Good day, and thank you for standing by. Welcome to the Patria third quarter 2021 earnings conference call. At this time, all participants are in listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. I would now like to hand the conference over to your speaker today, Josh Wood, Head of Shareholder Relations. Please go ahead.
Thank you. Good morning, everyone, and welcome to Patria's third quarter 2021 earnings call. Joining on the call today are our Chief Executive Officer, Alexandre Saigh, and our Chief Financial Officer, Marco D'Ippolito. Earlier this morning, we issued a press release and earnings presentation detailing our third quarter 2021 results, which you can find posted on our investor relations website at ir.patria.com or on Form 6-K filed with the Securities and Exchange Commission. Any forward-looking statements made on this call are uncertain, do not guarantee future performance, and undue reliance should not be placed on them. Patria assumes no obligation and does not intend to update any such forward-looking statements. Such statements are based on current management expectations and involve inherent risks, including those discussed in the Risk Factors section of our Form 20-F annual report filed earlier this year.
As a foreign private issuer, Patria reports financial results using International Financial Reporting Standards, or IFRS, as opposed to U.S. GAAP. Additionally, we will report and refer to certain non-GAAP industry measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with IFRS. Reconciliations of these measures to the most comparable measures calculated in accordance with IFRS are included in our earnings presentation. As a quick overview of the results, Patria generated $21.5 million in IFRS net income in Q3 2021. On key non-GAAP measures for the third quarter, we generated fee related earnings of $21.8 million and performance-related earnings of $1.5 million, resulting in distributable earnings of $22.5 million or $0.165 per share.
In alignment with our policy, we declared a dividend of $0.14 per share payable on December sixteenth to shareholders of record as of December second. With that, I'll now turn the call over to our Chief Executive Officer, Alexandre Saigh.
Thank you, Josh. Good morning to you all, and thank you for joining us today. We now find ourselves nearing the end of 2021, Patria's first year as a public company, and it has been a privilege getting to know many of our shareholders in these past months. I want to reiterate upfront that we greatly value your support, and I think our results continue to demonstrate that we are delivering on the targets we put forward for this year and positioning ourselves well for strong growth in 2022. We remain on track for last quarter's guidance of at least $75 million of Fee Related Earnings and $1 per share of Distributable Earnings, which would generate a 5% dividend yield for an investor in our IPO.
Year to date, we have generated $0.83 of Distributable Earnings per share, of which $0.17 of Distributable Earnings per share in this last quarter, in the third quarter, meaning we just need to deliver the same results from third quarter again in the fourth quarter to reach our target. This outcome would represent Fee Related Earnings growth of 30%+ and Distributable Earnings growth of more than 140% compared to 2020 when adjusting the prior year for comparable compensation structure. Our 2021 results are purely organic, without the contribution of any acquisition, but diluted for the cash raised in our IPO. We see that momentum continuing in 2022, where we expect, based on current factors, to see our Fee Related Earnings increase by more than 50% compared to 2021, including Moneda's Fee Related Earnings to Patria's standalone.
Our flagship strategy timelines have accelerated with our next generation private equity fund in the market as we speak, putting us roughly one year ahead of schedule. Our strong investment performance is the backbone of everything we do, driving loyalty and larger capital flows allocations from our limited partners, as well as a substantial performance fee of $214 million, which will benefit shareholders as Distributable Earnings in future periods. Notably in the third quarter, we took a major first step in our M&A growth strategy with the announcement of our combination with Moneda Asset Management, which will be further additive to earnings in 2022 as it provides the foundation for a leading alternative credit platform in the region.
For our flagship private equity and infrastructure strategies, we have raised each new vintage on consistent time intervals, raising the majority of capital from sophisticated international limited partners and with the commitments denominated in U.S. dollars. We have done this through many different macro environments, and we don't believe now is somehow special or different. Supported by a track record of strong investment performance, we have established trust with our investors as a partner of choice to access private markets in the region. Since they tend to invest in private markets around the globe, they understand the times of volatility are often when firms like Patria can do their best work, and they recognize our ability to be opportunistic during market dislocations through deep and localized industry knowledge.
For those reasons, we have been able to raise new vintages of long-term locked-up capital every 3-4 years, while also scaling the capital commitments at an impressive rate. We are almost fully committed on our current generation private equity fund, and we are now back in the market raising the next vintage 1 year ahead of schedule. We expect the first closing to be around the end of the year, or perhaps just after, depending on logistics for some of our LPs, and we continue to see demand to scale this fund up by 50%.
The two latest vintage funds, Private Equity Fund VI and Private Equity Fund V, are performing extraordinarily well, with Private Equity Fund V net IRRs of 29% and Private Equity Fund VI net IRRs in US dollars of 27%, and we are seeing great progress within the portfolio. For example, our heavy deployment in the first half of 2021 included a commitment to our cybersecurity thesis in Private Equity Fund VI. In the third quarter, we announced the acquisition of NeoSecure and Proteus to consolidate the largest information security platform in Latin America with operations in five countries. This platform can continue to grow through additional consolidation, and this is a classic example of our distinctive approach to building market leaders in the region.
