Investor Update

Sep 7, 2021

Slides

Good day, and thank you for standing by. Welcome to the Patria Investments Investor Conference Call. 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 to discuss Patria Investments combination with Moneda Asset Management. With me on the call are Patria's Chief Executive Officer, Alexandre Saigh, and Chief Financial Officer, Marco D'Ippolito. Alex will begin by giving some prepared remarks, then we'll open up for Q&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 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. A few key details on the transaction. Patria is announcing a combination with Moneda for total upfront consideration of $315 million, 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 million over the next 5 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 million. The transaction is subject to customary closing conditions and expected to close by the end of 2021. In our investor presentation, we have also provided an illustrative pro forma of certain 2021 metrics based on Patria's recent guidance and current estimates for Moneda. On our recent earnings call, we noted that our FRE guidance of at least $75 million 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 from Moneda on an illustrative pro forma 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 1 after closing. I'll now turn the call over to our Chief Executive Officer, Alexandre Saigh. Thank you, Josh, and good morning to everyone. We are very excited to announce this combination of Patria and Moneda, a partnership that joins together 2 premier asset management firms, and it is a compelling first step in Patria's M&A growth strategy. With this combination, we are consolidating the region's largest private equity, infrastructure, and credit platforms, and further solidifies Patria's status as the leader in private markets and alternative investments in Latin America. For our shareholders, we are also growing in a profitable way, as we expect this combination to be accretive to our earnings per share from day 1. As we prepared for initial public offering at the beginning of this year, and in our commentary since then, we have made clear that 3 things are important in pursuing inorganic growth for our business. Number 1, enhancing our product offerings. Number 2, expanding our geographic expertise in the region. Number 3, 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 the combination 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 Patria's shareholders. Like Patria, Moneda brings a 25-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 $10 billion U.S. in assets under management across credit and equity strategies, which has grown at an impressive 13% compounded annual growth rate since 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 turnover 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 Patria. 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 Patria'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 BRL 450 million in private credit investments. Together with Patria's private credit fund focus in Brazil, we will now manage more than BRL 650 million in private credit assets, and that is in an estimated market size of about BRL 4.7 billion 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 side 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 20 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 5 years. We see a clear and compelling opportunity to pursue leadership in this space, both expanding Moneda's successful 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 billion-$30 billion 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 to execute. We are also very excited about Moneda's high-performing equity strategies and synergies with Patria'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 constructivist equity strategies more broadly across Latin America. Moneda's deep investor relationships in the region has also facilitated a growing advisory business focus 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 Patria products and also generating independent distribution revenue streams, which could be an incremental driver for highly valuable fee-related earnings growth over time. 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&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 Patria partners and remain fully committed to the combination with a five-year lock-up agreement. Over Patria'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 Patria's structure to align and incentivize the next generation of leadership. For Patria 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 forma 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 will be minimal. We believe this provides a reasonable baseline for thinking about the combined earnings profile looking forward. In closing, we are very excited to welcome Moneda's leadership and professionals to Patria, 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. As a reminder, if you would like to ask a question at this time, please press star then one. To withdraw your question, please press the pound key. Our first question comes from the line of Tito Labarta 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 questions. I guess one, just want to make sure I'm doing the math right here on this 12% accretion, based on roughly BRL 1 per share in EPS this year for Patria, with that 12% accretion gets to BRL 1.12. I'm estimating roughly BRL 35 million coming from Moneda 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, does that BRL 35 million sound about right? Any color you can provide on what's kind of driving that growth from 2021, I mean, from 2020. I have a second question after that. Thank you. Hey, Tito. 