Good day and thank you for standing by. Welcome to the Patriot Investments Investor Conference Call. At this time, participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference may be recorded.
I would now like to hand the conference over to your host, Josh Wood, Head of Shareholder Relations. Please go ahead.
Good morning, everyone, and thank you for joining us this morning to discuss Patria Investments' combination with Moneta Asset Management. With me on the call are Patria's Chief Executive Officer, Alex Sigh and Chief Financial Officer, Marco DiPalato. Alex will begin by giving some prepared remarks, and then we'll open up for Q and A. Yesterday evening, we issued a press release and presentation on the transaction, which you can find posted on our Investor Relations website at ir.patria.com or on Form six ks filed with the Securities and Exchange Commission. 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. A few key details on the transaction. Patria is announcing a combination with Moneta for total upfront consideration of $315,000,000 comprised of 40% cash and 60% equity in the form of Patria Class B shares. Certain additional earn out and retention payments of up to $130,000,000 over the next five years are contingent on the achievement of performance targets and may also consist of a mix of cash and equity.
Together, the upfront consideration and maximized earn out and retention components would total approximately $445,000,000 The transaction is subject conditions and expected to close by the end of twenty twenty one. In our investor presentation, we have also provided an illustrative pro form a of certain 2021 metrics based on Patria's recent guidance estimates for Moneta. On our recent earnings call, we noted that our FRE guidance of at least $75,000,000 of fee related earnings plus the performance related earnings generated in Q2 would result in distributable earnings near $1 per share. Based on current estimates for Moneta, on an illustrative pro form a basis for the full year 2021, we believe the combination would be approximately 12% accretive to distributable earnings per share, and we expect it to be accretive going forward in year one after closing. I'll now turn the call over to our Chief Executive Officer, Alex Sigh.
Thank
you, Josh, and good morning to everyone. We're very excited to announce combination of Patria and Moneda, a partnership that joins together two premier asset management firms, and that is a compelling first step in Patria's M and A growth strategy. With this combination, we are consolidating the region's largest private equity, infrastructure and credit platforms, and further solidifies pasture status as the leader in private markets and alternative investments in Latin America. For our shareholders, we're also growing in a profitable way, as we expect this combination to be accretive to our earnings per share from day one. As we prepared for initial public offering at the beginning this year, and in our commentary since then, we have made clear that three things are important in pursuing inorganic growth for our business: enhancing our product offering two, expanding our geographic expertise in the region and three, improving our distribution capabilities.
We have also said that it is critical to be diligent and identify partners that can not only grow our assets under management and earnings, but also add key strategic competencies to our platform, making something greater than the sum of its parts. In Moneda, we believe we are welcoming a partner that checks all of these boxes, and we are excited for the value this combination can deliver for Like Patria, Moneda brings a twenty five plus year track record of attractive and consistent investment performance, which has earned them a loyal investor base of more than 110 clients, including some of the most sophisticated institutional investors in the world. As of June 30, they managed more than US10 billion dollars in assets under management across credit and equity strategies, which has grown at an impressive 13% compounded annual growth rate since 02/2007. More than 90% of Moneda's assets under management earns management fees, and more than 70% is managed in closed end fund structures with limited gates of liquidity.
This has afforded a very sticky assets under management base over time, with low annual turn over rates and a stable and growing stream of fee revenue. Effectively, all of Moneda's earnings will be in the form of highly valued fee related earnings to Patriot. More than half of the assets under management is in credit, most notably a mix of high yield public credit and private credit, where Moneda is a clear leader in the region. Their Latin America high yield strategy is most significant, and is clearly distinguished as the market leader, with 10 times the assets under management of the next largest competitive fund in the region. Moneda's bottom up, fundamental research driven approach has delivered nearly 400 basis points of alpha and consistent top quartile performance since inception.
With the expertise Moneda brings in the credit space, combined with Patch's leadership in credit markets, we are particularly excited about what this partnership can build together in private credit. Moneda was already the market leader for private credit in Latin America, managing more than $450,000,000 in private credit investments. Together with Patra's private credit fund focus in Brazil, we will now manage more than $650,000,000 in private credit assets, and that is in an estimated market size of about 4,700,000,000 per third party research data. Now, that may not sound like a lot, but it underscores the nascent stage of private credit in the region, and the significant opportunity in front of us. Zooming out globally, private credit has been growing at a phenomenal rate and continues to catch up to demand on both the borrower and investor sides of the equation.
