of Patria's M&A agenda for the next 12 months? Following the acceleration on deal closing during the first half of the year, we saw also an increase in the transaction costs. So should we expect this cost to decline? And if so, to what levels?
Thanks, Ricardo, and thank you for participating in the call. On the fundraising side, the three asset classes performing best are credit, infrastructure, and GPMS. Credit shows solid performance that drives fundraising—private credit, dollar-denominated strategies in particular. We are on the road to raise our private credit LatAm dollar-denominated Fund II and I think it will surprise on the upside. On the infra side, fundraising for Infra Core is also strong; it's a dollar-denominated, pan-regional LatAm core strategy. GPMS did well as we closed SOF V at around $676 million versus a $500 million target—about a 35% oversubscription. The other asset classes—real estate, public equities, and private equity—are performing reasonably well. Public equities, mainly the Chilean funds, have delivered strong returns. Real estate saw strong fundraising momentum, including share-for-quota exchanges in our Brazilian real estate investment trusts. Regarding private equity, we raised money for a healthcare deal acquired in Colombia and Chile through Private Equity Fund VII and a co-investment vehicle. Re-ups represent about 35%–40% for SOF V and generally 1/3 to 1/2 of our fundraising comes from re-ups, but we are also expanding our base of new clients. Compared with five years ago when we IPOed and raised $2 billion–$3 billion, we have significantly increased our fundraising scale. Regions: Asia is a top-performing region, followed by Latin America. Asia is more active on SMAs with large tickets; Latin America contributes to day-to-day investing in credit and public equity strategies. North America is coming back—after underperforming in prior periods—and we saw strong demand for secondaries through SOF V. North American clients are interested in mid-market private equity, infrastructure LatAm dollar-denominated, and private credit pan-regional LatAm dollar-denominated. So we are seeing North America return as an important region. On M&A, we will be very selective. We've already acquired the asset classes we wanted to expand into since the IPO: credit, public equities, real estate via FIBRA acquisitions, and GPMS. Future M&A will be more selective, focusing on specific strategies or acquisitions of teams (acqui-hires), particularly in Mexico, rather than large-scale deals. Most future growth will be organic rather than M&A. Thank you very much, Ricardo. I hope I answered your question.
That's super clear and very helpful. Just one follow-up. Like I understand that most of the M&A agenda is behind us and we should see some deceleration. So in terms of the timing for the line of transaction costs going down, if you could clarify what you could expect here, please?
Yes. I think—I'll turn it over to Denadai, Raphael, to comment. But the answer is yes: as we pursue selective, smaller-scale M&A, transaction costs should come down.
The transaction and restructuring costs were around $11 million in the second quarter of 2026. Assuming no incremental large M&A, we expect a small decline in 2026 with the third quarter and the fourth quarter running around $7 million to $8 million per quarter, followed by a significant decline in 2027 and beyond.
Yes. So again, it's a result of us having done the major M&A we wanted to do and now being more selective. This expense line will come down through '26 and be subdued in '27.
The next question will come from Guilherme Grespan with JPMorgan.
Congrats on fundraising. Pretty solid. Most of my questions were answered. Just a quick one, maybe even to Raphael here on the balance sheet. It caught my attention to the shareholders' equity. It declined $40 million this quarter. It was $600 million last quarter, this quarter, $560 million. And doing a very rough math here, what I was struggling is net income was $10 million. You paid out as dividends $25 million roughly, right? So it was supposed to go down in this math only $15 million, but it went down $40 million. So there is something else that is $25 million there against equity. I just want to understand what exactly is in this point. I would imagine FX is something that sometimes goes against equity. But this quarter, I don't recall having a lot of FX movement. So I just want to understand if there's anything else on the OCI here on the equity book.
Thank you for your question. Yes, there is another reason and it's in Other Reserves. Other reserves are impacted by the accounting recognition of gross obligations related to put options over minority interests in certain subsidiaries. Following the closing of Solis in January, the company recognized for the first time the gross obligation associated with the potential future acquisition of the remaining 49% minority interest. So this is the explanation for the additional impact on shareholders' equity.
The next question will come from Nicolas Vaysselier with BNP.
Three questions from my side. The first one, I just wanted to check this multi-asset line in disclosing the fundraising bridge, which I understand is SMAs. I want to know if you can give more color on the fee margin, the management fee margin on this line. Then my second question is on the other income in the fee-related revenues line. I do understand the point on the Solis structuring fees, yet if I'm correct, they represented only around $0.5 million this quarter. So that doesn't really get us to the quarter-on-quarter increase to $7 million that we've seen. So I wanted to know a bit more what goes into this line. And then finally, if I look at the accrued carry pool across your funds, it's been going down this quarter, mostly due to private equity Fund VI. And I understand from your statement, it's mostly related to negative mark-to-market movements over the quarter. So I wanted to understand if this changes your view on the PRA guidance for the year 2026 and 2027.
