Good afternoon. I'm Anna Castro, Investor Relations Manager. On behalf of the company, I'd like to welcome you all to Vinci Partners first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. To enter the queue for Q&A, please press the Raise Hand option on the Zoom tool. As a reminder, this call will be recorded. Joining today are Alessandro Horta, Chief Executive Officer, Bruno Zaremba, Private Equity Chairman and Head of Investor Relations, and Sergio 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 know that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Vinci Partners fund. With that, I'll turn the call over to Alessandro.
Thank you, Anna. Good afternoon, and thank you all for joining our call. We are extremely pleased to join you all today as we announce results for the first quarter of 2022. Adjusted distributable earnings totaling BRL 57.7 million in the first quarter, or BRL 1.03 per common share when adjusted for non-recurring expenses incurred in the quarter. This represented an increase of 22% year-over-year. Vinci announced a quarterly dividend of $0.17 per common share, totaling $0.83 per common share distributed as dividends since our IPO. We continue to deliver solid results thanks to our asset light and diversified business model, translating into substantial amounts of free cash flow and an attractive dividend distribution to our shareholders.
We ended the first quarter with BRL 57 billion in AUM, a solid result compared to the end of the fourth quarter of 2021, with no relevant outflows in the quarter despite the challenging macroeconomic scenario in Brazil. During the quarter, we also had the effect of capital returns totaling BRL 1 billion in our infrastructure strategy. In our liquid strategy AUM, we continue to display strong resilience as we have been discussing in the last few earnings calls. During the first quarter, we continued to face extremely challenging local markets. Public equities and hedge fund managers in Brazil have been impacted by approximately BRL 70 billion in outflow only in the first three months of the year, more than double the amount seen in outflows during the whole second half of 2021 when interest rates started its current tightening cycle.
Vinci, on the other hand, has increased AUM for liquid strategies quarter-over-quarter, and our segments margins for liquid funds remained stable on a year-over-year basis. Considering the last 12 months, FRE for liquid strategies has grown 17%, an outstanding expansion considering the increasingly tougher market for liquids in Brazil. Vinci is going through its second interest rate tightening cycle since our foundation in 2009, and we are proving that our business model is capable of going through tougher market conditions and not only remain resilient, but also deliver solid results and attractive dividends. We believe our diversified business model and long-term oriented investor base differentiates us from other asset managers in Brazil that are suffering from huge outflows as interest rates went up in 2021 and 2022.
If we go back in time from 2015 to 2017, we went through our first tightening cycle in interest rates as a company when real interest rates surpassed the 7% level and nominal rates reached over 14%. In that period, our AUM remained resilient and overall has grown threefold since then during the following interest rate easing cycle. We believe to be towards the end of the recent cycle of rising interest rates. Our expectation is that nominal interest rates should soon peak and over time, real interest rates to convert to neutral. The market in general currently considers neutral real interest rates in Brazil to be around 3.5%. In fact, Brazil is quite ahead of the global curve when we compare ourselves to other global economies.
We had made a relevant push in monetary and fiscal policies over the pandemic, both of which have been fully withdrawn in 2021. Interest rates have been rising since 2021 in Brazil, and as mentioned, we are close, if not at the end of this rising cycle, while most foreign economies are starting their cycles now following the rise in inflation. According to the Central Bank's focus report, we can expect inflation to return to 4% levels in 2023, since the government has anticipated a great part of the job during 2020 and 2021 with implemented policies such as the spending cap and Social Security reform, which should be followed by the decline in real interest rates for the near future until we reach an equilibrium stage.
While this may affect our ability to accelerate liquid strategies fundraising in the short term, we continue to have a robust pipeline of private market funds that are starting to raise capital this year and will push our AUM growth over the next 18 months. As we mentioned in our fourth quarter 2021 call, we have a total pipeline of target fundraising that adds up to BRL 10 billion. Starting in our private equity strategy, we are on track to reach our first close for VCP IV in coming months. In credit, we are launching a new listed fund, VCRI, the first step on yet another perpetual capital fund, which should be able to come back to market periodically for fresh capital. We still have in the pipeline for 2022 in credit, our first close for our closed-end fund focused on infrastructure debentures.