Following the global financial crisis, the retreat of the banks in certain lending areas led to underserved segments of the market. And this has certainly been true in Latin America, where small and mid sized businesses in particular have been underserved. Private credit has now become a more mature asset class in developed markets around the world, growing at a compounded annual growth rate of 26% over the last twenty years. In Latin America, where the asset class is just emerging, it has been growing at a compounded annual growth rate of more than 60% over the last five years. We see a clear and compelling opportunity to pursue leadership in this space, both expanding Moneda's success of existing products and introducing new products targeted towards global institutional investors.
The potential market size for private credit in the region is estimated by certain third parties as high as $20 to $30,000,000,000 by 2025. If we see anything near that kind of market growth, and we can succeed in maintaining or improving our combined market share, we can certainly build a diversified credit platform to scale alongside our private equity and infrastructure platforms. That process will require careful planning and plenty of hard work, but in Moneda, we are aligning with an elite partner and together we have high confidence in our ability We are also very excited about Moneda's high performing exit strategies and synergies with Patra's existing local strategies. The Chilean small cap strategy, for example, has delivered 600 basis points of alpha and top quartile performance since inception, and takes an activist approach leveraging deep local knowledge of companies.
This profile strongly aligns with our existing constructivist equity strategy in Brazil, which focuses on pipe investing, or making privately structured investments in public companies. The combination provides a fantastic foundation for collaboration and the expansion of these constructive executive strategies more broadly across relationships in the region has also facilitated a growing advisory business focused on family offices and high net worth investors, as well as attractive distribution partnerships, which address an increasing interest from LATAM institutional investors to access alternative investments outside Latin America. While these areas generate only a small share of Moneda's revenue today, they serve as a foundation for expanded distribution capabilities for Patriot products, and also generating independent distribution revenue streams, which could be an incremental driver for highly value fee related earnings growth over time. Now, it goes without saying that cultural fit is an essential element of any business combination, and it has been a high priority throughout our M and A diligence process. In the Moneda team, we saw a group of like minded entrepreneurs that in many ways was like looking in a mirror.
It's extremely important to understand that this transaction is about the combination of two highly successful partnerships to achieve even larger ambitions together. Moneda Partners will become Patriot Partners and remain fully committed to the combination with a five year lockup agreement. Over Patra's history, talent development and succession planning have been a key pillar in building our business for the long term, and maintaining that discipline is important here as well. Compensation structures will be fully aligned with Patra's structure to align and incentivize the next generation of leadership. For Patra shareholders, we believe this combination should be highly attractive given the immediate financial accretion, and particularly how it positions us to grow and succeed in the credit vertical.
We are adding capabilities in Constructivist Equity or PIPE investing, and also significantly expanding our country specific strategies into Chile, which diversifies our Latin America currency exposure in a positive way, expands our geographical expertise, and pushes forward the goal of deepening relationships with local investors and providing a conduit into alternative investments. Overall, you should think of this transaction as fully additive to our existing platform, as it does not impact the organic growth expectations we have been discussing with you over the last few quarters. Our private equity and infrastructure strategies are full steam ahead on the upcoming fundraising cycle and initiatives for our country specific strategies focused in Brazil continue to move forward. We have also tried to provide you with some high level insight on financial impact in the presentation. Notably, if you combine the 2021 earnings guidance that we provided in our second quarter conference call two weeks ago, with Moneda's estimates for 2021 earnings, pro form a accretion based on full year estimated 2021 financials will be about 12% on a distributable earnings per share basis.
Of course, this transaction is expected to close in the fourth quarter and therefore the actual 2021 impact be minimal. But we believe this provides a reasonable baseline for thinking about the combined earnings profile looking forward. In closing, we are very excited to welcome Juanita's leadership and professional Supatriya, and both sides stand ready to build great things together. We will have much more to share as we complete the transaction and begin the next steps forward in Patria's journey. We're now happy to take questions.
Thank you. Our first question comes from the line of Tito Labrada with Goldman Sachs. Your line is open. Please go ahead.
