Good evening and welcome to the Vinci Partners Q3 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A session, and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Anna Castro, Investor Relations Manager. Please go ahead, Anna.
Thank you and good afternoon, everyone. Joining us today are Alessandro Horta, Chief Executive Officer; Bruno Zaremba, Private Equity Chairman and Head of Investor Relations; and Sérgio Passos, Chief Financial Officer. Earlier today, we issued a press release, slide presentation, and our financial statements for the quarter, which are available on our website at ir.vincipartners.com. I'd like to remind you that today's call may include forward-looking statements, which are uncertain and outside of the firm's control, and may differ from actual results materially. We do not undertake any duty to update these statements. For discussion of some of the risks that could affect results, please see the Risk Factors section of our 20-F. We will also refer to certain non-GAAP measures and you'll find reconciliations in the release.
Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Vinci Partners fund. On results, Vinci generated fee-related earnings of BRL 53.8 million, or BRL 1.02 per share, and adjusted distributable earnings of BRL 57.1 million, or BRL 1.08 per share, for Q3 2024. We declare a quarterly dividend of BRL 0.16 on the dollar per common share, payable on December 5th to shareholders of record as of November 20th. With that, I'll turn the call over to Alessandro.
Thank you, Anna. Good evening, and thank you all for joining our call. We are very pleased to join you today as we announce results for Q3 2024. To kick things off, let's start with a brief overview of our results for the quarter. Vinci reached $70 billion in AUM, posting an 8% year-over-year growth. Our efforts in raising capital for private market funds continue to boost our AUM and FRE, with highlights this quarter to a little over BRL 0.5 billion in additional commitments, including the first coming from a global investor in our credit infrastructure. We also saw positive net inflows in our public equity strategy, which we will provide more details further in the call. While during this quarter, growth was more measured, we anticipate a strong finish to the year.
We expect final closings for VCP IV, securing additional commitments for VICC and Credit Infra, and completing the first closing for SPS 4. While interest rates in the U.S. are on a downward trajectory, Brazil's central bank is expected to implement modest rate hikes to continue to keep inflation expectations under control. Despite these circumstances, Vinci continues to excel, especially when it comes to fundraising in private markets, standing resilient in a market where many asset managers, limited to single strategies, have struggled to remain competitive. In that sense, we are getting to a point where the recognition of the brand and attractiveness of the platform has put us in a different position from other local and regional players.
We had seen a similar evolution in the U.S. and European alternative asset markets, with the sector displaying bigger concentration around the larger names, and we are starting to witness the same phenomenon in our Latin American market. Moving on to our segment, earnings. Distributable earnings reached BRL 57M in the quarter, reflecting a 12% year-over-year increase on a per-share basis. These results highlight our firm's robust trajectory and position us well to continue delivering value and growth. Shifting to some very exciting news since the end of the quarter, last week we announced the closing of our combination with Compass. This begins a historic transformation for our firm that will redefine our future. The combination with Compass marks the official establishment of a leading pan-regional alternative asset manager with a first-class diversified product offering, with all major strategies across the alternative scope, where local, regional, and global investors can find a full suite of products.
With the combined platform of Vinci and Compass, we have established one of the leading content providers for alternative investments in Latin America. This strength, paired with the extensive distribution capability we possess, creates a formidable presence across the region. Together, we serve a vast and diverse client base of more than 2,600 LPs, spanning both institutional and high-net-worth investors. Compass brings $41 billion in AUM as of September 2024, reflecting a significant 10% growth year-to-date from BRL 37 billion at the close of 2023. This strong expansion underscores the dynamism and strength of the Compass platform, now part of our combined vision to deliver unparalleled investment solutions across Latin America. The combined platform managed $54 billion in AUM as of September 2024. As we have disclosed when we signed the transaction in March, we needed to secure regulatory approvals across multiple Latin American countries, each with its own processes and requirements.
We are pleased to report that the required steps for closing unfolded smoothly and according to our anticipated timeline. The integration process has been progressing exceptionally well, underscoring the strong cultural alignment and shared vision between our teams. We have been working together in close partnership, leveraging each other's strengths and expertise to create a cohesive united platform. For instance, we have already seamlessly combined operations into single consolidated offices in both São Paulo and New York, cities where both companies previously had independent locations. A significant milestone resulting from this integration is VCP IV's most recent achievement, securing its first commitment from a Mexican LP, following successful roadshows across Chile and Mexico by our integrated teams from Vinci and Compass.