In infrastructure, we are also on track for our first close for our new strategy, VICC, a climate-related fund anchored in renewable energy, which should take place in the second half of this year. The outcome of this fundraising should have a very important impact for Vinci in terms of FRE and subsequently distributable earnings in the medium term. In parallel, our platform continues to deliver solid results from our core business with a relevant upside coming from financial income due to our significant exposure to fixed income bonds in the company's cash position. The fundamentals of the business remain intact. Despite short-term headwinds from a sharp interest rate tightening cycle, we believe the shift of allocation towards alternative investments remain a secular trend that we are more than able to capitalize upon as we offer the full suite of alternative investment options for investors in Brazil.
In addition, global allocations to Brazil continue to be substantially underweighted when compared to historical averages. This is true across all our asset classes from equities to private equity. The current strong commodity market backdrop should be favorable to Brazil as it benefits our trade balance, exchange rates, and GDP growth. We see continuous strong feedback from LPs regarding a potential rebalance of their portfolios towards the country. When we look into our FRE only for our asset management segments, taking out our more cyclical financial advisor vertical and our new effort in retirement service, which I will discuss in a few moments, we are looking into almost 10% year-over-year growth and a 51% margin. Our core business remains solid, and we should see substantial growth in coming years as we activate fees for private market funds raised throughout this year.
Across our platform, we see strong additional growth opportunities with all our listed vehicles fully deployed at this point and ready to come back to market, a strong value proposition for our IPNS clients, and strong performing liquid funds. The platform is ready to further accelerate growth as nominal interest rates peak in Brazil. Additionally, we believe there is a significant opportunity for inorganic growth through M&A. We are seeing an acceleration in the pipeline for M&A and are currently evaluating several potential opportunities. We are very proud of this quarter's outcome considering the market conditions encountered recently. We believe first quarter results are a testimony to the power of our platform, validating the resilience of our business in the most challenging and volatile of macro scenarios.
To finalize my remarks, I would like to go over a very exciting announcement that we made today of our new segment, Vinci Retirement Services. We believe some of the biggest challenges, as well as one of the main opportunities in the Brazilian financial market, is the education and the right incentive for investors to plan and build investment portfolios to achieve their long-term pension target returns. Based on our extensive knowledge in asset allocation and management, combined with our long-term vision, we decided to create a new segment within the company, Vinci Retirement Services or VRS. VRS will be a new segment within Vinci and will work to provide solutions for investors through robust and efficient technological tools, which the financial market currently lacks deeply alongside alternative distribution vehicles.
In conjunction with the service providers, we will provide investor education on the importance of a long-term allocation to achieve expected results. For this new initiative, we have appointed a specialized team in this sector focused on promoting innovation in these markets. VRS will be led by Vinicius Albernaz, our partner and former CEO of Bradesco Seguros and Bradesco Asset Management. We believe the pension plans industry in Brazil is an extremely attractive sector with over BRL 1 trillion in total addressable market, of which almost 90% is in the hands of the incumbent banks. We are ready to leverage our platform's powers and expertise in asset allocation to develop a tech-enabled segment, which in our opinion, has the potential to be extremely relevant to our company in the medium and long term.
Given the long-term vision and potential we see for this initiative, in addition to the digital nature and high growth profile we expect from it in the coming years, we believe VRS merits a stand-alone segment. Therefore, we have opened a fifth segment in our segment earnings section of the release, so shareholders can track our evolution in terms of AUM, revenues, and costs for the new initiative separately from our other already mature asset management segments. With that, I will turn it over to Bruno to go over our financial results.