Likewise, in the infrastructure space, our current generation fund continues to progress nicely, addressing an opportunity set in the region that only continues to grow. With a $2 billion fund, we are analyzing a pipeline for the next 24 months of around $50 billion of potential equity checks for transactions and CapEx. This figure includes actionable opportunities in sectors like power, logistics, telecom, and others, in Colombia, Chile, Brazil, and other countries in the region. In our infrastructure fund four portfolio, we have seen two fantastic stories develop just in the last month. The first was in the telecom sector. Just two weeks ago, Brazil held its 5G spectrum auction. Our telecom platform, Winity, placed the winning bid for the 700 megahertz band for national coverage.
As a result of this winning bid, our company will build more than 5,000 telecom towers in the coming years, all pre-contracted, serving the largest telecom operators and other corporate customers in Brazil. This will drive significant additional deployment of capital from our Infrastructure Fund IV at attractive returns. The second was in the power sector. Back in late October, Essentia Energia, a renewable energy portfolio focused on solar and wind power generation, announced the beginning of operations at the Sol do Sertão solar panel plant in the northeast of Brazil. Developed from scratch by Patria, Essentia Energia has now delivered the second-largest solar complex in Brazil and third-largest in Latin America with a capacity of 475 MW.
This plant, now fully operational, serves an estimated 580,000 households and saves the emissions of about 465,000 tons of CO2 per year. We are particularly proud of this project, and I think it underscores Patria's commitment to making ESG not just a box that we check, but an active and purposeful effort throughout our portfolio. Addressing the growing desire from global investors for dedicated allocations to ESG themes and the global energy transition, we also announced last quarter that we are currently raising a renewable energy fund to complement our flagship infrastructure fund. We are targeting to raise the renewables fund before coming back to market with flagship infrastructure fund next year.
In our country-specific strategies, we believe the financial deepening in the region continues to be a substantial long-term opportunity, and these locally focused products continue to be important to our growth strategy. Currently, they still account for less than 10% of our assets under management and fee revenues. For better or worse, this bucket is not yet a big needle mover for our P&L. The more recent developments in local interest rate environments are particularly supportive of credit strategies, and accordingly, we are seeing the immediate fundraising opportunities shifting in that direction. In the coming quarters, we expect to raise capital for our second middle market credit fund as we finish investing the $200 million raised for the first one, where performance has been excellent with no defaults and improving credit ratings in several portfolio companies.
We are also targeting to raise capital for our first infrastructure credit product, where there is significant demand for capital given the regional momentum in infrastructure and investment activity. At this point, we have established anchor investors for both products, which should be primary contributors to country-specific fundraising in 2022. There are multiple work streams in motion within this area, and we will keep you posted on progress as it becomes more material. Our big news from the third quarter is, of course, Moneda, and we are well on track to close the transaction before end of the year, as we previously noted. We hope the information we shared with you at the announcement in September was helpful, but let me reiterate our big picture view on this strategic combination. Moneda has established an outstanding brand and track record across both credit and equities over the last few decades.
First and foremost, they are an attractive addition to our platform based solely on their existing business today. The vision here is not just bolting on an adjacent business. This is about complementary expertise that enables us to build much bigger things together. With global investors reducing their number of GP relationships, Patria's goal is to stand alone as the premier comprehensive provider for alternatives in Latin America. In that regard, credit was the most competing white space in our platform. Moneda manages the largest high yield credit fund in the region, which is 10 times the size of the next largest competitor, and has delivered leading returns with more than 350 basis points of outperformance against the benchmark since inception. In their team, we are gaining a level of truly regional expertise, not just Brazil, that would be difficult for us to build organically.
Immediately out of the gates, we see strong synergies with our global clients who are interested in credit allocations in the region, where they can find yields that remain absent in developed markets around the world. This translates to incremental wallet share from our existing clients and incremental growth channels that would have been difficult for Moneda to access on their own. Bigger picture, you should expect to see product development on the private credit front. Moneda's current private credit portfolio of roughly $450 million adds the previously mentioned $200 million Patria manages already. Together, we expect to develop distinct private credit offerings with drawdown structures similar to our current flagship products. As I noted, we are progressing with plans for middle market credit and infra credit products in our country-specific strategies.
Given the steep growth trajectory of private credit across the globe, we believe we can attract significant credit allocations from international investors over the coming years as well. Beyond Moneda, we continue to be active in pursuing other inorganic opportunities, and there is more activity on the horizon. This could mean bolting on high demand and complementary sub-strategies or acquiring local talent in different regional geographies. In any case, our efforts will always be patient and diligent to ensure that any new partners will be a fit for our culture and highly aligned with our vision for what Patria has become. With that, I'll now turn the call over to Marco to walk you through the numbers. Marco?
Thank you, Alex, and good morning to everyone on the call. Our financial results for the quarter reflect our continued progress toward our prior guidance for the full year 2021, and demonstrate the top line impact from the heavy deployment we saw in the first half of the year. Fee-related earnings were $21.8 million in the third quarter 2021, up 24% from $17.6 million in the second quarter. Fee revenue of $37.4 million rose 16% from last quarter as we added nearly $1 billion net of our fee-earning AUM through deployment. Our FRE margin for the Q3 was 58%, up from 55% in Q2 due to the jump in revenue, putting us on pace for a margin in the high 50s range for the full year.
