Executive Summary / Key Takeaways

• Patria Investments ($PAX) is demonstrating robust growth by strategically diversifying its investment platforms and expanding its geographic and product reach, positioning itself as a premier alternative asset manager in Latin America and a growing player in European private markets.
• The company reported strong financial performance in Q2 2025, with fee-related earnings (FRE) of $46.1 million (17% year-over-year growth) and fee-earning AUM (FEAUM) reaching $37.2 billion (20% year-over-year growth), driven by significant organic net inflows and strategic acquisitions.
• Management has raised its full-year 2025 fundraising target to $6.3 billion-$6.6 billion, a 5-10% increase, and remains confident in achieving FRE targets of $200 million-$225 million for 2025 and $260 million-$290 million by 2027, underpinned by a resilient business model and effective integration of recent acquisitions.
• Patria's unique competitive advantage lies in its deep regional expertise and extensive "boots-on-the-ground" presence across Latin America, enabling it to develop local-to-local strategies and attract capital from global investors seeking alternatives to U.S. markets amidst geopolitical uncertainty.
• The company's focus on permanent capital vehicles (20% of FEAUM) and funds with limited redemption features (90% of FEAUM) provides highly predictable and sticky revenue streams, while a disciplined capital management strategy supports shareholder returns through dividends and share repurchases.

The Ascent of a Latin American Alternative Asset Powerhouse

Patria Investments Limited, founded in 1994, has evolved into a formidable private market investment firm, strategically transforming from a product-centric manager to a comprehensive solutions provider for its diverse investor base. This evolution, significantly accelerated since its 2021 IPO, underpins its current robust market position and ambitious growth trajectory. Patria's core strategy centers on profound diversification across asset classes, geographies, and investor types, coupled with a relentless focus on operational excellence and value creation.

The company's historical journey is marked by pivotal acquisitions that have reshaped its capabilities and market footprint. Key among these was the late 2021 integration of the Moneda business, a Chilean asset management firm, which significantly bolstered its Andean region presence. This was followed by a series of strategic moves in 2024, including the acquisition of the Global Private Market Solutions (GPMS) business from abrdn , the Brazilian Real Estate Investment Trust (REIT) business from Credit Suisse, and the Nexus Real Estate business in Colombia. These transactions were instrumental in expanding Patria's fee-earning AUM (FEAUM) and diversifying its revenue streams, particularly in real estate, where it emerged as the largest independent REIT manager in Brazil. The firm's joint venture with VBI Real Estate in mid-2022 further cemented its real estate prowess, doubling managed assets from BRL 5 billion to BRL 10 billion by mid-2024. In 2025, Patria continued this inorganic growth with the acquisition of seven listed Brazilian REITs, projected to add approximately $600 million of high-margin permanent capital FEAUM, and a small Mexican real estate fund (FIBRA) of $26 million, signaling its intent for further regional penetration.

Patria's strategic expansion is particularly timely given the current global macroeconomic landscape. Increased global uncertainty and volatility, exacerbated by proposed widespread tariffs from the United States, are prompting a re-evaluation of global asset allocations. Latin America, with its low geopolitical risk, large internal markets (over 650 million people and a combined GDP exceeding $6.5 trillion), and focus on in-demand agricultural products and commodities, is emerging as an increasingly attractive destination for global capital. This shift is further supported by trade agreements between the European Union and MERCOSUR, and a growing interest from Asian, Middle Eastern, and European investors seeking alternative deployment avenues outside the U.S. Patria, with its 37 years of experience investing through periods of high interest rates, FX volatility, and economic uncertainty, is uniquely positioned to capitalize on these trends.

Competitive Edge and Operational Differentiators

Patria operates in a competitive landscape dominated by global alternative asset managers like Blackstone (BX), KKR & Co. Inc. (KKR), Carlyle Group Inc. (CG), Apollo Global Management Inc. (APO), and Brookfield Asset Management Ltd. (BAM). While these global giants possess immense scale and broader geographic reach, Patria carves out a distinct competitive moat through its unparalleled regional expertise and "boots-on-the-ground" presence across Latin America. The company's deep local knowledge translates into superior deal sourcing, execution efficiency, and tailored investment strategies that resonate with regional opportunities and regulatory nuances.