This accomplishment is a direct outcome of the combined efforts and the expanded reach of our joint platform, illustrating the real value and growth potential that this integration brings to our investment network and strategic initiatives. We expect many more cross-selling opportunities in the future, with commitment indications for the first close of SPS4 to be held in the Q4. Join us on November 25th for an extraordinary call where we will delve deeper into the combination, provide integration and synergies updates, and outline our strategic vision for our combined platforms as we move forward. Moving on to a more recent announcement, the acquisition of Lacan early this week. This acquisition will allow Vinci to launch its forestry strategy. We believe forestry is a complementary investment strategy to our current roster of solutions and for which we have a positive long-term view.
Lacan is a prominent timberland investment management organization in Latin America, with BRL 1.5 billion in AUM, distributed across three vintages, with the fourth currently in fundraising. Their deep expertise in this area makes them the ideal partner for this expansion, with a proven track record that sets them apart, and we are excited to offer our clients a new investment strategy. Lacan's team manages 130,000 hectares of planted land and an additional 31,000 hectares of preserved areas. Their extensive experience and commitment to sustainable forestry practices align perfectly with our vision of impactful long-term investment. This acquisition brings Lacan's people into Vinci's fold, led by founder Luiz Augusto Candiota and a senior leadership team that has successfully managed multiple forestry assets for over a decade.
With a diversified portfolio that includes greenfield and brownfield projects in eucalyptus, pine, and native forests, Lacan's presence strengthens our capabilities in real asset investments and provides a new avenue for growth. The strategy provides us with the potential for sustainable value creation in an underserved market, and we believe that with Lacan's seasoned team on board, there will be additional opportunities to expand the strategy into other Latin American markets in the future. We structured the transaction with a cash payment upon closing, which took place last Monday, and additional cash considerations in a period of up to four years, contingent upon fundraising and incremental management fee revenues. We expect the acquisition to favorably impact our AUM and segment results for Q4 and into 2025, and the transaction is expected to be immediately accretive to FRE per share and DE per share.
To finalize my remarks, I would like to reinforce that these transactions aren't just milestones. They mark the beginning of a new era for Vinci Partners, establishing us as the gateway to alternative investments in Latin America. We believe these movements solidify Vinci's status as a leading full-service player in Latin America, uniquely positioned to capitalize on the region's high growth potential for alternative investments. This is one of the topics we want to convey in our call on November 25th, and we hope to see you there. We will discuss the key aspects of our M&A activity so far, delve into further details on the Compass business, team, and integration process, and provide our strategic vision for the coming years as we grow into Latin America. Thanks again for joining our call. With that, I would like to turn the call over to Bruno.
Thank you, Alessandro, and good evening, everyone. I'll start by covering our fundraising efforts. Starting with public equities, we saw positive net inflows this quarter coming primarily from institutional investors. Our mosaic of strategies secured additional commitments from an offshore institutional investor, a sovereign wealth fund, with a long-standing relationship with Vinci. We share with this investor the view that Brazilian equities are extremely undervalued from a historical perspective against more developed markets and are currently at an interesting entry point for medium to long-term investors. As we have been talking with our investment prospects, Brazil is currently two standard deviations from the mean when you compare the market's price-to-earnings multiple to that of the S&P 500. Brazil's economy has been growing strongly post-pandemic, while the stock market has been practically stable in reais since the beginning of 2021.
We are thrilled with the growing momentum of this strategy and the strong interest from international investors. For this reason, we have designated it as one of the priorities in our fundraising efforts in collaboration with Compass. As we consistently highlighted in previous communications, we anticipate a recovering capital raising as soon as the market presents an opportunity, fueled by our strong long-term track record and deep enduring relationship with our clients. In contrast, the IPNS segment continues to experience outflows in the Q3, primarily driven by withdrawals within our separate mandate strategies. The record-high real interest rate levels in Brazil have prompted some rebalancing across clients' portfolios, and this led to some revocation of mandates that were under our control. Meanwhile, our commingled funds, which feature higher fees, have shown redemptions tapering off during the quarter.