Compared to Q3 2020, fee-related earnings were actually similar as you see reported in our P&L, but that is not comparable due to the post-IPO adjustments to the compensation structure. Adjusting the prior year quarter to an apples-to-apples compensation structure, fee-related earnings were up 25% compared to third quarter 2020. Fee-Earning AUM of $9.2 billion is up 11% from $8.3 billion last quarter, and up 22% from $7.5 billion one year ago. We landed slightly below the range of $9.4 billion-$9.6 billion we suggested last quarter, with private equity and infrastructure as expected, but a slightly lower outcome in our country-specific strategies, where we have lower visibility due to, in part, FX and local equity markets volatility.
Regardless, we continue to deliver attractive year-over-year growth in our management fee basis, which is the critical driver for the organic FRE growth path. On the cost side, 3Q 2021 personnel expenses of $12.1 million were up from $10.1 million in the prior quarter, with about half of this increase being run rate and the other half relating to some non-recurring adjustments. We therefore expect the fourth quarter personnel expenses to fall between the Q2 and Q3 levels. Admin expenses of $3 million in the third quarter 2021 were down from $3.8 million in Q2 due to some non-recurring items that elevated the prior quarter. On year-to-date basis, admin expenses are running about 5% higher than in 2020.
We had $1.5 million of incremental performance-related earnings related to Private Equity Fund III, which aligns with our comments last quarter that we could see some minor adjustments in subsequent quarters as the steps of the Alliar sale are completed and other escrows are received. At this point, we do not expect significant additional performance-related earnings in 2021, and we expect Private Equity Fund V to be the major driver in 2022. Net accrued performance fees were $314 million as of September 30, down slightly from $325 million last quarter, driven primarily by currency fluctuation in the quarter and local equity capital market volatility, pressuring some public positions and comps. Year to date, the net accrual is up 14% on an absolute basis, and up 35% when accounting for the amounts that we realized in Q2.
The third quarter was mostly uneventful in terms of new reported fundraising, deployment, and realization activity. You should certainly not mistake that for a lack of activity on the fundraising trail or in the portfolio in our pipelines. As a reminder, we report our deployment figures based on incremental capital that is deployed or reserved. In other words, binding commitments to a portfolio company or investment thesis, since that is typically what drives Fee-Earning AUM and revenue in our flagship funds. In the first half of the year, our deployment pace was well above average at nearly $1.8 billion, higher in six months than in all 2020. In the third quarter, what you are seeing is that capital really flowing into the business development plans and M&A within the portfolio, as Alex noted a few great examples.
We still have $1.4 billion of pending fee-earning AUM eligible to earn management fees once deployed, which will be replenished by our ongoing fundraising efforts. This $1.4 billion is spread across a few funds, but most notably, we do expect one additional allocation from Private Equity Fund VI before transitioning to the next vintage fund. Fundraising for our next vintage private equity fund and first dedicated renewable energy fund is ongoing, as Alex covered in his remarks. We expect these funds will begin deploying capital in 2022 alongside the remaining commitments in Infrastructure Fund IV. As we approach the end of 2021, we now have higher visibility on our full-year earnings. We know that attention has naturally turned to 2022 expectations.
Our intention will be to provide you with a helpful outlook once we have a good ability to forecast, and then refine with a sharper point as the year progresses, much like we've done this year. Now, with our initial 2022 annual planning process complete, we are in a much better position to do that on Fee-Related Earnings. Overall, as Alex mentioned earlier, we expect total FRE to increase by more than 50% in 2022, driven by solid double-digit organic growth as we invest larger flagship funds and launch adjacent strategies such as renewable energy and the addition of Moneda's platform. We expect the FRE margin for the organic business to increase slightly in 2022, while Moneda's margin is expected to be closer to 40%. Combined, we expect an FRE margin in the low 50% range.
On performance fees, the 2022 outcome will really depend on the harvesting progress for Private Equity Fund V, which has net accrued performance fees of $217 million as of September 30. We've said that you should think about the Fund V realization arc as extending mainly over 2022, 2023 and 2024, and that remains the case. While we expect to generate some portion of that in 2022, exit timing is very hard to project, and it only makes sense for us to provide distinct guidance on this when we have very clear line of sight. Altogether, this outlook, we believe, frames a strong growth profile for the coming year. Keep in mind that our dividend policy shares 85% of our distributable earnings with our shareholders.
In 2021, the outlook for DE of $1 per share means $0.85 to the shareholder, which, as Alex noted, is a 5% yield on our IPO share price, nearly four times the current yield on an S&P 500 index fund. If we grow FRE by more than 50% next year, most of that incremental value is being delivered directly to shareholders each quarter. Even thinking conservatively, we believe our growth and dividend profile imply an attractive current valuation for our shares today. Across our entire business, from executive leadership to fundraising, investment professionals to value creation teams, we are focused on execution, and we are aligned with building value for all of our stakeholders. We thank you for your time, and we'll now open the line for questions.
Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Again, if you would like to ask a question, press star one. Our first question comes from Craig Siegenthaler with Bank of America. Your line is open.
Good morning, Alex, Marco. Hope you're both doing well.
Hey, Craig. How are you? Good morning.
Good morning.
Hi, Craig. This is Alex here. I hope you are well.