Thank you very much, Nicolas. SMA margins: generally 1% management fee and 10% performance on average. We have some SMAs with 1% and 15% or 1% management fees and 15% performance fees, but on average SMAs or co-investments that we charge are typically 1% management and 10% performance. Drawdown funds are typically 1.5% to 2% management with 15% to 20% performance fee; infrastructure closer to 1.5% and 15%; private equity closer to 2% and 20% carry. Sometimes we give co-investment rights with no fee and no carry in infrastructure drawdown funds and private equity drawdown funds for large-ticket clients. On Solis structuring fees, when Solis raises $500 million, the structuring fees are not always in the same quarter because structuring typically occurs before fundraising. So structuring fees may have been earned in prior quarters and fundraising closes several quarters later. Therefore, structuring fees and fundraising are not perfectly correlated on a quarter-to-quarter basis. As I mentioned earlier, we expect to see about another $2 million per quarter on average from Solis structuring fees going forward. On Private Equity Fund VI, the markdown reflected one specific company that we felt was not performing as planned. We always try to be conservative in valuation. Historically, about 80% of exits have been at mark or within 5% of mark. The last 10 exits show that trend. For Funds VI and VII, the companies are generally deleveraged and performing aligned with expectations; they are cash-flow generators with a capital structure we believe is appropriate for the high interest rate environment in Brazil. We were not relying on meaningful private equity fundraising in our guidance for '26 or '27; we expect more fundraising in SMAs and co-investments while we finish deploying Private Equity Fund VII before considering Fund VIII. Therefore, the private equity markdowns do not change our FRE guidance for 2026 or 2027. Thank you. I hope I answered your questions, Nicolas.
The next question will come from William Barranjard with Itaú BBA.
I have a couple here on my side. First, about the multi-asset SMA you disclosed this quarter. Just wondering how should we estimate when it becomes fee AUM, right, for now it's considered pending? And regard to it, what is the expected management fee charge there, if it's below or above the blended of 0.86% we see here? Also regarding multi-asset, this new segment, how do you see the pipeline here? Do you have any new fundraisings coming to this new line soon? What kind of fundraising, what kind of SMAs there? And a second one, maybe it's a long shot, but regarding the redemptions on credit, I saw that this quarter amounted to almost half of the redemptions we saw through the last 12 months. So I was wondering if this is maybe related to Brazil because we saw some sizable outflows during the second quarter. And now in July, we've seen some net inflows increasing again on fixed income funds here in Brazil. So if we should—if this is correlated, should we expect maybe improvements on net intakes in this credit front?
Thank you, William. The multi-asset SMA is positive news and reflects a deep, trusted relationship with this client who wanted a solutions-oriented mandate across multiple asset classes. These mandates are chunky in nature—typically $1 billion plus—and are often deployed over several quarters. Given the client's profile and dollar-denominated revenue preference, we expect a meaningful allocation to infrastructure and credit, likely deployed over the next 4 to 6 quarters before they convert from pending to fee-earning AUM. On fees, SMAs typically have lower management fees versus drawdown funds; as I mentioned earlier, SMAs are typically around 1% and 10% performance fee on average. On the credit redemption you referenced, around $100 million of the redemption was actually a move where a client redeemed from one fund and reinvested that same amount into another Patria credit fund. So it was technically a redemption but effectively a reallocation within our credit product menu. It's not related to portfolio quality or higher delinquencies. Our credit portfolios, both private credit and public credit strategies, are healthy. For example, our private credit Fund I dollar-denominated pan-regional LatAm is performing extremely well—posting a net IRR in USD materially above expectations. That strong performance is the basis for us to raise Fund II. So overall, credit flows remain positive and healthy, and we expect improvements in net inflows as performance and product-market fit continue.
I'm showing no more questions in the queue at this time. I will now turn the call back over to Alex for closing remarks.
Well, thank you very much for participating. I know it's a very busy agenda for everyone and a lot of our peers reporting earnings. I can see that the whole industry is more upbeat than it was a couple of quarters ago from the earnings of peers that already came out. On our side, very solid performance, fundraising, FRE, FRE per share, DED per share, most of the metrics, very positive that we're going to continue to hit and deliver our guidance for 2026 that you guys know by now and beating on the fundraising side, delivering the FRE that we mentioned, $225 million to $245 million for '26, positioning us in a very good position to also deliver our '27 guidance. So very confident here, confident Solis business performing very well. Thanks for your patience. Thanks for participating. I hope to see you in person soon, and have a great Friday and a great weekend. Goodbye.
This concludes today's conference call. Thank you for participating, and you may now disconnect.