Thank you, Alessandro, and good afternoon, everyone. Starting on slide nine, we ended the quarter with BRL 57 billion in AUM, up 3% year-over-year. During the first quarter, we had BRL 1.1 billion in capital return from FIP Energia PCH after a successful run of the mandate won for this fund in 2015 by our infrastructure team. The objective was to restructure the fund's portfolio and return capital to LPs, which was successfully completed this quarter. The excellent performance in this restructure adds to the already stellar track record of our infrastructure team. We closed in the first quarter a follow-on offering for one of our listed REITs, [VINO11] , in the office sector, which contributed with BRL 250 million in perpetual capital commitments for real estate AUM.
The offering was done through a pay-in-kind transaction, such as the one we did in our shopping mall REIT recently, as local markets have not been favorable for primary issuances so far in the REIT segment. Our real estate team has been extremely active and a pioneer in the REIT market for this type of stock transaction, being able to raise AUM even in a tougher market environment for primary offerings. We continue to see additional opportunities to raise capital through such structures in coming quarters. Moving on to slide 11, we go over accrued performance fees in our private market funds.
Performance fee receivable increased to BRL 104.6 million in the first quarter, a 3% increase quarter-over-quarter, driven primarily by appreciation in our VCP III strategy that currently totals BRL 84.6 million in performance fees or 81% of total fees. As a reminder, Vinci had BRL 8 billion at the end of the quarter in performance fee AUM coming from private market funds still in investment period that can further contribute to our accrued performance fees as these funds enter their divestment periods. We continue to see this as a significant long-term upside for distributable earnings and dividends. In slide 13, we go over management and advisory revenues in the quarter. Management fee revenues were up 7% year-over-year, following strong fundraising across private markets and IPNS segments through 2021.
Management fees for the last twelve months totaled BRL 422 million, up 33% year-over-year. Advisory fees accounted for BRL 3.7 million in the quarter and totaled BRL 55.4 million over the last twelve months, up 98% against the prior twelve-month period. Advisory fees are more volatile in nature as they are recognized when deals close, so we can have quarters with greater contribution from advisory, while others will build mostly upon our management fee revenues. As discussed in our fourth quarter earnings call, in 2021, we had a banner year in advisory, which will be difficult to replicate in 2022. However, we believe the growth in origination for new mandates will allow us to develop the business organically in the long term.
In slide 14, we have our operating expenses for the quarter and last twelve months. Total expenses represented BRL 48 million in the quarter, down 4% year-over-year. Over the last twelve months, expenses were up 21%, a limited expansion when compared to the growth in fee-related revenues in the same period, even with the new costs related to becoming a public company in 2021. Our robust platform and management teams allow us to raise AUM with very little added costs, which translates into higher margins as we expand the business. On slide 15, we present our fee-related earnings. FRE was BRL 43.8 million or $0.78 per share, representing a decrease of 13% year-over-year.
FRE in the first quarter was directly impacted by a lower advisory revenue quarter when compared to the first quarter of 2021, a stellar quarter for advisory. When we consider only our asset management businesses, FRE would have been BRL 44.5 million or a 9% increase year-over-year. FRE totaled BRL 216 million in the last twelve months, a 38% growth against the prior period. FRE margin for the last twelve months was 51%, an increase of 190 basis points against the prior twelve-month period. Management fees remained the main contributor to revenues, accounting for 81% of total revenues over the last twelve months, reiterating the relevance of FRE in the company's business model. Next, in slide 16, PRE was BRL 2.1 million in the quarter, down 68% year-over-year.
In the first quarter of 2021, we had an extraordinary performance contribution coming from international exclusive mandates in our IPNS segment. This becomes evident when we look into the detailed PRE results for the IPNS segment in slide 24 of this presentation, which Sergio will cover in more detail in a few moments. Another point to highlight is that most of our domestic open-ended funds charge performance fees semi-annually in June and December. Thus, first and third quarters are usually expected to post lower levels of performance fees seasonally.
PRE over the last twelve months totaled BRL 19.1 million, down 47% over the prior period, primarily due to the recognition of positive BRL 9 million in unrealized performance fees over the course of the last twelve months of first quarter of 2021, as opposed to BRL -5 million of unrealized performance fees this year's first quarter last twelve months. Realized performance fees were basically flat. Shifting to slide 17, we go over our realized GP investment in financial income. We had BRL 27 million in realized income this quarter, coming from gains in our liquid funds portfolios and dividend distributions of the company's proprietary position in listed REITs.