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. You cannot just assume that their earnings last year was any public numbers that you have may found. Okay. Great. Thanks, Marco. The math is right. It's just, yeah, we did see some numbers on their website. It's just to confirm, so those aren't necessarily comparable. 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 broader platform? Any cost saving that you expect from that acquisition? Thank you. Yes. Hi, Tito. This is Alex here. Hope that you're well and safe, and you enjoy the weekend here. I think on the revenue side, we 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 10x more than the cost lines. We're now with a new credit vertical with the highly experts from Moneda. We had, as you know, a small private credit business. We raised a BRL 250 million fund end of 2019. That combination puts us with BRL 650 million in private credit already, which in a BRL 4.7 billion market, it's a 15% market share. Private markets, addressable market is growing at around 60% per annum in Latin America. We're very excited in being able to continue to pursue this increase in market share and 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 billion-$30 billion market in 5 years. Imagine if we keep 15% market share, that's $4.5 billion vertical for us just in private credit. You know that private credit and public high yield credit, they talk to each other. 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. The company is the same. It's the mid-cap Latin American companies that are now raising debt, issuing debt. The focus origination is very similar when you go and pursue a high yield public debt security or a private debt security. You have the same origination. It depends on which instrument you're actually applying for that solution for that specific company raising debt. All of Moneda's public credit efforts or high yield has a lot to do where we want to gain expertise and where Patria 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 around BRL 1.8 billion, which if you do the math around $300 million. They have a very substantial PIPE strategy, not only in Chile, but for LATAM. There, I think there's an amazing growth opportunity also for the both teams to join forces and do more LATAM, do more outside Chile and outside of Brazil. Very excited there with these two combinations. We're actually adding our private equity vertical, which was already the leader in the region, our infrastructure vertical, already a leader in the region, and now with this very solid credit vertical, and most importantly, with the Moneda team with us. A lot of synergies are there because it's extremely complementary. On the cost side, I think that's not really, to be honest, the focus right now. I think they're running a 40% plus FRE margin business. We're running a 55% FRE plus margin business. It's very high growth, very high margin businesses. 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, given that they are very complementary, there's not a lot of synergies on the cost side, number 1. Number 2, they are adding this fantastic expertise on a vertical that was very small for us, which was credit and PIPE. 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 now 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 5, 10 years ago, and we didn't even really know each other that well. I'm very happy for that. 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. Again, very excited at the exchange of intelligence that we're going to have between the teams. You know that Patria 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 their funds, in Moneda's funds, but 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. That shows the internationalization that Moneda went through over the last 10 years, and 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 strategies also that we have under our belt here is also very important, but the SPAN regional expansion, so we can actually have exposure to different geographies, different currencies, and making our earnings even more predictable and foreseeable. I hope I answered your question. Thank you. Just one addition. Yes. 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. 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. 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, I see a lot of revenue synergies as you expand your product offering and geographic offering and leverage the distribution platform. Very helpful and congratulations on the acquisition. Thank you. Thank you. Our next question comes from the line of Robert Lee with KBW. Great. Thanks. Good morning. Congratulations on the transaction. Maybe first question will just be, just trying to get a sense of what maybe Moneda's growth has been more recently in the last couple of years. Has 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. Well, Moneda's growth has been approximately 13% over the last years and more or less the same growth over the last recent years. I think that's more or less the number. I think there's, as Marco mentioned a couple of minutes ago, I think there's a huge potential for us to grow Moneda's fundraising efforts outside of Latin America. As we did build this fundraising machine, which has now offices all over the world, as you know, and we have been fundraising for our private equity and infrastructure products, the 2 main fundraising efforts that we have currently using these proprietary distribution channels for institutional clients around the world. I think that this channel, to be honest, we could do more. I think we can actually do distribute more products through this channel. I think having Moneda's 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. 