Patria's competitive advantage is evident in its ability to develop local-to-local products in local currencies for institutional and retail investors in countries like Brazil, Chile, Colombia, Peru, and potentially Mexico. This strategy directly addresses the home country bias and regulatory restrictions often faced by local pension funds, which are projected to see their combined assets in Mexico, Colombia, Peru, Chile, and Brazil double to $1.5 trillion in the next five years due to increased contributions. Global alternative asset managers typically do not launch such localized products, and smaller local players lack Patria's scale, distribution capabilities, and brand recognition. For instance, Patria boasts over 80 people in Colombia, 150 in Chile, and 200 in Brazil, a significant resource allocation that rivals cannot easily replicate. In the Brazilian infrastructure market, Patria competes effectively with global players like Brookfield, leveraging its long-standing track record and ability to attract co-investment capital for larger projects.

Operationally, Patria leverages a sophisticated CRM structure for fundraising, enabling it to manage its "funnel" from lead generation to subscription. The company's energy trading platform, Tria, also contributes to its financial performance, generating income that partially offsets interest expenses. Furthermore, Patria's ability to craft customized investment accounts (SMAs) for large, sophisticated LPs, such as the $1 billion in commitments secured from Asian sovereign wealth funds in Q1 2025, highlights its evolution into a client-centric solutions provider. These SMAs, which now constitute approximately 16% of its FEAUM, offer perpetual, long-dated relationships and the potential for capital recycling and compounding. The company's fund structures are designed to flow through non-U.S. jurisdictions, such as the Cayman Islands, providing a structural advantage for investors concerned about geopolitical risks associated with U.S.-domiciled funds.

Diversified Growth Engines and Robust Financial Performance

Patria's diversified platform spans Private Equity, Infrastructure, Credit, Global Private Market Solutions (GPMS), Real Estate, and Public Equities, each contributing to its resilient growth profile.

Private Equity: This segment focuses on domestic consumption markets in resilient sectors like agribusiness, food and beverage, and healthcare. Underlying EBITDA at non-public private equity portfolio companies rose approximately 25% on average over the past year in local currency, demonstrating strong operational performance despite constrained realization activity across the industry. Private Equity Fund VII has reached $1.4 billion, including co-investment vehicles, and is expected to close around $2 billion.

Infrastructure: A standout performer, infrastructure fundraising in H1 2025 was approximately three times greater than all of 2024, led by Infrastructure Fund V, which has secured $2.5 billion in commitments. This segment benefits from high demand for inflation-protected assets in the current macroeconomic environment. Infrastructure Fund III, with $47 million of net accrued performance fees as of Q2 2025, is in full realization mode and is expected to be a primary source of performance-related earnings (PRE) through 2026. The deployment pipeline is robust, particularly in Brazil and Colombia, with opportunities in toll roads, energy, and water sanitation.

Credit: This segment has also been a strong performer, with fundraising in H1 2025 reaching 85% of 2024's levels. Credit strategies, especially the flagship LatAm U.S. dollar high-yield fund, have delivered strong investment performance, beating benchmarks and attracting significant inflows. Patria manages over $1.5 billion in private credit, capitalizing on high real interest rates in Latin America to provide financing solutions to companies. The company anticipates launching a second private credit fund soon due to high investor interest.

Global Private Market Solutions (GPMS): Acquired from abrdn (ABDN), this business focuses on European and U.S. middle-market private equity secondaries, primaries, and co-investments. GPMS FEAUM stands at over $10.3 billion and contributed significantly to fundraising, raising over $1.8 billion in Q2 and Q3 2024. Demand for GPMS products is increasing as institutional investors seek liquidity and flexible portfolio solutions, further benefiting from the potential for the denominator effect and lower DPIs in the global PE industry.

Real Estate: Patria is the largest independent REIT manager in Brazil, with FEAUM exceeding $6 billion (approximately 90% permanent capital) after recent acquisitions. While high interest rates in Brazil have impacted demand for some listed REITs, opportunities exist through M&A, consolidation, and credit-oriented REIT strategies. Funds like HGLG (industrial logistics) and HGRU (urban retail) are performing well, with follow-on offerings planned. The company's entry into the Mexican real estate market via a small FIBRA acquisition signals long-term expansion plans, particularly in logistics real estate.

In Q2 2025, Patria reported fee-related earnings (FRE) of $46.1 million, an 8% sequential and 17% year-over-year increase. Fee-earning AUM (FEAUM) grew 6% sequentially and 20% year-over-year to $37.2 billion. The company generated over $600 million in organic net inflows into FEAUM in Q2 2025, contributing to $1.3 billion in the first half of the year, reflecting an annualized organic growth rate of approximately 8%. Distributable earnings (DE) for Q2 2025 were $39 million, or $0.24 per share, up 9% year-over-year. The FRE margin improved by 170 basis points sequentially to 56.8%. Total fee revenue reached $81.1 million, up 14% year-over-year. Patria's management fee rate averaged 95 basis points over the last four trailing quarters, with an expectation to average between 92 and 94 basis points in the coming quarters.

