Good day, and thank you for waiting. Welcome To BR Partners conference call to discuss first quarter 2022 earnings results. Here with us are Mr. Ricardo Lacerda, CEO, Mr. Marcelo Costa, CFO, Mr. Vinicius Carmona, IRO. We inform you that this event is being recorded and that all participants will be in listen-only mode during the presentation of BR Partners. Later, there will be a Q&A session when further instructions to participate will be provided. Should you need assistance during this conference call, please dial star zero for the operator.
This event is also being broadcast simultaneously over the internet via webcast and can be accessed at ri.brpartners.com.br, where the respective presentation can be downloaded. Slide selection will be controlled by you. The replay of this event will be available soon after the call has ended.
We remind you that webcast participants may also post questions to BR Partners, and these will be answered after the conference call is over by the IR team of the company. Before proceeding, let me mention that forward-looking statements that might be made during this conference call relative to the company's business perspectives, projections, and operating and financial goals are based on the beliefs and assumptions of the management of BR Partners, as well as on information currently available to the company.
Such forward-looking statements are not a guarantee of performance. They involve risks, uncertainties, and assumptions, and refer to future events, and therefore are dependent on circumstances that may or may not occur.
Investors and analysts should understand that general economic conditions, industry conditions, and other operating factors may also affect the future results of the company and may lead results to differ materially from those expressed in such forward-looking statements. Now, we will start the presentation with the company's IRO, Vinicius Carmona. Please, Mr. Carmona, you may begin.
Good day, everyone, and thank you for participating in our Q1 2022 earnings conference call. We had a very positive first quarter, as we will show throughout the presentation across our different business lines. Let's start the presentation on slide 2 with the company's highlights. We started the year with good revenue generation, healthy margins, high profitability, and increased usage of capital. Our net revenue totaled BRL 98.5 million for the quarter, up 24% quarter-on-quarter and 30% year-over-year.
Net income reached BRL 40 million in Q1, increasing 29% over the previous quarter and also compared to the same period last year with a net margin that remained at high levels at 41%. In turn, annualized ROAE reached 21% in Q1. It is important to point out that our ROAE is a 100% accounting indicator with no management adjustments. Shareholders' equity was BRL 759 million in March 2022, down 1.1% over the previous quarter due to the payment of dividends in the period, and it was up 134% compared to the same period last year, explained by the capital increase with the IPO carried out in June 2021.
The efficiency and compensation ratios were 32% and 21% respectively, indicating once more our high operating leverage and control of the company's expenses.
Basel ratio remained comfortable and reached 28.8% in March 2022. Lastly, our private securities portfolio and bridge loans reached BRL 872 million at the end of March 2022, growing 31% quarter-on-quarter and up 134% year-over-year. Next, we will explain the results of our business units starting on slide number 3 with investment banking.
Our investment banking business continues at a healthy level of activity, and the first quarter saw a recovery in revenue compared to the previous quarter, up 32.5%. In relation to the same period of last year, there was a reduction of 18.5% due to the already expected slowdown, mainly in M&A activity.
It is important to mention that although we're experiencing a cooling down in M&A activity, mainly due to the rising cost of funding in Brazil and its respective impacts, we continue in a continuous process of recycling our pipeline with opportunities in active sectors and with well-capitalized companies in sectors such as energy, agribusiness, and financial services. We are also experiencing a more diversified mix of services with the highlight going to special situations and restructuring advisory, which has been gaining space in our agenda.
Regarding deal flow for the last 12 months ended March, we announced 18 investment banking transactions totaling BRL 64 billion among different advisory services with M&A predominating. We announced 5 recent transactions. Advisory to Grupo Moreno in the sugar and ethanol industry, in which we were successful in restructuring the company's liabilities.