IPNS remains a more cyclical part of our business, with a more direct connection to fluctuations in short-term interest rates. With the recent interest rate hike cycle, it is likely that the group will face headwinds for some additional time. Shifting to our retirement service vertical, we are seeing increasing inflows for Vinci Retirement Services following the launch of our new platform, Mio Vinci Partners, in the first half of the year. We're excited to share that Mio has recently launched several new investment strategies in collaboration with some of Brazil's top asset managers. Among these, three new pension plan funds were created in partnership with Vinci's IPNS and private credit teams, marking a significant expansion of our retirement-focused offerings. In addition, Mio was chosen by BlackRock as its partner for the introduction of its first retirement strategy in Brazil.
This new equity index fund, specifically designed for retirement, was successfully launched in September, further strengthening Mio's position in the retirement space and underscoring our ability to attract leading global partnerships. We believe there are significant opportunities for VRS to further penetrate Brazil's traditional pension market by introducing the technology innovations that address the market's current fragmentation and lack of integration. The conventional pension model in Brazil is heavily analog, often requiring multiple agents, such as managers, insurers, and distributors, with limited collaboration among them. This setup restricts investors to a single discretionary strategy per pension fund, making portfolio diversification challenging without holding multiple accounts. We have witnessed strong feedback to Mio's solution in the marketplace and are currently participating in several processes to absorb corporate pension plans in our solution. We expect to continue to see growth accelerated in the platform in coming quarters.
Now, let's move on to our fundraising efforts in private markets. During the Q3, we received a new commitment from a Latin American LP into Vinci Credit Infrastructure Fund under our private credit segment, marking the first capital subscription from an international institutional investor for this fund. This milestone is particularly exciting, and we remain optimistic about future commitments from this channel. In the Q3, Vinci Credit Infrastructure raised $215 million, primarily from this LP, but also from our allocators and distributors channel. Demand for the fund remains strong across multiple distribution channels, and we will continue our fundraising effort for Vinci Credit Infrastructure throughout the end of 2024 and into early 2025, bringing it closer to our target of BRL 2 billion. Within the private credit strategy, we also launched a new strategy this quarter, a new receivable investment fund, or FIDC.
This fund has been well received by allocators and distributors, with BRL 100 million raised so far and continuous flows every day. These achievements reflect our effective execution of Vinci's strategic plan to expand in private markets and highlight our ability to navigate complex economic conditions while consistently delivering results. The credit inflow on our platform is in line with trends at Compass, where we are also seeing exceptionally strong fundraising in fixed income and credit products. Now, turning to our infrastructure strategy, VICC reached a significant milestone of BRL 1.5 billion in total commitments, driven by strong interest from allocators and distributors this quarter. This fund has already started to deploy capital and has a robust pipeline for the upcoming quarters. This pipeline is positioned at return levels exceeding the fund's targets, supported by a very favorable investment environment.
The market environment continues to be favorable for capital deployment, and the fund remains on track to achieve its targeted total commitments of BRL 2 billion. We anticipate a final closing for VICC in the Q1 of 2025. VCP IV, within our private equity strategy, is also gearing up for final rounds of fundraising in the Q4. We continue to receive record-breaking capital subscriptions from local institutions, marking the highest level seen across all VCP vintages. As Alessandro highlighted, the integration and collaboration with Compass has been very productive, and we are already seeing the positive outcomes of this partnership. In October, we secured our first commitment from a Mexican LP within the Compass distribution channel, a significant milestone that represents the initial investment in VCP from this newly integrated distribution network. This client not only indicated the commitment to VCP, but also is expected to underwrite SPS4.
This marks an exciting new phase for VCP IV, as well as for other Vinci products, as we expand our reach and leverage the strengths of our combined platform. Still on the topic of VCP, we are delighted to inform that VCP III has announced its first partial divestment of our portfolio company, Farmax. This divestment, achieved in under three years since the acquisition of the company, will allow the fund to return over 80% of the capital initially invested in the asset at 27% IR. This transaction underscores the private equity team's vision in leveraging opportunities to drive strong returns and create substantial value to LPs. Portfolio companies in VCP III are growing revenues and EBITDA at annualized rates of 30% and 29%, respectively, since the inception of the fund. This should lead to additional opportunities to return capital at interesting levels of return to our investors.