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. 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. 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. Now to offer other products. We had these clients asking us to show other things in the alternative space in Latin America to them, and mostly into credit in the credit space. Now we have yields in the region. Now, the region, because of different reasons, and we have our Head Economist here also online to talk to you guys. Luis Fernando Lopes, Head Economist and Partner. 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 other issues. You don't have a lot of yield around the world. If you have on the credit side, funds performing as they are on the Moneda side producing 8%-12% US dollar returns, net returns in US dollars, that's a lot of yields under the current world scenario. 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 our distribution channels can do a lot more. I think they're looking actually, as I said, for other products to be able to distribute and sell. On the other side, we have this, in our view, amazing Moneda products giving that sort of a 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, 4-yield curves are around 8%. Moneda's products will benefit from this rise in yield curves in the region. Extremely excited on that front, to be honest. I think we see a 13% growth, which is, from our point of view, a very exciting growth over the past years. Looking to the future, I think continuing 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. 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 Moneda start doing? I think Moneda saw an appetite, I think, in the origin from Chilean clients, from Chilean institutional investors. 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 were basically investing in fixed income when they had high interest rates, and then interest rates comes down and inflation comes down, and interest rates comes down in these countries. All over the world, we see this trend. They start investing in equities, in other products, instruments. They go into alternative investments products denominated in their local currency. This is the first step. 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, the financial deepening, and it happened in Chile. Today, around 40% of the Chilean pension funds assets are in other currency but the Chilean peso. They are doing this process of internationalization. Given the size of the pension funds in Chile vis-à-vis its economy, they 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. 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. They started then distributing these global managers that were fundraising to Chilean clients. This is a beginning of a very interesting business of a primary fund of funds and then a secondary fund of funds to help not only Chilean but Latin investors, Latin American institutional investors, taking a step outside of Latin America and investing in these global asset managers, alternative asset managers that you know. All of our peers around the world. Our partner, Blackstone, and all of the other big guys, KKR, TPG, CD&R, and Carlyle, and then the venture guys. You can do a primary fund of funds for venture, which gives them access to venture. 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. 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, they can, 8 to 12-year private equity credit infrastructure fund from one of these global alternative asset managers. We have the fee locked in for 10 years. The cost base to do this and the cost to serve after you distribute it is very low. It's a very, very high margin, lucrative business. 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. We're very excited with this. Again, I think we're not focusing on this as we speak. I think the credit and constructive equity, this part of the business of Moneda is what we focus and the verticals that I mentioned, that adds to our verticals, as I mentioned a couple of minutes ago. This part of the business could be extremely exciting. We are not only the conduit of international investors willing to invest in alternative investments in Latin America, as I mentioned a couple of minutes ago, but also then the gateway, the conduit of Latin American international, Latin American institutional investors willing to go outside of LatAm and invest in these global alternative asset managers, and we can be the conduit there. The conduit of money coming in and the conduit of money going out. It's very exciting. Sorry for my long answer, but I'm pretty excited about this part of the business. No, that's great. It's helpful. Thanks. Maybe one last one. I appreciate your patience on just some transaction details. I just want to make sure I understand it correctly. The $59 million contingent payments years two to three after closing, that's based solely on partner retention, right? The earn-out of $71 million after 2023 is based on, as you say, your revenue and profitability targets. Somewhat two different strike points. What's the kind of baked-in growth needed for the earn-out? Does 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 to trigger, of course. You're correct in the way that you lay down. 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. That's where we are looking for. That's our base case, right? That's the base case for us, I think, looking into the future, and to continue to have Moneda 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. The numbers that you're seeing is the max out numbers. The numbers are higher than that to achieve the BRL 71 million. 