Advisory to Intelbras board of directors in the context of the acquisition of Renovigi, specialized in photovoltaic panels. Advisory to Tupy for the purchase of MWM of the automotive industry. Advisory to the Petrobras board of directors in the context of the sale of their stake in Deten Química. Advisory to BNDESPar in the sale of its minority stake, a carve-out in Stara, an agricultural machinery company.
In terms of sector breakdown by number of investment banking transactions, we see a diversified pipeline with highlights going to the following sectors, oil and gas, retail, financial services, and infrastructure. Now we will see the highlights of capital markets on slide number four. In capital markets, we continued the development of our thesis focused on financial disintermediation. In this quarter, we continued to access new products with greater diversification in the mix of debt issuances.
Net revenue was BRL 23 million, up 22% over the previous quarter and in line with the same period last year. However, in a more challenging interest rate environment when compared to 2021. The volume of issuance has reached BRL 2.1 billion in the quarter with 9 transactions in total. We issued 3 MBS operations, 2 infrastructure debentures, 2 bridge loans, 1 ABS operation, and 1 REIT real estate investment fund. In the bottom left chart, we see the quarterly evolution of our debt issuances, which reached BRL 2.1 billion in the quarter.
The percentage of debt retention, which was 10%, a lower level than in recent quarters, due mainly to our participation in a large debenture operation. I would like once again to emphasize that the capital raised with the IPO last year has been transformational for our business.
In this first quarter, we can see a change in the product mix, especially in our participation in the infrastructure debentures market, where we are gaining competitiveness in the market, thanks to a more robust balance sheet and the ability to offer firm guarantees in the operations. Furthermore, despite the economic cycle of monetary tightening and inflation impacting the pace of development of the Brazilian capital market, we are managing to access companies with solid management and good projects, mainly in the energy, agribusiness, and infrastructure sectors.
Also, we have been working with an increasingly diversified portfolio, including ABS, FIAGRO or agribusiness investment funds, and CRIs. On the graph in the bottom right, we present the sector breakdown of clients according to debt issuances in the last twelve months, highlighting an increasing sector polarization as we expand our activity in new products with new issuers.
To conclude, we are prepared to continue capturing good opportunities in the market, focusing on structuring debt for good clients and distributing it to a wide network of investors. I now turn the floor to our CFO, Marcelo Costa, who will continue the presentation. Our sales and trading area continues to develop and take advantage of the proceeds raised with the IPO. Net revenues totaled BRL 15 million in the quarter, a slight increase over the previous quarter and growing 268% over the same period last year when we still had a capital constraint.
It is worth noting that although revenue was in line with Q4 2021, we consider this to be a very positive result, given that the first quarter of the year always presents a seasonal effect and less activity with clients.
In addition to the impact we felt in March with high risk aversion due to the global geopolitical deadlock, in terms of activity, we have reinforced more and more our cross-selling with the capital markets area, being able to offer treasury solutions to clients that we advise in debt structuring.
In addition, we have been successful in accessing and increasing our competitiveness with new and large corporates, those clients with a larger balance sheet, and expanding the structuring of structured derivatives and other liability management solutions, which has resulted in a higher average revenue per client compared to last year. Lastly, we have a healthy Basel ratio to continue with our strategy of being more competitive in offering treasury solutions without any usage of capital to take on proprietary risks. In investments, we posted revenues of BRL 1.2 million in the quarter.
Revenues grew 99% compared to the same period of last year, and this stemmed from the growth in our AUM with investment in FIP PE made in Q4 2021, whose result was impacted in a non-recurring manner by the structuring fee of this transaction. In the capital revenues, we observed significant growth, both in the quarterly comparison. Reflecting the increase in CDI capital revenues, which has been changing levels, and also in the yearly comparison, which reflects the increase in the capital raised with the IPO in June 2021. Next, we will present more detail about our capital and funding.
On slide 6, we show the growth of our private securities portfolio and bridge loans, which reached BRL 872 million at the end of March 2022, up 31% over the previous quarter and up 134% over Q1 2021.