Thank you. Thanks for all the guidance and targets for 2022. That will be helpful. My first question is on the M&A outlook after Moneda. How do you quantify deal capacity after Moneda? And also, do you have an appetite to pursue additional transactions after this one?
This is Alex again, and thanks for the question. The answer is yes. We still have appetite. We did consume around $100 million from the $300 million that we raised with the primary issuance of shares in the IPO in the Moneda deal, or we will consume because we're gonna now close the deal by year-end, hopefully. Everything looks completely on track, just a parenthesis here. With that, we have $200 million still in cash from the issuance of primary shares at the IPO to deploy for additional acquisitions, and we wanna do that.
If we do translate that $200 million of cash, if we buy something also using stock, you know, 50% cash, 50% stock, you know, we can still have another $400 million there of powder to buy other asset managers. Why the 50-50? Because I think it's important, as we are a people-driven business, to give the new partners of ours shares and keep them locked up for a while to align interests. If we divide that by the same multiple that we bought Moneda, we have another $40 million of earnings to buy in several different geographies and products. We did fill, I think, the credit space quite nicely with the Moneda acquisition, as mentioned earlier and today.
I think there we can really continue to grow their you know private credit with ours and their listed credit high yields, which is a product that a lot of investors around the world are seeking for, given the yields in the region. We also acquired a very significant PIPE portfolio with Moneda. We also had a smaller PIPE strategy that can join forces, and we can do more on that front, raising also closed-end kind of structures. I think here on the real estate side, Craig, that now I think we're gonna start try to focus to do other acquisitions to grow our real estate portfolio. Just to remind everyone in the region that real estate is inflation plus, right?
When you buy a real estate product and when you rent out whatever, all the contracts in the region are adjusted by inflation. With inflation picking up around the globe and in the region as well, investors are looking for these kind of products. Now, REITs, real estate investment trusts, where the share of that REIT is whatever the yield that you get plus the inflation as the rental contracts are all adjusted by inflation. That's another product that we wanna go into more deeply and an acquisition there or acquisitions there, I think makes sense. Also there are several other holes here in our menu that we would like to fill.
For example, within the private equity vertical, we do have a buyouts consolidation private equity fund which we call our flagship private equity strategy. I think there's a space for us to launch a core private equity strategy in a listed format, which is a permanent capital format. I think there's also space for us to launch or do a small acquisition in the venture, which we now call growth equity part of the business. There, I think there's a lot of interest from international investors in investing in a product in the growth equity space. A lot of things to do.
Very exciting, you know, buying into real estate, buying into private equity, different strategies, buying into different geographies, as we did with Moneda to get more exposed to Chile. We would like to get more exposed to Colombia and Mexico in due time. I think in Colombia, I think it's the right time. In Mexico, we have to follow through the leadership there and what the leadership in Mexico, I mean, the president, is actually directing Mexico to. Nevertheless, Mexico is an economy so much linked to the U.S. There are very interesting theses like nearshoring of production that is done all over the world now being driven to Mexico to be closer to the U.S., and other theses very interesting in the infrastructure space as well.
Yes, appetite continues to be high. We still have the cash from the IPO, $200 million. We normally use some stock to do these acquisitions so that our dry powder is even larger than the $200 million or bigger than the $200 million. We are generating so much cash, you know, that we are a cash generative business that we can do these acquisitions and continue to distribute 85% of our Distributable Earnings as dividends. Hopefully here I answered your question. I don't know if, Marco, if you wanna comment on anything.
Yeah. Just think about our acquisition program aiming at, you know, enhancing the product offering, expanding our geographic footprint, and bringing in new geographic capabilities, and improving the distribution capability. Moneda brings the three of them. Following acquisitions may bring two of the three of them, but may not be the case as well. As Alex alluded to, there's a lot of opportunity in infrastructure, in credit, real estate, and we will continue with this effort.
Great. Thanks for that, very comprehensive response. In fact, it was so comprehensive, you actually answered my follow-up on M&A. I do have another one here, and it's on the macroeconomic front. Listen, I know you guys could spend a while answering this, but you know, very simply, you know, the COVID conditions are getting better in Brazil, but inflation's starting to rise. Low interest rates are generally a benefit for many private market asset classes. How do you see higher interest rates impacting in Brazil impacting your business, especially your ability to sell to local investors where you're competing with fixed income?
No, I think great question here, and we have, of course, been asked by other investors the same question or a similar kind of a question. Yes, I think the interest rates are going up in the region because inflation is going up. I think here it's important to say that actually, the products that we offer has always been actually interbank rates linked plus a premium, of course, and inflation linked plus a premium. I mentioned the real estate's products. Now, all of our real estate products, the rental contracts are adjusted by inflation.
When we sell the product here in Brazil, we sell a REIT, and normally the way that we actually market it is inflation plus 6%, inflation plus 8%. That's how you actually sell the shares of a REIT in Brazil, not only our REIT. Investors that are worried with inflation, they look at a real estate investment trust actually as a protective investment. And also our credit product's the same. Of course, sometimes they are interbank plus a premium, interbank rates plus a premium, and the rates here are going up in order to cope with the rise of inflation. 100% of our credit products here are variable rates linked. We don't...