Hi. Good morning, everyone. Thank you for the call and the additional information you released. A couple of questions. I guess one, just to get just want to make sure I'm doing the math right here on this 12% accretion, you know, based on roughly $1 per share, an EPS this year for Batya.
You know, with a 12% accretion, get to 112. I'm estimating roughly $35,000,000 coming from Oneida in net income for 2021. It seems a lot higher than what they did in 2020. I'm not sure if there was any COVID impact on their 2020 earnings. Just to make sure, one, is that $35,000,000 sound about right?
And any color you can provide on what's kind of driving that growth from 2021 I mean from 2020? And then I have a second question after that. Thank you.
Hey, Pito. Good morning. This is Marco. Thank you for your question. Hope you are well.
While doing the reverse engineering, the numbers are very much the ones that you laid out. Just one note on your statement is that any public number that you may have gotten from MONEDA's website or something like that, just have in mind that these are partial information from certain of their entities. So you cannot just assume that their earnings last year was any public numbers that you have may found.
Okay. Great. Thanks, Marco. So the math is right. It's just, yeah, we see some numbers on their website.
So just to confirm, so those aren't necessarily comparable. And then I guess on the second question in terms of the synergies that you see, if you can maybe give a little bit more color in terms of either cost synergies, the revenue synergies that you can expect there? Is it just better growth opportunities given the BARDA platform and any cost savings that you expect from the acquisition? Thank you.
Yes, hi Kyoto, this is Alex here and I hope that you're well and safe and you enjoy the lake in here. Yes, I think there's a on the revenue side. Have great prospects for the combination of the two firms. Actually, we pursue this deal and we're happy that the Moneda partners and team accepted our invitation to become our partners, looking to the top line, 10 times more than the bottom than cost lines. So we're now with a new credit vertical with the highly experts from Moneda.
And we had, as you know, a small private credit business. We raised a $250,000,000 fund end of twenty nineteen. That combination puts us with $650,000,000 in private credit already, which in a $4,700,000,000 market, so it's a 15% market share. Private markets, addressable market is growing at around 60% per annum in Latin America. So we're very, very, very excited and be able to continue to pursue this increase in market share and actually to pursue the actually keep on growing as well as with the market.
We and some analysts actually expect that this market is going to be a 25,000,000,000 to $30,000,000,000 market in five years. Imagine if we keep 15% market share, that's $4,500,000,000 vertical for us, just in private credit. And you know that private credit and public high yield credit, they talk to each other, so it's the beginning and end of the same process. Some companies do actually raise a private credit kind of instrument, and then they do actually make that a public instrument to sell down into the market and vice versa. So the company is the same, it's the mid cap Latin American companies that are raising debt, issuing debt.
So the focus origination is very similar when you go and pursue a high yield public debt security or a private debt security. Now you have the same origination, it depends on which instrument you actually applying for that solution for that specific company raising debt. So all of Moneda's public credit efforts or high yield has a lot to do which where we want to gain expertise and where Patrick was looking to gain expertise and we found in Moneda the real right partner to do so. In addition to that, they have an amazing constructivist PIPE strategy that adds to our PIPE strategy. You know that we do have also a PIPE strategy focused in Brazilian equities, which is around BRL1.8 billion, which if you do the math, around $300,000,000 And they have a very substantial strategy not only in Chile, but for LATAM.
So there I think there's an amazing growth opportunity also for both teams to join forces and do more LATAM, do more outside Chile and outside of Brazil. So very excited there with these two combinations. So, we're actually adding our private equity vertical, which was already the leader in the region, our infrastructure vertical already leader in the region, and now with this very, very solid credit vertical, and most importantly, with the Moneda team with us. So a lot of synergies are there because it's extremely complementary. On the cost side, I think that's not really, the focus right now.
I think we know they're running at 40% plus FRE margin business. We're running at 55% FRE plus margin business. It's very, very high growth, very high margin businesses. So our focus is in the combination, in top line growth. Of course, synergies will come, it's part of the process, but I don't see that as a major area of focus for us right now.