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, there's a band of money that will be paid. The max out number, just to be clear, is the BRL 71 million. Of course, it's higher than these past numbers that we just mentioned on the phone here today. Of course, you have the second part, which is just retention. Of course, then it's not linked to a performance metric. It's linked to working with us all the way down 2 to 3 years down the road. Great. Just one quick follow-up on the potential earn-out, the $71 million. Is that kind of a one-time payment after 2023? Is that kind of the aggregate payments that would be paid over some period of times after 2023? It's paid out of 2 exercises over the period. Yeah. I think if we do Now, of course, this is a base case, right? If we do manage to close the deal by year end, year end 2021, which is our current projection, if everything goes as planned, then we're talking about performance metrics for 2022 and 2023. Together they then add to these growth patterns that we mentioned, and one of those patterns could max out at $71 million by the end of 2023. That, of course, we're going to measure with the audited numbers beginning of 2024. Okay, great. Thank you for taking my questions. No, no. It's okay. Thank you. Our next question comes from the line of Marcelo Telles with Credit Suisse. Hi, good morning, everyone, thanks for your time. I have one follow-up question regarding the recent growth rate of Moneda. At least looking in their website, it looks like the growth in assets under management was only at 2.7% in 2020. I was wondering if you could elaborate upon that and if you can provide us what has the growth been, let's say, year to date. Also, if you can comment a bit on what was the amount of net inflows that Moneda had in 2020 and perhaps the first half this year. The other question tied to that is, I think the AFPs in Chile account for a little over 40% of the investor base of Moneda. When you look at the recent growth of AFPs in Chile, it seems that at least in dollar terms, I think the last 2 years, I think the growth was probably negative, about 1% in dollars. I think in Chilean pesos, probably around 4% growth. They don't seem to be growing that much. How do we reconcile that, the expectation of double-digit growth that you mentioned? Yes. Hi, thank you. Do you want to take the first part, Marco? Yeah. Hi, Marcelo. This is Marco. As I mentioned. Hi, Marco. probably what you're looking at are financial figures that are partial to Moneda, which are the ones that have been posted on their website. 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. 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 AFPs 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 AFP system is going to grow in between 7.5% and 10% per annum. There have been some COVID-related withdrawals on the AFP systems. Actually, two withdrawals that have been relieved by the government in order to make front to the COVID situation in the region, like in many other countries. We don't think that that's in any way a trend. The Chilean AFPs have been pioneer in not only growing into the alternative asset space, but investing internationally relative to Chile. That makes us very comfortable. Okay. Thank you. Yeah. My question was, in terms of the AFPs, right? The last five years in dollars, it's been growing a little under 5%. You think it's going to be 7%-10% going forward? Yeah. We look the allocation to 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. For us, I think the most important is the allocation to alternatives. We see the allocation to alternatives growing because they need yields, as most pension funds around the world do. They can't find yields in a normal mom-and-pop kind of fixed income instrument, so they go into other instruments. 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 pocket. 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, but 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 now, $17 billion yielding negative nominal interest rates. I'm not talking about negative real interest rates, I'm talking about just negative nominal interest rates, and in Chile is 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. Just going back to the first point, if I may. The 2.7% growth that I see in their financials, I think we're going from $7.3 billion to $8 billion. Those are the numbers that I see in the finance, which is, I know, I think it has a little over $10 billion currently. You think the growth is not low single digits. We're saying like 2020, you cannot disclose, but you're saying the growth in 2020 is- That's under management for Moneda. Well, if we were to look at the last 18 months, let's say, because we are in the midst of 2021, we would see a decent AUM growth across all the platforms. Which again, we're not disclosing at this time. But it's- Why not? Why not disclose them? Yeah, again, it's a private company, and they have all of these different Moneda instruments and funds that are not the ones based in Chile that I think is the ones that are available in the website. I think what align with what we agreed with them is that their last 18 months growth has been consistent with their past growth, and that's what we have been seeing. Okay. All right. Okay. In addition, Marcel, just to complete, at this point, we have just signed the deal we're heading to the closing, we don't want to take commitments to the disclosure metrics before getting into some more details especially providing disclosure metrics relative to the past. We want to make sure that we get it right in the disclosures metrics that we'll be offering to you. Okay. That's fair. Thank you very much. Oh, thank you, Marcel. Thanks for your patience. Thank you. Our next question