We're not stuck to any low interest rates that we did lend money in the past and now we were caught off guard. All of our products actually are variable rates. With the increase of the interbank rates, with the increase of inflation, so does the increase of the rates that we receive in our credit products. They are very much sought after by investors. In the infrastructure space, the same, Craig, if you look at our Infrastructure Fund IV, all of the investments in that fund have the revenues corrected by inflation contractually. Because when you we use the example here in our call today, in our earnings call today. That infrastructure won a 5G auction just a couple weeks ago.
That contract is contracted by inflation, so it's X amount of reais plus inflation. Also our core infrastructure fund the same. All of these. Why did we do this? Because inflation has been an issue in the region, and because of the structural issues of the economies in the region, it will still be an issue. The economies here are, of course, in different moments in time of their developments. We have always protected, given our past experience, and we continue to be protected. Finally, on the private equity side, of course, we don't have revenues contracted by inflation when we go into a healthcare company, for example.
We do go into resilient sectors which we normally and most of the times we can pass on inflation to prices on our costs. All of these results and the returns that you saw, given our past funds and current funds, and even more so our past funds, they went through higher inflation environments. Our fund 1, fund 2, fund 3 Private Equity, for example, already delivered only fully divested, all three funds fully divested 16% Net IRR in U.S. dollars, 2.3 times your money net in U.S. dollars. Fund 1, fund 2, fund 3 Private Equity lived in a higher inflationary environment.
At such moments, we had inflation high double digits in Brazil, for example, and we still delivered 16% net in U.S. dollars, 2.3 times net MOIC in U.S. dollars for those three funds. Now we are harvesting fund four and fund five in our private equity space. Investors are actually shifting of course more to inflation-protected instruments like, you know, our real estate products, our credit products, our infrastructure products, and we see that locally. Now, of course, we see more demand for our credit products at the current time. Having this broader menu is part of the strategy in order to cope with these different shifts in demand and continue to raise money locally in a very healthy manner.
Hopefully I answered your question.
Very comprehensive again. Thank you, guys.
Thank you.
Thank you.
Our next question comes from Robert Lee with KBW. Your line is open.
Thanks. Good morning, everyone. I appreciate you taking the questions. I'm just kind of curious, a couple questions around the fundraising. With the PE fund you're raising now, is there any change in the LP base? Is it, you know, mostly, say, 80% re-ups and you're getting 20% new investors? Just curious about how maybe the LP base may be changing, if at all. On the renewable fund, could you possibly size that? Do you think that that would kind of take any demand away from the infrastructure fund when you start to raise that, you know, maybe later next year or early the year after? Or do you view them more as a complementary?
Well, thanks again, and nice talking to you, and thanks for the questions. As of your first question, we see the same LP base on institutional LPs that are most of our LPs in our private equity strategy today. Of course, sometimes there are little shifts here or there, and one of our LPs is merged with another LP, and that's life, and that's what I'm talking, you know, a minority part of our LP base. But yes, the majority are re-ups, as you mentioned, 80%. What we're trying to do, and I think we want to do it, is to expand our LP base to other regions and other, you know, types of clients.
We would, you know, really enjoy having more money from, you know, ultra-high-net-worth individuals through the private banking. I think, you know, distributors, we see that, you know, private equity, alternative asset investments in general is becoming more and more attractive, for individuals, high-net-worth individuals. That's. I think there's a lot of money to be raised there. I think there's some regions in the world that we would like to increase our share of wallets, Australia for example, that we have an amazing amount of, as you know, very large, pension funds. I think our market share there is low, so I would love to bring them in to this fund.
The answer is yes, I think, most of our capital for Private Equity Fund VII will come from current LPs, and the current LPs are the ones that actually do come earlier in the process. They are the ones that actually really support us in a first closing, for example, because they already know us. It's just a re-up. Now, great returns for Private Equity Funds 5 and 6. Fully divested for Private Equity Fund I, 2, and 3 with the returns that I just mentioned, 16% net in US dollars, 2.3 net MOIC in US dollars. They're used. We know. They know us, et cetera. They are the...
The percentage of LPs that come in the first closing are even more so current LPs. Then we try, then, of course, to work with other LPs. To give you a number, I would love to have a two-thirds current LPs and a third new LPs in order to do exactly what I just mentioned, expand the base, looking to fund 8, 9, and 10, right? On the renewable energy front question, it might happen.
I think you have a point there, because some of these LPs look at the region and say, "Look, I'm gonna expose myself to infrastructure and I'm gonna expose myself to renewable infrastructure, in this case, renewable energy." Might that be, look, I'm gonna have a X amount of dollar checks for Patria and a slice for renewable and the other slice for Infrastructure Fund V. If I would guess, I think it might happen. We haven't had these conversations yet with these LPs because we haven't. We are not raising Infrastructure Fund V. We are focused on the infrastructure side to raise the renewable funds.
The LPs that are supporting us, at least in the first closing of this renewable fund, are current LPs of our infrastructure strategies. It might happen. I think it's a good question. It's hard to circle a number, but I think you have a point there. It might, you know, one fund erode a little bit the demand for the other.