Again, that they are very complementary, so there's not a lot of synergies on the cost side, number one. Number two, they are adding this fantastic expertise on a vertical that was very small for us, which was credit and pipe. And more so, the intelligence, the ethics, the values of the Moneda partners is so much aligned with us. I said during my very short speech here, I was looking into the mirror when I was talking to the Moneda team. It seemed that we grew together, and the solutions that they had for some problems were the same solutions that we had for the same problems that we faced five, ten years ago, and we didn't even really know each other that well.
So I'm very, very happy for that. And you know that this is a people business, so the people chemistry is very important for this thing to actually come up and be successful. So again, very excited and the exchange of intelligence that we're going to have between the teams. Know that Patro has been expanding outside of Brazil and Moneda adds a lot to that. 70% of Moneda's assets are non Chilean assets.
Even though there's a big portion of the Chilean investors investing in Chile in funds, in Moneda's funds, when you look from an asset point of view, over 70% of the assets of all of Moneda's funds are in non Chilean instruments or assets. So that shows the internationalization that Moneda went through the last ten years. That's exactly what we want to accomplish. Of course, the Chilean centric business is very important. It's an amazing country.
The Brazilian centric strategy is also that we have under our belt here is also very important. But the spend regional expansion so we can actually have exposure to different geographies, different currencies, and making our earnings even more predictable and foreseeable. Hope I answered your question. Thank you.
Just one addition. Sorry, Tito, just one addition here. The first thing that comes to my mind when I think about the combination of the businesses and as we speak about Patria many times, remember that Patria has a proprietary distribution channel that is across 10 countries, or 10 different international locations covering 300 plus LPs. And we're running two strategies with basically an excess of capacity. That means there's way more capacity to raise money today than capacity actually to offer products.
So Moneda, if anything, is bringing a new portfolio of products in which we can synergize with our current client base.
Okay. Great. Thank you, Alex and Marco. Yes. So it seems a lot of revenue synergies as you expand your product offering and geographic offering and leverage the distribution platform.
So very helpful and congratulations on the acquisition.
Thank you.
Thank you. And our next question comes from the line of Robert Lee Your line is open. Please go ahead.
Great. Thanks. Good morning and congratulations on the transaction. Maybe first question would just be just trying to get a sense of what maybe Monita's growth has been more recently in the last couple of years? It been pretty much in line with their long term average?
Has it accelerated or been a little slower recently? Just trying to get a sense of that coming into the transaction.
Monetas growth has been approximately 13% over the last years, more or less the same growth over the last recent years. So I think that's more or less the number. And I think there's, as Marco mentioned a couple of minutes ago, I think there's a huge potential for us to grow the Moneda's fundraising efforts outside of Latin America. As we did build this fundraising machine, which has no offices in all over the world, as you know, and we have been fundraising for our private equity and infrastructure products. The two main fundraising efforts that we have currently using this proprietary distribution channels for institutional clients around the world.
And I think that this channel, to be honest, we could do more. I think we can actually distribute more products through this channel. So I think having the Monendas products to be distributed by our team is something extremely positive. Our sales team was really looking to have more products to be able to sell and distribute to these institutional clients. And as these institutional clients also see us as the gateway into alternative assets in Latin America.
This is something extremely important. You know that these institutional clients, they are reducing the number of relationships that they want to have around the world, So when they come into Latin American alternatives, they look into one, two, maybe three relationships in the alternative asset space. We talked to most of these institutional investors, they want to have 150 relationships around the world. And if you do the breakdown, they're going to have one or two relationships in Latin America. And they see Patria as that relationship, definitely private equity and infrastructure, and now to offer other products.
So we had these clients asking us to show other things the alternative space in Latin America to them and mostly into credit in the credit space. Now we have yields in the region, the region because of different reasons. We have our head economist here also online to talk to you guys. Luis Fernando Lopez, Head Economist and Partner. But you know that it's a region that actually has to pay yields with real interest rates because of the developing nature of its economies and so on other issues.
And you don't have a lot of yield around the world. So if you have on the credit side funds performing as they are on the Moneda side now producing eight to 12% U. S. Dollar returns net returns in U. S.
Dollars. That's a lot of use under the current world scenario. So we think that this is going to be extremely attractive for our international base of clients using our distribution channels to sell the Moneda assets. Again, I think we can our distribution channels can do a lot more. I think they're looking at, as I said, for other products to be able to distribute and sell.