comes from the line of Domingos Falavina with J.P. Morgan. Your line is open. Please go ahead. Thank you. Good morning, everyone. Congrats on the meaningful transaction, for sure. I got a little lost here and I confess it took me a little bit to actually get the presentation here to work. Apologize if you touched on this already. Two things. The first one is, I just wanted to get a sense, kind of the notional risk with the pension withdrawal. I'm not super up to date, but I believe it was passed early, September 2nd, in the constitutional committee. It's going to hit the floor. There is discussions about an additional withdrawal. Sort of in the total AUM, you didn't break down on asset class. I'd like to know on product types to see if there's a 20% or 30% withdrawal, any kind of number you could provide us what kind of AUM is under risk. The second one I heard just now the sentence, the last 18 months, the growth has been consistent with the past. Can you just give us, like, an idea, like the last AUM, how that compare versus year-end 2019, if it grew, if it shrank? We're all kind of touching around the same center point, which is, there has been several redemptions, and the data you provided is implying consistent growth and we're trying to understand where exactly is the V shape and if it recover and so on. Okay. Well, thank you very much. Nice to talk to you. This is Alex here, and I think the first part of your question, we'll 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 what's going on? Or what went on, actually? Yes, of course. Can everybody hear me? Okay. Hi, Domingos Falavina. Luis Fernando Lopes here. Our information, we've been following everything that matters in terms of pension plans and pension funds in Chile. There has been more than 1 suggestion to authorize yet another withdrawal from pension funds, but all of them have been shot down, actually. The intuition that we have in Chile is that if the economic and the public health situation were deteriorating, there should be room for yet another withdrawal. Exactly the opposite, which is happening there. Chile is leading the region in terms of maximum rollout. GDP growth is estimated between something between 10.5%-11.5% real growth this year. There would be no need for another withdrawal. Actually, the suggestions that are coming from not only the constitutional convention, but if you look at the platform of the major three presidential candidates, Castillo, Boric, and Yasna Provoste, they are going to increase the contribution to the pension system. 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 pension plans. The discussion is whether it is going to be pure based on the private system, private management as they have right now, or if they are going to create a government entity to do part of this allocation of resources, et cetera. We are constructive on the pension plans. We 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. If you net out what happened in 2020 and assume that the trend was consistent with the past 5 or 10 years, the AUM has a very steady and robust growth, and that's why the AUM of the pension system as a whole is nearly 9% of GDP. We are far more constructive on this front. You're telling me that on September 2nd, there was no approval on the constitutional committee to have an additional withdrawal? There was a proposal, but it was not implemented. It was approved, from my understanding. It was approved even by opposition. 7 opposition deputies voting in favor. No, that one. We can take this offline. Okay. The AUM that is basically exposed to this withdrawal as a percentage of total AUM, I don't think we got this number. 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. Any depreciation of the asset coming from the asset per se or for the currency will affect for the good and for the bad. That's where you're going to see volatility in the recent period. The net new money that is coming through has been very consistent, and that's the consistency that I wanted to. I think this is where some of the confusion from the numbers can come through. 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 reais, in Colombian pesos, et cetera, 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 2020. In addition, the currency devalued or weakened against the US dollars in that moment. As the year progressed in 2020, the assets prices recovered, some of these currencies actually then strengthened vis-a-vis the US dollars. You have this movement of the price of the asset itself and the currency. By the end of the year, the net new money coming in was consistent with the past. You had this 2020 volatility that we were mentioning. When you look at the number, there is these other factors that we just mentioned to count on. 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. Thank you very much. Thank you. I'm showing no further questions, and I would like to turn the conference back to the CEO, Alexandre Saigh, for any further remarks. 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, and we're very pleased that the 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 the foreseeable future, already accretive from day one for our firm. Getting Patria more exposed as a whole to other countries in Latin America. Very consistent what we were saying during the IPO, other products, other currencies. Having this and being even more dominant in the region. 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. We'll be talking with each of you, I think, in a more individual basis as we move forward during this week and next week. Thanks again. All the best. This concludes today's conference call. Thank you for participating. You may now disconnect.