Outlook, Guidance, and Capital Management

Patria's management has expressed strong confidence in its forward-looking targets, driven by its diversified platform and robust fundraising momentum. The company has raised its full-year 2025 fundraising target by 5% to 10%, now expecting to raise between $6.3 billion and $6.6 billion, up from the initial $6 billion. This revised guidance reflects strong performance in the first half of 2025, which saw approximately $4.5 billion in fundraising.

For fee-related earnings (FRE), Patria maintains its 2025 target of $200 million to $225 million, or $1.25 to $1.40 per share, representing approximately 20% year-over-year growth at the midpoint. The company anticipates achieving its 2027 targets of $70 billion in total FEAUM and FRE of $260 million to $290 million, or $1.60 to $1.80 per share. The full-year FRE margin is expected to be within the 58% to 60% range, with the fourth quarter typically being the strongest due to incentive fees. An additional $15 million to $20 million in performance-related earnings (PRE) is expected in the second half of 2025, contributing to the overall target of $120 million to $140 million for Q4 2024 through 2027.

Patria's capital management strategy prioritizes shareholder returns and balance sheet strength. Net debt stood at approximately $130 million in Q2 2025, with a net debt to FRE ratio of 0.6x, well below the 1x target. Net debt is expected to remain relatively stable through year-end 2025, despite $40 million in M&A-related deferred cash payments. The Board has approved a quarterly dividend of $0.15 per share for 2025, with a potential review of this policy towards year-end if strong fundraising and receding uncertainties create a robust outlook for 2026. A renewed share repurchase program authorizes the buyback of up to 3 million shares over the next 12 months, aimed at offsetting stock-based compensation and maintaining the share count between 158 million and 160 million through 2027.

Risks and Strategic Resilience

While Patria's outlook is strong, it operates amidst global macroeconomic uncertainties and geopolitical shifts. The renewed threats of high tariffs by the U.S. on trading partners, including Brazil, could negatively impact the Brazilian economy. However, Patria's business model is inherently resilient. Its private equity investments are largely oriented towards domestic consumption, infrastructure assets are local by nature, and the GPMS business focuses on European and U.S. middle-market private equity, minimizing direct exposure to export-focused businesses or U.S. investments. Investments in Brazil account for approximately 30% of invested assets, with minimal exposure to Mexico (below 3% of AUM).

The company's non-U.S. fund structures and Cayman-based company status are perceived as beneficial by investors seeking alternatives to U.S.-domiciled funds in an uncertain geopolitical climate. Patria's long history in Latin America provides extensive experience in navigating periods of high interest rates, FX volatility, and economic uncertainty. The company is also designating 2025 as an "integration year" to consolidate recent acquisitions and optimize margins, with a temporary hiatus on new major M&A activities to ensure successful integration and demonstrate its capability to drive profitability from its expanded platform. This strategic pause is crucial for realizing synergies and reinforcing investor confidence in its inorganic growth strategy.

Conclusion

Patria Investments stands as a compelling investment proposition, strategically positioned to capitalize on the evolving dynamics of global capital allocation and the burgeoning alternative asset market in Latin America and beyond. Its core investment thesis is rooted in a proven strategy of diversification, deep regional expertise, and a client-centric approach that delivers tailored solutions across a broad spectrum of private market strategies. The company's robust financial performance in Q2 2025, marked by significant growth in FEAUM and FRE, coupled with an upward revision of fundraising guidance, underscores the effectiveness of its strategic initiatives.

Patria's unique competitive advantages, particularly its extensive local presence and ability to develop localized products, differentiate it from global behemoths and smaller regional players alike. This positioning, combined with a resilient business model designed to thrive amidst macroeconomic uncertainties and geopolitical shifts, provides a strong foundation for sustained growth. With clear targets for FEAUM and FRE through 2027, a disciplined capital management strategy, and a focus on integrating recent acquisitions to enhance margins, Patria Investments offers a compelling narrative for discerning investors seeking exposure to a dynamic and expanding alternative asset manager. The company's ability to consistently generate organic growth and deliver on its financial commitments, even as it pauses major M&A for integration, reinforces its long-term potential.