This increase is explained by growth in the private securities portfolio in line with our strategy of using more capital through more active debt retention in the issuances that we structure and co-invest in with our investors. It is worth remembering that 100% of this portfolio is made up of securities of companies whose debt we structured with a complete due diligence of the loans done by our credit risk areas. We highlight that 94% of our portfolio is rated between AA and B, with no non-performing loans according to the criteria of Resolution 2682 of the Brazilian Central Bank.
Also in the first graph, we present the bank's leverage, which was 1.3 times in the first quarter of 2022, with still a lot of room for us to implement our strategy to grow assets.
As for Basel ratio, we ended March 2022 with a Basel ratio of 28.8%, representing higher usage compared to the previous quarter, but which remains a very healthy ratio and one that allows us to continue to implement our strategy of expanding the private securities portfolio and bridge loans, as well as continuing to grow our derivatives operations. We underscore that 100% of the company's Basel ratio is Tier 1. On slide 7, we present the evolution of the company's shareholders' equity, which totaled BRL 759 million.
Down 1% due to the payment of supplementary dividends in March and up 134% compared to the same period last year due to the capital increase with the IPO. On the bottom graph, we present the evolution of the company's funding.
We reached a funding of BRL 1 billion at the end of March 2022. Up 197% over Q1 2021. I would like to point out that we took the opportunity to continue to increase our funding, to be ready to continue leveraging the bank in a portfolio growth strategy while maintaining rather comfortable levels of liquidity in our balance sheet. Average term of funding with third parties was 289 calendar days, which shows continuous funding extension to support the growth of our assets.
In the next slides, we will talk about our performance indicators. In slide 8, we present the evolution and composition of our revenues considering service fees and capital revenues.
Regarding the evolution of revenues, we recorded growth of 24% in the quarter and 30% in the year as a result of the good performance of our business lines. As for revenue composition, in Q1 2022, 54% of our revenues came from service fees. We can see that the percentage of service revenues has been declining over recent quarters, which is explained by greater usage of capital in sales and trading and also in capital market, which also gives us the firepower to generate more service fees.
In addition, we must also consider the impact of higher interest rates on revenues from equity invested in government bonds indexed to the Selic rate. However, in the mid to long-term strategy, we believe in a higher percentage of service revenues in relation to the company's total revenue.
On the bottom of the slide, we present the evolution of our efficiency and compensation ratios, which in the first quarter of 2022 were 32% and 21% respectively, remaining at healthy levels and indicating our operating leverage and effective control of expenses, even with a considerable headcount increase compared to last year. On the next slide, we present our net income and profitability for the period. On slide nine, net income in Q1 2022 was BRL 14 million.
Up 29% over the previous quarter. Also over the same period last year, net income growth stems mainly from the strong performance of our business lines. Accounting net margin remained healthy at 41% in the first quarter of this year. As for profitability, annualized ROAE was 21% in Q1 2022.
This is a healthy level, and in keeping with our post-IPO goal of maintaining profitability at around 20%. In a nutshell, during yet another quarter, we attested to our strong capacity to generate revenue and effectively control expenses. We remain focused and working hard to continue to create value to our shareholders in the long run. We will now be available to answer your questions. Thank you very much. Ladies and gentlemen, please hold.
Ladies and gentlemen, we will now begin the question and answer session for analysts and investors. If you have a question, please dial star one. To remove your question from the queue, please dial star two. Our first question comes from Ricardo Buchpiguel with BTG Pactual. Good afternoon. Thank you for the opportunity to ask questions. I have three questions.
You see a mix of results of capital markets contracting a little, getting close to 30%. How should we think about this number in terms of debt retentions in the next quarter? And what should be the average fee of capital markets? Would it be a little lower given the change in mix and debentures? And lastly, could you comment on the reassessment of the value of investments this quarter? We apologize, but the sound was a little bit chopped.