And on the other side, have this amazing Ponenda products giving that sort of returns in a region that will continue to generate yields. Now you see interest rates in the region are going up. You see that in Brazil, Four yield curves are around 8%. Among other products will benefit from this rise in yield curve in the region. So it's extremely exciting on that front, to be honest.
I think having to we see a 13% growth, which is, our point of view, a very exciting growth over the past years. But looking to the future, I think continue to having this growth plus in addition our distribution channels that can fuel this 13% growth. We are very excited with the prospects and I hope I answered your question there.
Yes, thanks. And maybe I know it's not a big contributor right now to revenues, but could you talk a little bit more about the advisory and distribution business? Is that distributing other managers' products? It wasn't quite clear to me exactly what that is or maybe how it's structured.
Yes, I'm happy that you asked that question because I'm also very excited about this part of the business, even though, as we mentioned during the call, it does not move the needle yet. I think the perspective and projections for this part of the business is very exciting. What did Moneta start doing? Moneda saw an appetite, I think, in the origin from Chilean clients, Chilean institutional investors. And the path is more or less this way, and it happened in all of the countries where interest rates came down to single digit levels, whatever.
Investors then were basically investing in fixed income when they had high interest rates, and then interest rates come down, and inflation comes down, and interest rates come down in these countries. All over the world, we see this trend. And then they start investing in equities, in other products, instruments, then they go into alternative investment products denominated in their local currency. This is the first step. And then they start looking for other products and other investment alternatives in other currencies other than their local currency.
It happened all over the world. You know this trend of financial deepening. It happened in Chile. Today, 40% of the Chilean pension funds assets are in other currencies, but the Chilean peso. So they are doing this process of internationalization, and given the size of the pension funds in Chile vis a vis its economy, are very large, so they look for instruments outside of Chile.
Happened in Canada, the Canadian pension funds also looking for instruments outside of Canada, given the size of their pension funds and the size of the Canadian economy. I can see this trend in several other countries. So they started talking to these clients and saying, Look, what else you guys want to buy outside of Chile? I can help you in the alternative investment space. So they started then distributing these global managers that were fundraising to Chilean clients.
And this is a beginning of a very interesting business of a primary fund of funds, then a secondary fund of funds to help Chile, not only Chilean, but Latin American institutional investors, a step out outside of Latin America and investing in these global asset managers, alternative asset managers that know, all of our peers around the world, our partner Blackstone and all of the other big guys and KKR and TPG and CDNR, Carlyle, and then the venture guys. And so you can do a primary fund of funds for venture, which gives them access to venture. So it's a very exciting business, to be honest. And I think we have a lot of value added here. We can give these institutional Latin investors a lot of advice in how to take this step.
And as you know, there is a rich fee base to do that, and this fee base is actually locked in for the length of the fund. If you do distribute to Latin American institutional investors, ten, eight to twelve year private equity credit infrastructure fund from one of these global alternative asset managers, we have the fee locked in for ten years. And the cost base to do this and the cost to serve after you distribute it is very low. So it's a very, very high margin lucrative business, because once you did actually distribute the fund, then you have all of these years in receiving the fee and not having a very high cost to serve. So we're very excited with this.
Again, think we're not focusing on this as we speak. I think the credit and constructive executive is part of the business Moneda is what we focus and the verticals that I mentioned that adds to our verticals, as I mentioned a couple of minutes ago. But this part of the business could be extremely exciting. And we are not only the conduits of international investors, we need to invest in alternative investments in Latin America, as I mentioned a couple of minutes ago, but also then the gateway, the conduits of Latin American institutional investors, need to go outside of LATAM and invest in these global alternative asset managers and we can be the conduit there. So the conduit of money coming in and the conduit of money going out.
So it's very exciting. Sorry for my long answer, but I'm pretty excited about this part of the business.
That's great. That's helpful. Thanks. Then maybe one last one. Appreciate your patience on just some transaction details.
I just want to make sure I understand it correctly. The $59,000,000 contingent payments, years two or three after closing, that's based solely on partner retention, right? But the earn out of $71,000,000 after 2023 is based on, as you say, your revenue and profitability targets. So somewhat two different strike points. But what's the kind of baked in growth needed for the earn out?