Thanks for the complete answer. I appreciate it. I did have one follow-up. I mean, PE Fund Five, you know, performance, you know, has been, you know, very good, and obviously that's where you expect the next realizations. Do you see much of an opportunity to maybe even accelerate that? I mean, obviously, you know, continuation funds, GP-led secondaries have been really, you know, growing in the industry, and I'm sure you have some assets in there you maybe would like to hold even longer. Is there a possibility that you may be able to deploy some of those strategies to kind of accelerate the return of capital realizations, but also kind of keep the assets and fees in place?
Yes, definitely so. I think that part of the market is so exciting today. I think there's so many new things and new strategies going on. But the concept of continuing to invest in these what we call champions has always been part of our day-to-day here, our strategy. I'll give you an example. The first deal that we did was a drugstore retail chain. We bought it for $28 million. We sold it for $300-something million. We thought that we were just geniuses. This company today is worth $5 billion. And we made 12 times our money. We said, "Wow, what an investment." We could have made, you know, the company today is worth $5 billion, the same company, okay?
It's an amazing company, number one in Brazil in drugstore retailing, blah, blah, blah and continue to grow very strongly. I can give you other amazing examples from our private equity fund, from our infrastructure fund, one or two champions per fund that I would love to continue investing in these companies given that they continue to deliver 20%+ returns per year, right? To do that for 20 years, for 30 years, this drugstore retail company that I mentioned, we divested in the late 1990s, so whatever, 20-something years ago, growing 20% per year. That's something rare to find.
We have other companies in the diagnostic field, in the energy field that we could have continued to invest. Yes, we are looking to set up in continuation driven vehicles listed. We are looking at strategies that you can list these funds in exchanges like in Brazil, exchanges like in London that have a pocket for these kind of funds, as you know. We can continue to drive a lot of value. Investors are really supporting us on that because, you know, finding a company that we foresee that will continue to grow 20% per year for the next 5-10 years, we have demand, and we already de-risked that, right?
It's a company that probably we have already owned for, you know, whatever, six to eight years. We know the management. We actually placed the management there. We de-risked the assets. We know exactly what to do. We did that with, lately, with a health club chain called Smart Fit. It was part of Fund III. Now it's part of Fund Five, plus a group of co-investors. It's working extremely well. The answer is definitely yes. You know, when you're managing a fund, right?
That's my view at least, which is the case of Private Equity Fund Five with 28% returns in US dollars net and a 2.1 MOIC net in US dollars. You have to sell the assets or you have to have, go for a continuation fund for some of the assets. The investors, the LPs of Fund Five, you know, two times your money in dollars, 28%, net IRR in dollars, it's time to go. We are looking very actively to divestments for all of our companies in Private Equity Fund Five, which is a case that, you know, all of them are mature. It's interesting. Or they are ripe, not mature. I think it's not the right expression.
I think they're ripe to be sold given the returns that I just mentioned. Thank you.
Great. Thank you for the full answer.
Just to add to Alex, there are also opportunities to h old some of these investments that have been developed under the development funds into permanent capital structures, aiming at offering to local investors yield products. That's something that we saw happening in other parts of the globe that also are opportunities that we are looking at too.
Great. Thank you so much. Appreciate it.
Thank you. Our next question comes from Marcelo Telles with Credit Suisse. Your line is open.
Hi, Alex. Hi, Marco. You know, thanks for the time, and congratulations on the results. I have two questions. The first one, I mean, think up to 2022. You know, in, how do you see the level of capital deployment next year? You know, of course, you had a remarkable performance this year, $1.8 billion in deployed capital. How should we think about 2022? You think it should be around that $2 billion that historically have been or, you know, given that perhaps valuations in Brazil have come down a lot, I mean, do you see room to deploy capital even faster than that?
My other question is kind of the flip side, you know, of that argument in terms of the realizations. Of course, you know, there was a big derating in the Brazilian market. You know, currently the valuations, you know, have come down quite a lot. Does that impact, I know you just mentioned, you know, your willingness to divest, you know, particularly I think the Fund five. How do you think that environment, you know, impacts your ability to divest next year? Maybe it would be worth maybe to wait a little bit, you know, maybe after, you know, elections in Brazil and see what, you know, maybe get better valuations in 2023, hopefully.
How should we square, you know, these two things that are in some way kind of opposite at, you know, at this point in time, you know, the Brazil's cycle?
No, thank you, and nice talking to you. Thanks for the question. On the investment side, I think the first part of your question, we continue to see a very interesting environment to continue investing much more, so I think because we know the size that we have today and plus the opportunity sets, I think that is going on in the market, we continue to be extremely positive on that front, and we continue to see kind of the same level of activity that we had this year for next year. On the infrastructure fund side, it's amazing. I think, you know, we mentioned during our earnings call, you know, we run a $2 billion fund.
You know, we wanna now raise another infrastructure fund sometime in 2023, a year ahead of schedule, late 2022, 2023. There are like $40 billion-$60 billion of concessions going on just in Brazil. There's not a lot of capital chasing these concessions. Our interaction with the regulatory bodies in Brazil and the decision makers in Brazil, I mean, the Minister of Infrastructure, the Minister of Telecom and Energy, is very, very close. Now, we are now talking to them. Now, when is this? We, because we became a very important bidder in these auctions, no? I'm very excited on that front. I think there's so much to do.