Ricardo, this is Vinicius. Thank you for the question. Regarding capital markets, you can observe that in prior quarters we were retaining about 20%-30% of debt issuances. In this quarter, this indicator dropped to 10%. This is the result of a large infrastructure debentures operation of BRL 1.6 billion. We participated together with the Union of Banks.
Because of that operation that was very large, that led to perhaps a dilution of this percentage of retention. Looking from another lens, we had been retaining 20 to 30% of the debt with a more effective turnover in the secondary market. What we were truly retaining was actually about 10% in the carrying on our books. If you observe our portfolio of private securities, it grew by about BRL 200 million, which is exactly corresponding to those 10% that we retained.
We had a little less turnover in the secondary market, and we had more of these securities that present a good quality of assets with an interesting risk-return ratio. Regarding the average fee, we didn't have a reduction of the average fee.
Because in this big operation, we joined together with other banks and of course, the fee is split among all players. Ricardo, regarding your third point about the re-evaluation of the assets in our investments area. In the quarter, we had a re-evaluation in the approximate amount of BRL 2.8 million. This re-evaluation falls into those capital revenues. All of the re-evaluations plus our capital, which is linked to CDI. Understood.
Getting the capital markets revenue, just the part of fees, is there any effect on the average fee because you're getting into more debentures or that bigger infrastructure debenture transaction that you had? How can we think about this? There is a positive impact, actually, because we're being able to access new products. For example, infrastructure debentures, where there is a structuring component and we can even improve the average fee.
We have been able to actually have an improvement. We don't provide this number in our earnings release, but of the BRL 23 million of the capital markets revenue, there was a relevant growth of FIP. So this is fees plus the carrying. So these services components fees were substantially higher in this quarter compared to prior quarters because of these new products that we are working with. Okay. It's clear now. Thank you. Our next question comes from Pedro Leduc with Itaú BBA. Hello, good afternoon. Congratulations on the quarter results.
It was a challenging quarter, but you had a strong net income and good operations. Ricardo, Vinicius, I'd like to get a sense of how the quarter was evolving month after month, because we had many atypical events in this quarter.
Especially in IB, M&A, and even fixed income, there perhaps has been some pent-up demand that is going to flow now in the second quarter, given the volatility of Q1. I'd like to have a sense of how the quarter evolved and what you're expecting for the pipeline for the coming quarter. Hi, Ricardo. Can you hear me now? Yes. Yes, we can. All right. Leduc, thank you for the question.
Yes. We're living a moment of extreme volatility. In Q1, that's what we saw and felt and this has different impacts on our different business lines. In terms of financial advisory, M&A, the impact is a little more restricted because these are deals that have been announced before.
Several others we announced along the quarter, even in a somewhat more challenging environment, which comes to show that despite a decline compared to a record year, which was last year, the market continues with a very strong activity level. We did have some pent-up operations which will come in the second and third quarters. As for the capital market, we saw greater diversification of our products with the inclusion of MBS, infrastructure debentures, and greater diversification. I believe that the interest rates impacted the pipeline.
Some transactions were postponed, but we don't see such a negative effect as we see in the ECM market that closed. The DCM market continues to be a strong market. Traditionally, Brazil is a good market for DCM, but when you have repricing of this market with the base interest rates increasing as they did, of course that has a marginally negative impact.
You know, we overcome that. We offset that with more transactions, more structuring and additional aspects we add to the transactions that end up enabling the transactions to happen, both for the issuer and for investors. It is a little bit more labor-intensive, but I would say that this market remains strong. In terms of sales and trading, the first quarter is traditionally weaker, a little weaker because we have the holidays.
Oftentimes the decision-makers are on holidays for a good part of that Q1. Along the quarter, in moments of greater volatility, we were still able to deliver a good quarter first quarter. The solidity, the health of the business remains quite robust.
We have to recognize that we are now in a much more challenging market, a worse market than we had last year across the board. We have to be very transparent about that. Given the positioning of the company, given the size of the company, given the capital increase with the IPO proceeds, and given the fact that everything we do has a very strong service component and a very strong structuring component, you put it all together and we are able to deliver good results, even in a more challenging environment and market.