Moving on to SPS4, this fund remains one of the top priorities in our collaboration with the Compass team, as we work to integrate selected Vinci funds onto their distribution platform. This vintage is attracting substantial interest from international investors, and we anticipate securing the first round of commitments from both local and international investors in the Q4. The strategy has posted a historical 20% net annualized return in dollars across its first three vintages, which presents a very compelling level of risk-return and above what we typically see for opportunistic credit funds in developed markets. Wrapping up, it's clear that the momentum is strong across our private market strategies, with all major asset classes actively fundraising for its flagships. SPS4, in particular, presents a substantial opportunity to boost FRE growth in 2025.
Additionally, Lacan is currently in the fundraising process for its fourth vintage, and we will immediately integrate the investment team into our distribution platform to help them successfully raise the fund. This includes introducing the strategy to new local institutions such as municipalities, as well as reaching our foreign investor base, including both global investors and Latin American LPs from the Compass network. All of these fundraising drivers position us well for continued growth and expanded reach across our private market offerings. With that, I'll turn it over to Sérgio to go through our results.
Thank you, Bruno. Let's start by covering management and advisory fees. Fee-related revenues totaled BRL 112.7 million in this quarter, reflecting a 5% year-over-year increase. Focusing on advisory fees, we had a strong quarter with BRL 6 million in revenues. Year-to-date, advisory fees have generated close to BRL 28 million in net revenues, underscoring the solid momentum in our corporate advisory segment. We are confident in exceeding our annual target of BRL 30 million in net advisory fee. Despite a subdued IPO environment, our corporate advisory business has consistently delivered strong results. As market conditions improve, we believe we will be well-positioned to make an even greater impact on our overall results. Turning to management fees, we observed a 2% year-over-year increase. However, when you take out catch-up fees from both periods, management fees grew by 9% year-over-year, reflecting strong new commitments in private markets.
This variation is due to the fact that, while this quarter did benefit from retroactive fees associated with capital raises in VCP IV and VICC, catch-up fees were substantially higher in the Q3 of 2023. Fundraising for VCP IV and VICC in infrastructure will continue to come through in the Q4 of 2024. Both funds include retroactive fees clauses, which means new commitments will generate fees from the fund's inception dates. This feature could positively impact our financial results in the coming months. Turning to FRE results, Q3 year-to-date FRE totaled BRL 169 million, or BRL 3.19 per share, representing a 14% year-over-year increase on a per-share basis. For the quarter, FRE reached BRL 53.8 million, or BRL 1.02 per share, up 7% on a per-share basis.
We anticipated a continued upward trajectory in FRE growth, driven by several key factors: new commitments in private markets, the impact of retroactive fees, a strong pipeline in our advisory service, and, as Bruno mentioned, the inclusion of Lacan’s and Compass figures starting in the Q4. Shifting to expenses, our year-to-date margins have improved by 100 basis points on a year-over-year basis, reflecting our commitment to cost efficiency and disciplined expense growth. Notably, when excluding the VRS strategy, our margin for Q3 of 2024 year-to-date stands at 52%, compared to 50% for the same period in 2023, representing a solid 200 basis points increase. Our core business continues to uphold strong margins and demonstrates remarkable resilience, even amidst the challenging conditions of the past couple of years. This accomplishment directly reflects our focused efforts in private market fundraising and rigorous cost management.
Regarding non-operational expenses, this quarter includes some costs related to our M&A activities, mainly attributed to the closing of MAV acquisition. However, we anticipate a larger amount in the Q4, around BRL 35 million, primarily due to the closing of the Compass combination and the associated transaction costs, and also expenses related to the Lacan acquisition. These are one-time costs solely attributed to transaction costs closed in the Q3 and Q4. Turning to FRE results, it's worth noting that most of our open-end funds charge performance fees on a semi-annual basis, with revenues recognized in June and December. As a result, the Q1 and Q3 typically reflect lower levels of performance fees from our domestic open-end funds. For this quarter, performance fees were primarily recognized in our public equity segments, as the challenging local market conditions have impacted the performance of liquid funds.
However, we are well-positioned for future growth, with over BRL 16.5 billion in performance-eligible assets under management across IPNS and public equities, offering a substantial potential source of performance fees as market conditions improve. Additionally, gross accrued performance fee in private market funds reached BRL 308 million by Q3. While performance fees from liquid funds may impact earnings in the near term, we expect private market performance fees to begin materializing as these funds mature, providing a longer-term earning boost. To wrap up, I would like to cover our distributable earnings. Adjusted distributable earnings totaled BRL 57.1 million in the Q3, or BRL 1.08 per share, representing a 12% increase year-over-year on a per-share basis. Distributable earnings benefited from realized financial income this quarter. Our liquid cash position generated BRL 15.2 million in the Q3 of 2024, a 26% increase over the prior year.