Is it kind of continue at that 13% pace? Is it baking in kind of accelerated or somewhat slower growth? Just trying to get a sense of what would trigger those payments, which you hope you trigger, of course.
So you're correct in the way that you laid down. And we expect Moneda to continue to grow similar to what they have been growing, which Alex laid before. The 13% historical growth, maybe a little bit on the north on that. But that's where we are looking for.
That's our base case, right? That's the base case for us looking into the future and to continue to have Monene grow as they grew in the past with a notch up there. Of course, we have then a bandwidth. Of course, we have a lower case, base case, and we have a high case. And the numbers that you're seeing is the max out numbers, so the numbers are higher than that to achieve the 71,000,000.
So we have a range that comes from nothing if they don't reach a certain level of growth, then from this level of growth that we call the low case all the way to the high case, the band of money that will be paid and the max out number, just to be clear, is the 71,000,000. And then, of course, it's higher than these past numbers that we just mentioned on the phone here today. And then, of course, you have the second part, which is just retention. So, of course, then it's not linked to a performance metric, it's linked to working with us all the way down two to three years down the road.
Great. And just one quick follow-up on the potential earn out, the $71,000,000 Is that kind of a one time payment after 2023? Or is that kind of the aggregate payments that would be paid over some period of time after 2023?
So it's paid out of
two exercises over the period?
Yeah, so I think if we do know, of course, this is a base case, If we do manage to close the deal by year end, year end 2021, which is our current projection, if nothing goes on, if everything goes as planned, then we're talking about performance metrics for '22 and '23. And together, they then add to these growth patterns that we mentioned and could and one of those partners could max out at 71,000,000 by the end of twenty three that of course we're going to measure with the audited numbers beginning of twenty four.
Okay, great. Thank you for taking my questions.
Thank you. And our next question comes from the line of Marcelo Carlos with Credit Suisse. Your line is open. Please go ahead.
Hi. Good morning, everyone, and thanks for your time. I have one follow-up question, regarding the recent growth rate of Moneta. At least looking in their website, it looks like the growth in assets under management was only 2.7% in 2020. And I was wondering if you could elaborate upon that and if you can provide us what has the growth been, let's say, to date.
And also if you can comment a bit on the what was the amount of net inflows that Moneda had you know, in 2020 and perhaps, you know, the first half this year. And the other question tied to that is, you know, I think the ASPs in Chile, they account for a little over, you know, 40%, right, of the of the investor of the investor base of Moneda. And when you look at the growth, the recent growth of AFPs in Chile, it seems that the, you know, at least in dollar terms, think the last three years, I think the growth was probably negative, about 1% in dollars. I think in Chilean pesos, probably around like 4% growth. So they don't seem to be growing that much.
And how do we reconcile that, the expectation of double digit growth that you mentioned?
Yes, hi. Thank you. Do you to take the first part, Marco? Yes. Hi, Marcelo.
This is Marco. As I
mentioned before, what
you're looking at are financial figures that are partial to Moneda, which are the ones that have been posted on their website. So I encourage you not to take that as a whole because the whole figures show numbers that are consistent to what we mentioned before. We are not providing at this time the information about the recent growth. I can assure that for the very recent period, there has been substantial increase in AUM. Of course, during COVID time, there's more volatility on their growth, either to the positive and to the negative.
But if you just annualize that, you'll see that the growth is very much consistent both in AUM and as well reflected on their revenues. As you touched on the AFPs, and you can imagine that we had long discussion and long diligence on the AFPs in Chile, we have a view that AFPs are not only very sticky, but trendy wise, it's a growing asset class. You're right on the dollar terms because we're measuring the AUM on FIPs on Chilean pesos, you may have different figures, but when you look to the Chilean AUM increase, that has been very substantial and very consistent. Our base case here is that the AUM over the AFB system is going to grow in between 7.510% per annum. There has been some COVID related withdraws on the AFB system, actually two withdrawals that have been released by the government in order to make front to the COVID situation in the region, like in many other countries.
But we don't think that that's in any way a trend. And the Chilean FIPs have been pioneer in not only growing into the alternative asset space, but investing internationally relative to Chile. So that makes us very comfortable.
