PAX Balance Sheets
Description
Patria Investments Limited is the leading Latin American alternative asset manager, with $43 billion of AUM and $34 billion of fee-paying AUM as of 1Q24. The company operates five divisions: private equity, infrastructure, credit, public equities, real estate, and global private market solutions. The company aims to be the gateway for alternative investments in Latin America. Most of the assets are from international (non-Latam) institutional investors. Investment performance, which is the key to the business's long-term success, has been solid. The charts below illustrate how the company has grown and performed. Patria originated from Patrimonio Participacoes, a Brazilian M&A advisory boutique created in 1988 as a 50/50 partnership between local Brazilian partners and Salomon Brothers. In 1991 the advisory business acquired a broker-dealer and eventually evolved into an investment bank. In 1994, the company began its private equity operations with internal capital, and in 1997 Patriomonio raised its first private equity fund with outside LP’s. In 1998, following Travelers acquisition of Salomon Brothers and subsequent merger with Citibank, the local partners bought back Salomon’s 50% stake. In 1999, the partners sold the banking operation to Chase Manhattan to focus exclusively on private equity operations and developing the asset management business. Blackstone acquired a non-controlling stake in the business, which it sold during and after the IPO. As of December 2023, Patria had 430 investment professionals and 36 partners. The table below summarizes the ownership structure. The ticker symbol PAX pertains to the Class A shares. The class B shares, owned by the partners through a vehicle called Patria Holdings, represent 63% economic interest and 94% voting control. The class B shares are privately held and not listed. Despite the skewed voting controls, the Articles of Association provide reasonably good protection for minority shareholders, such as equal treatment in the sale of the business, tag a long rights, and the ability to appoint three independent directors to the board. Why can the company double in five years? Patria is the largest alternative asset manager in Latam, with a roughly 24% market share. As it expands its offering, it becomes a one-stop shop for investors seeking exposure to Latin America. Performance has been solid, which should enable the company to retain its position as the leading destination for external investment in Latin American private alternative assets. Global LPs are under-allocated to Latin America. Latin America represents 6% of global GDP but only 1% of private equity allocations. Latin American pension plans are growing but are under-allocated to private assets compared to plans globally.