Again, a $2 billion fund, just in Brazil, $40-$60 billion of concessions. You can really choose the best assets to go after, right? On the private equity side, I think that we do focus on 3 or 4 sectors, as you know, healthcare being number one, and then agriculture and food and beverage, and then business services, logistics, which, you know, logistics became kind of a business service today, given the digitalization of the world and the deliveries. We continue to be extremely excited. I think there's so much to do there. On the healthcare front, I cannot say more, right? You know, healthcare is booming, right? We had more than 60% of our investments in healthcare and our companies. It was really...
Nobody planned for COVID, but our companies really benefit from this situation 'cause more usage of distribution of drugs, more usage of the whole drug consumption really increased in the last years, as you know. We are now extremely excited there, and we're excited to continue to do investments there. On the agribusiness, you know, what happened with the commodity prices for agriculture. Now we have companies in that sector exposed to that sector, which are doing extremely well. Same thing with logistics and we know 'cause a lot of our companies do last mile logistics and cold logistics and did very well also during these last years.
On the divestment front, again, just to summarize, yes, I see the same kind of volume of investment that we did this year for next year. I don't see us decreasing that volume. I see us same or increasing actually. On the divestment side, of course, we're gonna be as cautious as possible. When you look at the portfolio, again, on the private equity side, you see healthcare. On the private equity side, you see agri. We have a lot of interest from strategics for our assets. We might not use the capital markets because the capital markets are choppy, but we see a lot of strategic interest for the assets. Now we are receiving offers for our assets as we speak because we are trying to sell them.
On the infrastructure side, of course, as we de-risk the assets, there's a lot of interest from strategics and a lot of interest also from Brazilian investors, or Colombian or Chilean wanting to be exposed to a very good yield-generating products. After you de-risk that infrastructure, it becomes fully mature and operational. It becomes a kind of fixed income product, right? With an equity upside embedded into it. A transmission, an electricity transmission line, a power generation, even a toll road, you know, after you know, the big CapEx is done, which is normally in the beginning of the concession, that asset becomes a yield asset. You know that investors are looking for yields.
These contracts, as I mentioned, are inflation corrected, so it's inflation plus, which is, you know, again, very, you know, we see the demand from investors. In addition to do recaps in our infrastructure because we see the demand for credit. Even if, you know, if we don't want to sell the equity, we after we de-risk the asset, we do a recap, you know, we can raise a new bond at a lower rate because we de-risked the assets, we pay the project finance debt, and we actually deliver, and we, you know, we do then redeem that cash to investors as a dividend. So it's extremely exciting on the divestment side as well.
Of course, the capital markets are getting very choppy, given everything that is going on in the region, not only in Brazil. Normally, if you look at our divestments, 70% plus, close to 80% of our divestments were to strategics. Strategics, they continue to be bullish on the region, to be honest, in the sectors that I mentioned to you. Yeah, I think the same volume on the investment side, and we see that we'll be able to divest also in due time, of course.
I think it's more of a question of the portfolio company being ready to be sold because we max out the synergies of a consolidation process, or we de-risk the asset because we finished constructing it and it's now fully operational. That's more the driver actually than interest from strategics that we continue to see, as they were in the past. Thank you.
One addition here, Marcelo, that I would encourage you to pay attention to is the underlying quality of the portfolio. Not only when you look to the different possibilities of divestment, as Alex noted too, you know, the return of Private Equity Fund five, which is a 2015 vintage, is 29%. Private Equity six is 27%. Infrastructure four is now yielding 25%. I think what is key here is we will always pay a lot of attention to the timing of divestment. But the great thing is that the underlying assets are great, so when the right timing comes, we will be in a very good positioning to divesting. That's. I just wanted to bring this up. Thank you.
Yeah. Extremely clear. Just two follow-ups, if I may. Number one, regarding the fundraising for, you know, for the country-specific strategies, you think like $1 billion a year, you know, is still, let's say, a good, you know, base case scenario? And secondly, you know, look at your guidance for, you know, 2022, you know, the growth, FRE growth more than 50%. How should we think about Moneda, you know, standalone business? You know, should we expect like, you know, perhaps like double-digit growth in FRE for Moneda in 2022? How should we think about that? Thank you.
Well, on the first part of the question, I think you're right on there. I think it's in organically, I think that's a number that you can work on. We plan to do acquisitions in the local market as well, as mentioned earlier. Yes, organically, I think that's the kind of AUM growth that I would expect from the team here, $1 billion that you mentioned, right? On the other front, we continue to see very strong growth for Moneda and ourselves. It's getting harder to actually break down which is which, to be honest, as we are now really, you know, merging the two businesses and consolidating the back office and the fund administration side.
I think we can definitely if you do the math here. I think it's now over 50% growth from where we landed in 2021. It is a double-digit growth, a high double-digit growth for both companies, right? Marco, if you wanna add anything here, what's your view?
Yeah. On the Moneda side, well, the whole dynamics with the higher interest rate in the region poses a favorable, you know, setup for the high-yield dollar-denominated funds and the local currency-denominated funds. I'm very positive with the possibilities there. It's still early to say as we are, you know, we're closing the transaction in the upcoming weeks, and there's a lot of work to do there. As Alex noted, there's also some opportunities on the, you know, the cost side and the tax side, and that would help us out to reach the double digits. I can see a double digits coming in. Still early to say where we're gonna land at this point. We'll certainly provide better guidance over the following quarters.