Okay, thank you. Yes, my question was in terms of the fees, right? I mean, the last five years in dollars, it's been growing little under 5%. So you think it's going to be 7% to 10% going forward? That's
Yes. That's we look at the allocation through alternatives, right? I think there might be a difference in what we're looking into. I think this one is the total size of the AFP that includes all of the assets that they own. And for us, I think the most important is the allocation to alternatives.
And we see the allocation to alternatives growing because they need find yields in a normal mom and pop kind of fixed income instrument, so they go into other instruments. So the difference between, I think, what you're looking into and what we're looking into, Marcelo, I think, is we look into more the growth of the alternative assets pockets. And that's the 7.5 that we're talking about. I think, to be honest, as we look into the future, not only the AFPs in Chile, I think several pension funds in Brazil and whatever, they're going to have to allocate more, just the general concepts to alternatives, given where we are in the world. That's $17,000,000,000 yielding negative nominal interest rates.
I'm not talking about negative real interest rates, I'm talking about just nominal, negative nominal interest rates. In Chile it's the same, and that's the 7.5% that we're talking about. That might be a difference between what you're looking into and what we are looking into.
Okay. No, that's clear. And just going back to the first point, if I may. You mentioned so the 2.7% growth that I see from in in your financials, I think we're going, like, from from 7.3 to to $8,000,000,000. You know, that's those are the numbers that I see in the financials, which is I know I think it has a little over 10,000,000,000 currently, but you think this the growth is is not low single digits.
So we're saying, like, 02/2020, you cannot disclose, but you're saying the growth in 02/2020 is
that's under management for Moneta
Or or or just just to understand that.
If you look at the if we were to look at the last eighteen months, let's say, because we are in the midst of '21, we would see a a decent AUM growth across all the platforms, which again we're not disclosing at this time. Why not disclosing?
Company and they have all of these different Moneda instruments and funds that are not ones based in Chile that I think is the ones available on the website. But I think what aligned with what we agreed with them is that their last eighteen months growth has been consistent with their past growth, and that's what we have been seeing.
And in addition, Marcel, just to complete, at this point we're trying to, we have just signed the deal and we're heading to the closing and we don't want to take commitments to the disclosure metrics before getting into some more details, and especially providing disclosure metrics relative to the past, we want to make sure that we get it right in the disclosures metric that we'll be offering to you.
Okay, that's very clear. Thank you very much.
Thank you, Marcel. Thanks for your patience.
Thank you. And our next question comes from the line of Dominguez Manila with JPMorgan. Your line is open. Please go ahead.
Thank you. Good morning, everyone. Congrats on the meaningful transaction for sure. Just got a little lost here, and and I confess that it took me a little bit to to actually get the the presentation here to work. So I apologize if you touched on this already.
But two things. The first one is I just wanted to get a a a sense kind of the notion at risk with the pension withdrawal. Like, I'm not super up to date, but I believe it was at early September second in the constitutional committee. You know, there's you know, it's gonna hit the floor. There's discussions about an additional withdrawal.
So sort of in the total AUM, you know, you didn't break down on asset class. I'd like to know on product, types to see, you know, if it does if there's a 20 or 30% withdrawal. Any kind of of number you you could provide us? What kind of AUMs is under risk? The second one, I heard just now the sentence, the last eighteen months, the growth has been consistent with the past.
Can just give us, like, an idea, like, the last AUM, how that compared versus year end '19, if
it if it grew, if
it shrink. Because it it is, like we're kind of touching around the same center point, which is, you know, there has been several redemptions, and the data you provide is is implying consistent growth, and and we're trying to to understand where exactly is the V shape and if we recall it, so on.
Okay. Thank you very much. Nice to talk to you. This is Alex here. And I think the first part of your question will ask Luis Fernando, our Head Economist and Partner, to touch base on.
I think what's going on with the pension funds withdrawals. Luis, do you want to just give your view on on what's going on or what went on, actually?
Yes. Yes. Of course. Can you everybody hear me? Okay.
Hi, Luis. Luis Fernando Lopez here. Our information, we've been following everything that matters in terms of of pension plans and pension funds in Chile. There has been more than one suggestion to, authorize yet another withdrawal from pension funds, but that all all of them have been shut down, actually. The intuition that we have in in Chile is that if the economic and and the public health situation were deteriorating, that should be room for yet another, withdrawal.