We remain optimistic regarding the coming quarters, despite dealing with a much worse scenario than we had last year. Perfect. Ricardo, thank you. If I may, I'd like to ask another question. May I? Regarding balance sheet, capital allocation.
When we look at the results of Q1, there's some benefit of remuneration of your capital. That's the effect of capitalization and Selic rate. There are parallel effects in all of the other lines, sales and trading with more limits in the capital market, perhaps investment banking, some effect. Could you refresh our memory in terms of the benefit for the business and not for capital revenue with this bigger balance sheet? Okay, and then I'll ask a follow-up question.
Well, here's what I can tell you. This is a key point for you to understand our operation. I actually thank you for the question, and I'm going to try to answer it very to the point. First of all, it is important to understand that all usage of capital at BR Partners is linked to some service and client activity. No one here is trading capital.
No one here is buying third-party securities. There's no risk linked to the capital, which is not related to our core activity, which is investment banking, capital market, and sales and trading. Actually, we say sales and trading, but it is substantially a sales activity. We don't have, we continue not having, and we will not have any proprietary exposure or any kind of risk which is not clearly related to our activity with clients and services. Now, obviously, being a financial institution, it's not that we have BRL 800 million in capital invested in CDI and no one is doing anything about it.
We have a network of usage of capital with several dimensions. We have regulatory capital. We have liquidity that we use to buy some securities. We have limits per client determined by that regulatory capital.
All of that ended up benefiting our different activities. If we have an infrastructure debenture, you don't have to outlay that capital. It's regulatory capital. Sometimes you have a derivatives position with a client, and you had a higher legal limit because you have more capital. But perhaps you didn't use all that capital to enable the operation.
When we see growth of our revenue, capital revenues, it is important to remember that this capital is being used in these different fronts to make business possible in the capital market or by carrying a greater part of this flow of issuances that we have, and also including the regulatory capital that it is used by our sales and trading area. Okay. That was. Thank you. That was a good overview.
In terms of private securities portfolio now, Vinicius in the beginning of the call mentioned that you were retaining 20-30%. In this quarter, only 10%. This quarter, it seems that you kept 10% in the portfolio, BRL 870 million in private securities. This greater final retention, net retention. Was this on purpose for us to have a little greater carrying of the interests, because then you can pass through these originated debentures? What is the potential size of this portfolio of private securities until the end of 2022? You see it a little over BRL 1 billion, a little under BRL 1 billion? Perfect.
I'll answer that. José Flávio, Danilo, or Vinicius can add to that. To start, always going back to the thesis that we are an intermediary.
We are a financial services company, and we use our capital to help enable transactions. We retain a part of that because these are good investments. We have an exceptional track record of risk return with this. We do not intend to become a credit bank in which the driver is going to be to build a very big loan portfolio. For example, the other day in our credit committee, we were assessing a transaction. We liked it a lot. Our commercial area requested us to retain a lot more than we normally do.
We said no. Why? Because we want our transactions to be market transactions, where we identify the issuer, we originate the operation, we structure it, distribute it. We know all of the investors who are co-investing, and we get a piece of that.
We keep a piece of that because, like I said, these are high quality and high yield securities, and we can have activity in the secondary market with that. Along the quarter, we saw that we were increasing our flow of issuances, but we are always limited to this maximum percentage of 30% per operation. With that, we have been growing our portfolio. There are other elements, Leduc, that we have to analyze during the quarter.
Sometimes we see that there's a security that will need to suffer due to mark-to-market or perhaps a slightly higher provision that can hurt the result. If there's a market for that security, we might prefer to sell that equity or that security. We start having a more opportunistic behavior in managing our portfolio and our results over time.