I think just as a note here, given that the deal is not yet approved by the regulatory bodies, we have limited capacity of talking to Moneda, okay? The antitrust bodies, they have to approve the deal. Before doing that, we cannot and we are not in full contact to go deep into the numbers of Moneda. Just as a caveat, which is a very important caveat, right? As you know, it's actually natural of every deal, right? We have not gone into any discussions with Moneda in a deeper manner, given what I said.
However, we see on their side demand for their products, as Marco just explained. We already see on our side from our investors demand for credit-related products. As we get the approvals and they should come, I think there's nothing in the horizon that says that the regulatory body should not approve this deal. On the contrary, we're gonna be able to have more in-depth conversations with the guys from Moneda. Isn't that correct, Marco?
Right. We're on the way to the closing. There are certain approvals that have been granted. There are certain precedent conditions that are still pending, but we're pretty much very positive that we're working solidly to the closing in the upcoming weeks.
Thank you.
Thank you. Our next question comes from Guilherme Grespan with JP Morgan. Your line is open.
Hi, Alex, Marco, Josh, thank you for organizing the call. Two quick ones on our side. We saw the average management fee rate in the quarter is likely going up. It seems to be related to the partial mix on the segments, but also, if we recall correctly, for some funds and specifically, I think Infra Four, the last one you raised, the management fee goes up once you deploy. My question is actually looking forward. You still have $1.4 billion to be deployed. Should we expect not only fee-earning AUM to grow, but also management fees to go up as a result of this different pricing schedule? The second one is just to confirm the general terms of the new PE fund being raised.
Again, if we recap correctly, the latest one, the pricing was only over deployed and was a 2% rate, if this new PE follow the same route. Thank you.
I can get that one. Thank you for the question. It's a very simple answer to the trending up of the fees, and it's specific on the infrastructure fund. As we deploy capital, there's a component of the fee that kicks up. As we strongly deploy over the quarters, that is building up the mix upward, is just the nature of the fee set up of the infrastructure fund. As for the private equity, we expect to have precisely the same dynamics.
We feel just by the way, I think I mentioned that before in previous quarters, but we have a very positive supply-demand dynamics to our funds that enable us to continue to sustain the base of fees that we have on the private equity, both on the infrastructure too.
Yeah. Just to be clear here, Guilherme, is two and twenty for private equity, and just we just charge when we commit deploy the capital. Okay?
Okay, guys. Super clear. Just one follow-up. The $1.4 billion still to be deployed, what is the breakdown between the infra and private equity?
It's across several family of funds. There's a big piece that is on private equity and another big piece that is infrastructure, but it adds up to other products as well.
Yeah, I think from my math here, I think it, you know, 80, 70, 80% is private equity and infra, right?
Okay, guys. Perfect. Thank you.
No, thank you very much, Guilherme.
Thank you. I'm showing no further questions. I'd like to turn the call back to Alexandre Saigh for closing comments.
Well, thank you very much again for your support. I think we're extremely proud of my team. I am extremely proud of my team. I think I can say also from the board, Olímpio and Otávio, now very proud of what we've been able to accomplish. You know, getting out of the gates as a first-year public company and managing to deliver what we expected, and we talked to most of you during the IPO process of $1 per share for 2021.
Looking into 2022 with fee-related earnings expected to grow by at least 50% with all the fundraising efforts that we mentioned to you guys, which would then push us into a good 2023 as well. In addition, we have the $200 million of cash still left from the primary issues of shares in the IPO to do acquisitions. Again, as I mentioned, if we buy $200 million and then another $200 million of seller's financing, whatever, now we have $400 million still dry powder the way that I see it, which is at the multiples that we did acquire Moneda, another $35-$40 million of fee-related earnings to add to the number that I just said.
On the performance fee-related earnings, you know, great performance from our funds, which was already mentioned, and Private Equity Fund five now ripe, so for us to harvest the performance fees, as we did for Private Equity Fund three in 2021. Also, broadening a little bit the view on the strategic side, I think we've been able to accomplish also, what we wanted to do and what we actually conveyed and talked to you guys, over this year, which is expand our geographic footprint, expand our product offering. Moneda fits exactly that recipe.
Being exposed to different countries, different currencies, different products gives me, as a CEO of this company, more predictability looking into the future of growth, but even more predictable growth than we have. We already have a very solid, predictable growth on the fee earnings side, and with this new products, credit-related products even more so from Moneda. We want to continue to expand our business as mentioned in countries like Colombia and Mexico. Very excited. Extremely pleased with the team. I'd like to, you know, thank the team. They're probably listening here with you guys today. Thank you for your support. All of our tax investors, great talking to you. If it was not for you guys' support, we wouldn't be here.
I think, of course, I'll probably gonna talk to most of you in the coming days or weeks. If there is any of you that I won't be able to talk to for some reason or another, I would like to wish you a great, happy holidays and all the best for end of 2021 into 2022. All of you, be well, be safe. Thank God we are getting out of this amazing and crazy pandemic. Hopefully 2022 on the healthcare side is gonna be a much better year than 2021 or 2020. Thank you very much again, and that's it for today.
This concludes today's conference call. Thank you for participating. You may now disconnect.