As we've discussed in the fourth quarter earnings call, financial income should be an important driver for distributable earnings growth in 2022, as most of our cash allocations are exposed to fixed income bonds related to the CDI rates. Capital continues to be deployed as commitments to our private market funds, but drawdowns happen over time, allowing for this capital to earn short-term rates in the meantime. Turning to slide 18, adjusted distributable earnings totaled BRL 57.7 million in the quarter, or around BRL 1.03 per share, up 22% year-over-year. After-tax distributable earnings totaled BRL 243 million over the last 12 months, up 77% against the same prior period. Even facing a challenging macro scenario, we were able to grow our distributable earnings significantly.
This reinforces our ability to generate cash flow thanks to our diversified business model, translating into dividends and adding value to our shareholders. Finally, in slide 19, we show our cash and investment balance. We finished the first quarter with BRL 1.4 billion in cash and net investments, or BRL 24.58 per share, or approximately $5 per share in cash position. So far, the company has committed BRL 451 million into private market funds, of which BRL 132 million were committed in the first quarter of 2022, with close to 60% of total commitments having been called by the funds. During the first quarter, we committed resources into new launches across our private market strategies, such as our seed investment in our mortgage-backed security funds in credit, which is now a listed vehicle in the B3.
We also seeded the first close for VSP, our new fund of funds strategy for private market allocations within IPNS, among others. For more detail, please see slide 33 of this presentation. With that, I'll turn it over to Sergio to go through our segments.
Thank you, Bruno. Turning to our segment highlights, as you can see in slide 21, our platform remains highly diversified, which we believe to be main contributor to the resilience of our business. 49% of our FRE in the last 12 months came from our private market strategies, followed by liquid strategies with 20%, IPNS with 18%, and financial advisory contributing with 13%. The same level of diversification is reflected in our segment distributable earnings. Moving on to each of the segments, starting with our private market strategies on slide 22. FR 21% over the prior period, following strong fundraising over the last 12 months across real estate, credit and infrastructure. Total AUM was flat year-over-year.
As previously mentioned, this quarter we had BRL 1.1 billion in capital return coming from Energia PCH after a successful run of the mandate won in 2015 by our infrastructure team. This quarter, we also had the 60th issue of quotas for our office REIT, VINO11, adding BRL 250 million in perpetual capital to our platform through a pay-in-kind transaction. While the markets are still struggling, pay-in-kind transactions have been an important contributor to our REIT business, as it presents an alternative to raise capital other than primary issuances. As mentioned by Alessandro in his prepared remarks, we are on track for our fundraising pipeline in private market funds over the course of the next 4-6 quarters, which should impact substantially growth for private markets FIE, as these funds carry higher fees than our average management fee rate.
Moving on to slide 23, we posted solid returns in our liquid strategies. FIE for the first quarter was up 2% year-over-year, and AUM was resilient in the last 12 months, considering the significant and constant outflows suffered by the asset management industry in Brazil over the last quarters. The significant rise in interest rate, aligned with a tougher macro scenario, led to strong outflows in the public equities industry. Due to our sticky investor base and our long-term track record for our flagship funds, we are able to sail through those uncertainties without any relevant redemptions and solid numbers. Our results prove once again that we are resilient in the face of a challenging market scenario and impactful when in favorable market conditions. With that said, we expect to improve our AUM as interest rates return to a healthy level.
We believe we are at the end of the rising cycle for rates, which could be an important indicator for future fundraising in liquidities. Moving on to our IPNS business on slide 24, FIE totaled BRL 40 million in the last twelve months, a notable increase of 73% against the prior period, following outstanding fundraising across our separate mandates strategy over the last twelve months. As Bruno anticipated when talking about PRE results, PRE for IPNS in the first quarter 2021 accounted for BRL 5 million, a result of extraordinary performance revenues coming from international mandates in the quarter, which did not take place in the first quarter of 2022. Segment DE totaled BRL 50.4 million over the last twelve months, a 35% increase against the prior period, reassuring the strong trends we had in our IPNS vertical recently.