We do always what's more profitable for the company. The idea is to continue to grow. I think that we have room in our balance sheet. For the balance sheet to be a lot bigger by year-end, given what we see as volume of issuances that we have in the pipeline. Always with this profile of being the intermediary, the distributor with always market transactions and never becoming a credit bank, because this is not our profile.
We don't use our balance sheet for that, but rather to help in our core activity. Leduc, this is José Flávio. I want to add something. We don't have a target for December 31st, 2022 of having BRL 1 billion, BRL 2 or 3 billion in the balance sheet. Our retentions are born out of our appetite to structure the operation.
Our credit appetite, the clients and the investors that we co-invest with. If you look at third quarter 2021, and from Q2 to Q3 2021, we ended up issuing, I think, 200 or 300, and we didn't retain anything. There was a moment when the interest rates were changing. We held back and said, "Let's wait for the spread to increase so that we can grow our portfolio." This is what we did. In Q3, we jumped from 600 to 800-odd. We will continue to work opportunistically in looking at the growth of the portfolio. We don't have an obligation to hold 30% or 20% or even 10%.
We do it with judicious decision and by eating a lot of beans, as my grandfather would say. We will grow co-playing good credit, a well-structured deal and market moment.
We are not going to grow the balance sheet just for the sake of it. We'll grow the balance sheet when there's a good opportunity. Same thing we sell to clients. If we think a deal is bad for our clients, our investors, we don't go forward with it. We don't keep it in our balance sheet, and we don't sell it to investors. Now, if the market gives us an opportunity, we are leveraged 1x. If we are 2.5x leveraged in a period of 12-18 years, it's not an absurd thing. We might be moving in that direction. Let's see what awaits around the corner in this challenging market that we are all dealing with. This is Marcelo speaking.
I think it is important to say that in terms of Basel, you probably saw that we are well-balanced in terms of usage of capital, this portfolio of assets and bridge loans and with the derivatives, so we continue to have a lot of room to grow. A piece of information that is interesting is today our derivatives portfolio recycles this capital in less than a year. Obviously we will continue to grow our capital allocation, but there is a relevant component in this part of derivatives.
We, as this portfolio is relatively small, so we will continue to generate very good results based on this capital allocation. Thank you, Marcelo, for complementing information. I see that you're providing additional information in sales and trading, volume traded, closing values, and then we can talk about how to interpret these metrics.
Thank you for the additional information. Our next question comes from the webcast platform by Pedro Gonzaga with Pacífico. Good afternoon. Congratulations on the results. I'd like to understand the renewal of the pipeline that seems to have dropped a lot in Q1 '22. I would also like to understand why there was a drop in Q1 '22 in the retention of offers in the capital markets. Okay, thank you for the question and for the comment regarding our results.
I would say that this percentage of decline in investment banking in Q1 2022 reflects kind of what we see as being the reduction of the pipeline along last year. Like I said, we are dealing with a slightly softer market than we had last year. I'd like to remind you that last year was a record year for IB in general.
IB is still at a rather healthy level, considering the long track record that we have in this segment. In terms of renewal, I would say that renewal is good. We continue. Recently, in the last 2-3 weeks, which were very, very volatile weeks, we were able to renew our pipeline quite a lot, and there are two important components here. One, the mandates that come in, the new mandates, and we have a lot of new mandates coming in.
The other is the probability that the ongoing mandates will materialize. That dropped a little. When there is such high market volatility as we're living now, as we're experiencing now, the market sellers and buyers tend to shrink a little because no one wants to price a transaction in a moment of very high volatility.
I think that this is reflected or this results in this 18% reduction compared to Q1 2022. When things were at a record high level. Like I said, looking at our pipeline, we don't see, at this point, any retraction greater than what we see quarter-on-quarter. Now, obviously, if the market stabilizes, we might even have more positive surprises given the level of renewal in the pipeline. Your second question regarding capital market pipeline. Vinicius, would you like to add something? Well, thank you, Ricardo.