This is exactly the opposite what's happening there. So Chile's leading the region in terms of vaccine rollout. GDP growth this year is estimated between something between 10.5 to 11.5% real growth this year. And there would be no need for an order withdrawal. Actually, the suggestions that are coming from not only the constitutional convention, but if you look at the form of all the major three presidential candidates, Citroen Boric and Jan Provoste, they are going to increase the contribution to the pension system.
So the amount of money that the Chileans will have to allocate from their paychecks into the system is going to increase, not to decrease, which speaks of further acceleration in the AUM of patient plans. So the discussion is rather they're going to be pure based on the private system, private management as they have right now, or if they're going to create a government entity to do part of this allocation of resources, etcetera. So we are constructive on the pension plans. And I would warn you, all the data and the comparisons on the behavior of the AUM of pension plans that include 2020, you have an outlier there because the economy decreased over 5%. There was the withdrawal and there was currency depreciation.
So if you net out what happened in 2020 and assume that the trend was consistent with the past five or ten years, The AUM has a very steady and robust growth, and that's why the AUM of the patient system as a whole is nearly 9% of GDP. So we are far more constructive on this front.
So so you're telling me that on September 2, there was no approval, on the constitutional committee to have an additional withdraw?
There was there there was a proposal, but it was not It
approved, from my understanding. It was approved even by opposition, seven opposition that is over in favor. No. That's We
can take this offhand. Okay.
Okay.
And the the AUM that is basically exposed to this withdrawal as a percentage of total AUM, I don't think you got this number.
So let me get that, Domingos, and just tying also to your previous question. When you think about Moneda's AUM, you have to factor in that Moneda's AUM is perceived as an NAV. So any depreciation of the asset coming from the asset percent or for the currency will affect for the good and for the bad. So so that's where you're gonna see volatility in the recent But the net new money that is coming through has been very consistent, and that's the consistency that I wanted to
Yeah, and I think this is where some of the confusion from the numbers come through. So again, as I mentioned in the beginning of the call, or even in my short speech here, over 70% of Moneda's assets are in currencies other than the Chilean peso, in US Dollars, in Brazilian Reyes, in Colombian pesos, etc, and 30% are exposed to Chilean pesos. During 2020, '2 things happened. The assets suffered, which means that the prices of these assets actually went down, mainly in the second quarter of twenty twenty. In addition, the currencies devalued or weakened against the US Dollars in that moment.
As the year progressed in 2020, the asset prices recovered and some of these currencies actually strengthened vis a vis the US Dollars. So you have this movement of the price of the asset itself and the currency. But by the end of the year, the net new money coming in was consistent with the past. But you had this 2020 volatility that we were mentioning, so when you look at the number, there is these other factors that we just mentioned to count on. But as far as new money is coming in, which is for us a very important performance indicator to watch is consistent with the past.
Makes sense, thank you.
Thank you very much.
Thank you, and I'm showing no further questions, and I would like to turn the conference back to the CXO, Alex Tsai, for any further remarks.
No, thank you very much here for all the questions, guys. Thanks for the patience. I think we're extremely excited, as I mentioned, to have Moneda with us. We're very pleased that Moneda partners and the Moneda team accepted our invitation to continue being entrepreneurs in the region and joining forces with us, Patria. As I mentioned, it's a very, very complementary business that they have in credit and equities, extremely equal minded set, entrepreneurs like us, feel extremely at ease with the Moneda partners that we worked, of course, as you probably imagine, several months to be able to get this deal signed.
Looking to the future, extremely excited with what we can do together with a foreseeable future already accretive from day one for our firm, and getting Patria more exposed as a whole to other countries in Latin America, very consistent with what we were saying during the IPO, other products, other currencies, so having this now and being even more dominant in region. So that's what I have to say here today and thank you very much for your patience. Thank you for participating in this call. I hope you're well and safe and keep well and safe. And we'll be talking with each of you, I think in a more individual basis we move forward in this week and next week.
Thanks again. All the best.
This concludes today's conference call. Thank you for participating. You may now disconnect.