We are noticing an exciting pipeline for separate mandates this year, placing IPNS in a great position to repeat its success in 2022. Turning to slide 25, financial advisory reported modest results in the first quarter, 2022. As we mentioned before, advisory fees carry a significant level of seasonality, depending on time for deal closings and market conditions. Nonetheless, we are seeing an exciting pipeline of deals ahead of us that we plan to execute throughout the next quarters. FRE for financial advisory was BRL 27.7 million over the last 12 months, representing a 97% increase over the prior period, thanks to the outstanding year for advising in 2021. Finally, moving on to slide 26, we are including our new business segment, Vinci Retirement Services. As Alessandro mentioned, we are in the process of developing this business line.
Therefore, we are only seeing expenses for the time being. Once the business grows, we should see important contributions from this segment in terms of AUM and revenues from management fees. We are extremely excited about this new growth initiative, and we will still share with you results from this new vertical every quarter from now on over a separate segment result. As we go through our segment, it becomes evident that our core business remains solid with healthy margins for mature asset management businesses. Management fees remain the core indicator of our business model, with most of our AUM coming from a long-term oriented investor base and subject to long-term lock-ups. We believe one of the key factors to our resilience and strong results since the IPO come from our diversification across asset classes, which protects the business in arduous and tumultuous market conditions.
Combined with optionality factors, we can also provide interesting upsides depending on the quarter, such as performance and advisory fees, and also our cash position translates into financial income. We have an important counter-cyclical effect over managing our cash and balance, as it benefits from the rise in interest rates, becoming a crucial factor of our dividend distribution throughout 2022. We are, over the course of this year, recycling private capital and raising the next family of long-term funds, which should drive fee on AUM growth for the following years.
That's it for today's presentation. Once again, we'd like to thank you for joining our call. With that, I would like to open the call for questions. Anna?
Thank you, Sergio. Our first question comes from Tito Labarta with Goldman Sachs. Please go ahead.
All right. Thank you, Anna. Good evening, Alessandro, Bruno, and Sergio. Thank you for the call and taking my question. I guess my question, following up on you mentioned you have a nice pipeline of fundraising for private markets, around BRL 10 billion over the next 4-8 quarters. Just any more color in terms of when that can begin to contribute to the AUM. Do you think it's closer to the four quarters? Like, will that benefit AUM at any point this year, do you think?
On the back of that, how do you think about your ability to deploy that capital, particularly given sort of the current market environment, and just, you know, where do you think you can see opportunities in this current environment? Thank you.
Okay, Tito. This is Bruno. Thanks a lot for the question. The typical private markets fund, it has a characteristic of being very backward-weighted in regards to the fee structure of the fund, at least in our case, right? Most of our products we charge on committed capital. We tend to have the impact being more felt towards the end of the process because we charge retroactive management fees, right? From people that entered towards the end of the fundraising process. The main products that are online today, that are in the market, are the similar ones that we mentioned in the last call. We continue to have the expectation of VCP IV in the next few months doing its first close.
We have our climate change fund, which is getting very good reviews in the market that we expect to have closes towards the second half of the year. We have a couple of credit funds. One of them we just announced that we did the listing of the funds. We will come back eventually with follow-ons. We have another one, which is a bigger one, which we are negotiating to put online either in the second or the third quarter of this year, which also has a very strong anchor in that process. We have other products in the real estate side, one that's related to agriculture and crops. We have other pay-in-kind transactions in real estate that are under negotiation. The pipeline is really very full.
The big products, they have longer fundraising cycles, and they should impact more 2023. Although we should see some impact in 2022, we would expect the bulk of the revenue impact to be felt in 2023 as we charge those retroactive management fees backing up to the first close of these funds, which should happen in the next few months.
Great. Thank you, Bruno. That's helpful.
Yeah.