Let me add something to investment banking. I think Ricardo contextualized things well. Even today, we communicated to the market that we advised an important transaction in food retail. We operated on the sell side of the M&A. Activity continues good, Pedro.
Last year, we were at the top of the Everest, as we like to say. Today, we were at the top of the Everest at 8,000 meters high. Now we are at 6,000 meters high. We are not as good as last year, but we are able to recycle the pipeline successfully. Regarding retention percentage, it is a little of what we explained to Pedro Leduc. We had an average ticket for an infrastructure debenture. It was a large operation with other six banks, and that led to a smaller risk retention percentage.
Like it was explained to you, this is not an exact science. This percentage can oscillate over the quarters because we'll only retain in our balance sheet what makes sense, what has a good credit rating.
We only distribute to our clients what we carry in our balance sheet. That is the mindset. Of course, that's what we do along the quarters. Along recent quarters, we've been able to retain around 20, 25%. Because those assets made sense to be in our portfolio and in our balance sheet. Let me add, the retention percentage, and I think that this is a question in everyone's mind because we've been talking about this, but the percentage is a statistical number. It doesn't really mean anything to us.
What is important is that you look at the balance sheet and that you realize the growth of the balance sheet, look at the origination and the deals we delivered. Because you all remember, and Ricardo spoke about this, that our business is about the clients. We are 100% focused on the client.
This business was built with our clients and with our talents. We retain securities. When one investor comes and asks for the security, even if we want to keep it in our balance sheet, we offer and we sell this to our client. Sometimes strategically serve a client, and that security goes out of the balance sheet because I know I can replenish the balance sheet with other securities, which strategically we want to have in the balance sheet and distribute.
Don't focus too much on the percentage, but focus on the growth of the balance sheet and how sustainable it is together with the right funding, because that is the most correct way of approaching this.
If we issue BRL 5 billion, it is possible that I won't want to have in my balance sheet, or our management committee will not want to have 30% of that, because that would be BRL 1.5 billion. We will grow the balance sheet, like I said, with a lot of common sense. Let's grow slowly. The percentage is less relevant to us. We don't keep looking at the percentage. Of course, there's a risk percentage, like Ricardo said, but the percentage that we seek is healthy leverage.
Ladies and gentlemen, as a reminder, if you want to ask a question, please dial star one. Please hold as we collect more questions. Our next question comes from Renata Miranda with XP. Hello. I'd like to ask a follow-up question regarding fees of the deals.
In the capital markets this year, particularly equity, has been a little more risky. It's cooling down, but it remains strong in terms of fixed income and other products. In your view, is there more concentration and competition from other institutions for these deals? Any relevant change in the fees? Not just about competition, but these larger deals that you could access now with a reinforced balance sheet. I'd like to understand if there is relevant difference in the fees of larger deals versus the original deals you were dealing with. Anna, thank you for the question.
We are in a very, very competitive market, both in IB, investment banking, where we compete directly with the large mainstream banks, and we also compete with international banks that have offices here. Also competition against small M&A boutiques that serve large clients. This is a very, very competitive market.
We are in a market dynamic where equity capital market, ECM, which is a product that we don't have, we don't do ECM. Since the window of ECM is closed, naturally the large banks turn their eyes again to M&A. There's always competition. We continue to recycle the pipeline successfully, and I think the secret lies in our focus on our clients. That generates repeat business. We have clients coming back to us, and that is very important. That's what we need to do, remain focused, find opportunities.
Recently, we broadened our focus of action in the area of advisory, special situations, and restructuring advisory. In a more challenging market, we have found new opportunities in this area, sometimes helping companies restructure and renegotiate their debt and liabilities. In terms of DCM, competition is also very strong, particularly competition posed by large local banks.
I guess that the capital we raised last year has allowed us to gain market share with new products. Again, although if we consider Selic of 12.75% plus spread for corporates of about 3%, we are talking about almost 16% interest rates for funding. This is, in a way, inhibiting the market. We see a lot of opportunities in specific industries such as energy, many direct generation projects, the infrastructure industry as a whole, and also agribusiness.