In closing, I would like to once again emphasize the positive outlook for fee-related earnings over the coming quarters and the strong momentum we are experiencing as a firm. We remain committed to generating shareholder value through both organic and inorganic growth opportunities. With that, I would like to close our remarks and open the call for questions. Once again, I would like to thank you for joining our call. Please, Operator, you can proceed with the questions. Thank you.
We are going to start the questions and answers session for investors and analysts. If you wish to ask a question, please press the button "Raise Hand." Wait while we poll for questions. Our first question comes from Pedro Leduc with Itaú. You can open your microphone.
Good evening, everybody. Congrats on the quarter. Thank you for taking the question. First, on the Lacan, congrats on the acquisition there. Can you talk us a little bit more about the ambitions that you have for this vertical mid-long term, perhaps in AUM or geographies or the subproducts within that can be explored? And then the second question, a bit more on the numbers itself, the personnel expense and other G&A line, went up a little bit. It's gone up a little bit year-to-date as well. I know there's some non-organic effects there, but if you can talk us a little bit more about the expense line, especially for the mid-long, at least Q4 and then year ahead. Thank you.
Hi, Pedro. This is Alessandro. Thank you for your question. I'll take the first portion of your question regarding Lacan. As you mentioned, we are very enthusiastic about and excited about the prospects of Lacan. As you know, this is a market where not just Brazil, but Latin America has a huge competitive advantage. And now, with the carbon possibilities for the assets, we can even enhance the interest coming from our investors, not just by the regular returns of the forest assets, but also with their carbon markets related to these assets. We do not have a precise target, but we evaluate that we can reach in this vertical without a lot of investment and the capacity, and taking into consideration the capacity of the team today, that we can reach around $1 billion of AUM, something near R$6 billion from R$5.5-R$6 billion.
In terms of geographies, first, I will talk a little bit more about the source of the capital that today for Lacan is basically local money. And we expect that already in the Q4, that it's under its fundraising, we will have some international LPs coming. So we are expanding the base of the LPs. And in terms of investment, for now, we'll keep the current strategy of focus in Brazil because there is a huge space to continue to deploy this capital. But in the future, we think this could be a regional and even global type of strategy. And especially in terms of Latin America, we see there is a potential to expand further than Brazil. In other countries, there are a lot of possibilities, for example, Uruguay, Paraguay, Chile, and so on.
That's great, Artur. Thank you.
Okay, Pedro. This is Bruno regarding our second question. I think the only outside effect that we had was incorporation of MAV that affected the Q3. So we closed that deal earlier, and that had an effect on a year-on-year basis. But other than that, the underlying trends below the acquisition of MAV or on top of the acquisition of MAV were basically related to inflation. So we had salary corrections that were in line with the, I mean, inflation. And we had some health costs, health plan costs that were a little bit above inflation. But I would say nothing else on a relative or relevant basis that I would point out at this point.
Thank you.
Next question from Ricardo Buchpiguel with BTG. You can open your microphone.
Hi, everyone, and thank you for the opportunity here to make questions. I have Chu here on my side. So first, can you please update us on the fundraising for VCP IV and how has been the demand picking up, especially for foreign investors, as I imagine was a little bit more of the focus now in this particular product? And also, we noticed the first time we saw in a quarter for a few quarters that we have like positive net inflows in the public equity segments. So I just wanted to hear your thoughts, if you believe this could mark like an inflection point or the recent market rotation we saw in the following months could eventually put this vertical back on the negative territory in terms of inflows. Thank you.
Thank you, Ricardo. This is Bruno. So on VCP IV, we are getting to the finish line. We expect to wrap up the fund by the end of the year. We do have still interest pending from international investors, and a few of them are in due diligence with us at this point. We would expect them to close by the end of the year. I think the highlight over the past few quarters has been a very strong interest from local institutional investors. So I think this was really a point that we made in the preparing remarks part of the call. It has been, I would say, probably the most significant surprise this time around. This fund is going to have a different balance from a local and international LP standpoint, from the participation of the two where more kind of half and half in this fund.