Maybe if I can ask one.
On the deployment side, you had a second question on deployment.
Yeah. Okay. Second.
I mean, we are in an excellent environment for capital deployments. Capital availability in Brazil continues to be very scarce, so the amount of capital being raised in Brazil, this hasn't really changed over the past 10 years or so. I think we had a peak year in 2010, 2011 perhaps, but after that, the fundraising was very disciplined overall. Across the board, I think I would say probably in all the verticals. The capital allocation opportunities that we see in the market today are exceptional. I think the market correction is creating even more alternatives.
We are structuring additional products that we should come online in the second half, different strategies that we don't have today, to take advantage of the market displacements, some of them in the liquid side of the business. We see very strong opportunity to deploy this capital as it becomes available to the platform.
Great. Thank you, Bruno. That's helpful. Maybe just any color you can provide on the new retirement strategy. When can that begin to be a contributor to fees? Well, yeah, if you can quantify that a little bit more, it would be super helpful.
Thank you, Tito. That's Alessandro . The VRS vertical now we are in a level in a moment of a problem and product discovery together with some clients. We are trying to validate the hypothesis in making the prototype of the products right now. As soon as it's validated, we are already building parallel the technical I would say side of the products together with the technology embedded. Probably we'll see that impacting more next year than this year. Probably we are already launching as soon as possible the products. Of course, we start with a few clients and the channels because that will use both the distribution channels that we have today and new ones.
We'll see this impacting more in terms of AUM and revenues, I believe, next years and so on. There is a very scalable business, so we can start slowly with a more cheap, I would say, type of access, and then scaling up as soon as we gather more AUM and more products, and etc.
Yeah, I think just to complement. It's Bruno again. Just to complement Alessandro. We feel that this market is still very, when compared to the rest of the market. Brazil, in general, is still very early in the cycle of going to alternatives, but we believe the private pensions even before from a cycle standpoint. It's a BRL 1 trillion addressable market, when you think about the open private plans in Brazil. Which is still almost 90% in the hands of the incumbents, the top five banks in the country. There's really a lot of opportunity for us to add value to the clients to generate alternative solutions for their long-term retirement plans.
As Alessandro mentioned, we want to do this from a tax standpoint. Allow the clients to work alongside with us in their asset allocation. Contribute with different products that are currently available to them. It's still a very immature market. Mostly fixed income. Hedge fund type of allocation. We believe we, as a content provider in the alternative space, we can add value to the clients in the medium to long-term basis. It's really a very mature market and with a big addressable market to us.
Great. Thank you, Bruno. Thank you, Alessandro.
Our next question comes from Ricardo Buchpiguel with BTG Pactual. Please go ahead.
Hi, good afternoon, everyone, and thank you for the opportunity of asking questions. I have one here on my side. Given the more challenging macro scenario seen for asset managers, especially smaller asset managers, do you believe this creates a good opportunity to buy a new asset manager with a different expertise in a different asset class, or perhaps with a presence in a different region? Thank you.
Thank you, Ricardo. It's Alessandro. That's completely true, your observation. With the market a little bit more difficult, we are seeing our pipeline for M&A being populated strongly in recent months. We are evolving with this analysis, and we are probably seeing a very good possibility of completing M&A in the next few months, especially on private markets, where we are looking for, as we mentioned before, additional capabilities or under our already very comprehensive private market business lines. This is, of course, new. I would say strategies or even regions and etcetera, but now we are more invested in looking for new strategies inside private markets.
As you mentioned, the current scenario in Brazil, it's helping us to really populate our M&A pipeline, so we are very optimistic that we would find probably in the next few months some interesting opportunities for us.
Thank you. Very clear.
We are showing no further questions at this time. I'd like to turn the conference back over to Alessandro for final remarks.
Thank you very much for your continued support. Even with a very challenging scenario, we are very happy with the performance of the company and the perspectives and opportunities for the rest of the year. I'd like to thank you again and thank you for attending our call.
This concludes today's conference call. Thank you for participating. You may now disconnect.