We are well-positioned to continue to capture these good opportunities. Let me add to that, I believe that the market is very competitive. It continues to be competitive. I don't see any relevant competitive change that we should communicate to our investors.
On the other hand, when the markets are more challenging and difficult, I believe that local players that have a strong footprint, like we do in markets where we have been operating for quite a while, well, they enjoy a certain advantage, I should say. Because it is harder for international players to attract attention of their firm to the Brazilian market. I don't think that this is something that will impact our result or our pipeline, but local players tend to be favored or to benefit in highly volatile environments. Here it's not just us. I include BTG, Itaú, and XP.
These players end up being benefited in these high-volatility markets. Okay, perfect. Very clear. Thank you. My next question comes from Pedro Leduc, Itaú BBA. Mr. Leduc, you may proceed. Well, thank you for allowing me to ask another question.
This is just to build on something Vinicius said. You talked about special situations in restructuring for Grupo Moreno. This question is out of curiosity. Do you see more demand for this kind of solution? A company in a more difficult situation, another one seeking restructuring. This is normal when we get into an NPL cycle that is higher. What about the compensation fee here vis-à-vis another investment banking operation? I should say would be higher despite longer.
I just want to pick your brains a little in the segment which is not much talked about. Leduc, excellent question. I think that most likely we are the only listed company in Brazil that does this kind of activity, because obviously the large banks are not active in that segment.
We talk about special situations, but the biggest component here is financial advisory in debt restructuring. We've been doing this since the beginning of BR Partners in 2010, but we ended up building a very strong team, and now we have six people who are 100% dedicated to that segment. The operation you mentioned was quite emblematic given the situation the company was in and the complexity of their restructuring with the banks.
This is a segment that we want to grow, and we have been growing. We have a pipeline that is quite good. Compensation is compatible with other investment banking areas. The only difference is that we get a monthly compensation instead of having a success fee. This is because of the nature of the business, because these are companies that are in a position to renegotiate.
It's not good in the eyes of creditors to have a structure very much linked to success and credit reduction. We have a retainer component which is a little more insignificant. This is an area we are focusing on a lot, and like I said, just a little less competition, and competition is focused on niche companies, and they don't have the M&A franchise that we do.
There's a lot of synergy, and something we see with a lot of optimism. Okay. In terms of order of magnitude, in terms of what this division represents in investment banking, is it 5.0%, 10%, 20%? Historically, if you look at our 12 years of existence, it's about 5%.
I would say that today it's more around 10-15%, and our expectation is that we are going to have a business representing 15%-20% of our IB revenues. Cool. Great. Thank you very much. Congratulations. Thank you. As a reminder, if you want to ask a question, please dial star one. Well, thank you. I just would like to remind you that the questions that we do not answer during this call, we'll answer by email. Actually, I'd like to take this opportunity to invite you to follow BR Partners on Instagram, the official Instagram account.
Over there, it's interesting because we show our deals in capital market and investment banking. So it might be interesting for you investors to monitor the deal flow. I turn the floor to Ricardo to proceed with his final statements.
Well, I just want to thank all of you for participating. I think that the name of the game in the financial market today is challenging. We see high levels of volatility in different segments, and also a cooling down in some other segments. Like we said, given our focus on services, given the size of the company, given the recap that we had, the capital increase that we had with the IPO, we were able and we are able to continue to deliver quite robust results, even in a much more challenging scenario in market.
This is what we expect for the coming quarters, i.e., that we will continue to bridge the gap of the more complex market with more structuring, more services, and a stronger presence in our client base.
With that, thank you very much for your participation, and we continue to be open to answer your questions. Our IR team is always available to answer your questions. This concludes BR Partners' conference call for today. Thank you very much for your participation. Have a good day, and thank you for using Chorus Call.