Historically, this has been more around 70% plus from international investors. I think this has a couple of interesting indications to the future. The first is that the asset class is becoming more and more known in Brazil, and this is good because it allows us to grow the amount of LPs that we have access to. And hopefully, these LPs that came in VCP IV, and some of them actually already re-upping from VCP III, they will be satisfied with the strategy and the returns and will come back in future vintages. I think this is an important point. And the second important point is that we are able to generate more potential carry in local currency. This is good because it creates more certainty on the carry because we are not against the dollar in this part of the fund.
Obviously, with the dollars, you have another variable in regards to future carry results. And having more of the fund in reais, I think that's also positive because it creates more certainty around carry collection in the future. We expect VCP IV to wrap up by the end of the year. Regarding equities, we did have positive inflow in the Q3. This is coming from international investors. I think there has been more and more of a viewpoint internationally that the valuations of Brazilian securities are really very cheap. This is something that we have been talking with investors quite a lot over the past, I would say, probably a year and a half or two years. And it's starting to hit home in terms of people really understanding and seeing this as being an interesting opportunity. We had the first inflow now.
We expect, as we also mentioned in the prepared remarks part, we expect equities to be one of the leading short-term opportunities with the combination with Compass. So what we're doing now is that we're launching UCITS platform funds for our equity strategies. So we're going to have one that is going to be Brazil-centric, that we're going to be more aligned with our dividend strategy. And then we're going to launch also a new revamped Latin American strategy in equities with the leadership of Roberto, who is our Head of Equities here at Vinci. He's going to lead that effort. And we're very optimistic about these two products. So for the Brazilian UCITS fund, there is apparently already some demand from pan-regional institutional investors. And basically, they have big exposures to passive index funds. And we're going to try to convert part of that into these active strategies.
And then in LATAM, Compass, at some point in time, a few years ago, it was a very, very big player in equities, LATAM. And we believe with the combination of our strengths, we can recover that position. So it's another part of the effort that we have with Compass on the equity side.
Very clear. Thank you. Thank you, guys.
Next question from Beatriz Abreu with Goldman Sachs. You can open your microphone.
Hi, Alessandro, Bruno, and Sérgio. Good evening. Thanks for the call. I have a couple of questions. The first one on management fees. What was the amount this quarter of retroactive fees if you could share that? And also, I know that Bruno just talked about the expected additional closings in VCP IV, but if you also could comment about expected closings and the timeline for the other flagship funds that you're fundraising for, that would be great. I'm just trying to get a sense here of for how many quarters more should we expect retroactive fees to be kicking in or not in management fees, right? And then my second question is a follow-up on Lacan. So you mentioned that you're looking to raise the fourth vintage already. What are your expectations regarding timing for this?
And if you could share maybe the sizes of the last vintages for Lacan, just to get a sense of how big that new vintage can get? Thank you.
Okay, Beatriz, thank you so much for the question. So on the retroactive fees, this quarter, we had BRL 3 million flat. So it was really BRL 3.0 million. It was a slower quarter from the funds that had the retroactive fee impact on the numbers. Remember that the second quarter, I think we had a more relevant impact. And also third quarter of last year, we had a more relevant impact. This was a slower quarter. We are still going to have impacts with these additional commitments in VCP IV. If they do come through, they might be material. And then VICC, which is the other fund that we have open, today we have an outlook of closing that fund in the first quarter of next year. But it's possible, depending on demand, that that is still extended a little bit more.
Today, we are at the end of the first quarter, but it might, let's say, might push forward another three months or so, so it could be middle of next year, so those are the two funds that we would expect to have still some retroactive impact for us. Additional significant closes, I think the next now in the fourth quarter, the big one that we have expectations at this point is SPS, so SPS, we have been working with investors in this fund for closing over the past few months. We are in a position now that we're starting to get the subdocs for the first close of the fund. Last fund, the last fund of SPS, Fund 3, was around BRL 1 billion, and we expect the first close of SPS to be above the total size of Fund 3.
So that's the expectation at this time, which obviously would be a very, very good indication. We still have by the end of 2025 to work in SPS 4. And starting with a first close above Fund 3 size, obviously, is a very, very good start and very good indication of what we might be able to get for Fund 4. In regards to Lacan, we are combining with them, let's say, at a moment where they had already started their fundraising for Fund 4. So they already have some commitments. They have commitments that are already signed, and some of them are conditioned to minimum sizes, which is something that we see mainly from international investors. They don't like coming in at a size of fund that is too small. So some of these commitments are conditioned to the fund reaching a minimum size.
We have both of them at this moment in Lacan. I think combining with Lacan and having Lacan access our international distribution platform is going to be very positive. Remember that obviously we were talking about VICC. We have been raising VICC for the past year. VICC is a climate-related impact fund in infra, Article 9 fund. And Lacan's fourth fund is also Article 9 and also is now in the new vintage more of a climate-related fund. We're going to start exploring carbon credits in the fund as part of the return. So we have already good experience in discussing climate-related investments in Brazil because of VICC. And we believe this is going to be very positive for Lacan 4 as well. It might lead to good LP conversations and potentially some of them might have interest in joining Vintage 4 for Lacan.
The size of Lacan today, the official target of the fund is about 800 million. Obviously, we would like to do more if possible, but the size that we are targeting at this point is 800. Today, we have commitments that are around a third of this already with very strong visibility. And we're going to work with the management team there to raise the rest over 2024, sorry, over 2025.
Beatriz, that's a lesson just to complement. We have the first three funds, they are $1.5 billion in total. The first one's around $350 million or so. The second, around $400 million-$500 million. And the last one, around $600 million-$700 million.
Perfect. Thank you, Bruno and Alessandro.
Next question from Guilherme Grespan with J.P. Morgan. You can open your microphone.
Hey, good evening, everyone. Thank you for the presentation and congratulations on the results, especially given the market conditions. Just one question on IPNS. We saw again a little bit of outflow there, BRL 1.2 billion outflows. I think it's the same product that continues to see the outflows is the pension strategy, right? If I recall correctly, it's mostly retail-driven. Just want to get your thoughts going ahead. We should have a select going up again, probably. I tend to imagine it's a headwind to the strategy. So how you guys are seeing the evolution of the strategy, if we should continue to see some outflows going forward, or if you see at some point stabilization or even a growth in there. Thank you.
Grespa, this is Bruno. So the trend, they changed a little bit. So in the past, I would say since the middle of 2023 until the middle of 2024, we saw a stronger outflow from the commingled fund, so the pension funds and other commingled type vehicles. In the third quarter, this trend changed a little bit. So we had less redemptions from the commingled funds, so pension plans and commingled funds, and a bigger impact from very specific mandates that we lost that were very low fee paying. And that had a bigger impact than we had in other quarters. So on a revenue standpoint, I think the withdrawals that we had in the third quarter, they are less significant than what we saw before. In the immediate future, we had some big wins in the separate mandate sides.
It's not very clear if we're going to be able to put all of them in by the fourth quarter, but we're working on that. The mandates have already been won. It's a matter really of transferring the funds into our custody. We're working hard to have them all in the fourth quarter. So the separate mandate side, we expect to see at least a moderation on the negative impact. And then on the commingled funds, although the trend and the higher interest rate environment, as you said, clearly is not positive for this business line, the performance of our funds in the more recent past has been better. So as you saw in the financial income line for the third quarter, we had a good third quarter. These funds are basically partially the funds that we sell to our clients.
So, most of them or all of them, the difference that in the income statement, sometimes we have some hedges that in the funds we don't have. But in general, the performance of the funds, the funds have been better. We would expect with this better performance for the trends in terms of outflows to continue to moderate. Although without an environment of more constructive interest rates, it's very, very difficult to see significant inflows in IPNS. I think this is something that we have been waiting for, this turning point. I think we had a couple of quarters over the past 18 months that were a little bit better. I remember the first quarter of 2024 was a little bit better.
And then I think in the middle of 2023, we had another quarter, which was a little bit better, in which we had some actually positive inflow. But with the current environment, you're right, it's a strong headwind. So hopefully we can reduce the negative impact in future quarters, but without a more constructive interest rate environment, it's tough to see a lot of contribution.
That's clear. Thank you.
I would like to turn the floor back to Mr. Alessandro Horta for the closing remarks. Please, Mr. Horta, you may proceed.
So Gerald, I would like to thank you for your continued support and interest. Again, we'd like to express our optimism with the future, and we are very confident with our recent developments. We would like also to reinforce the invitation for our call on November 25th. So thank you again. Have a nice weekend.