Good morning and welcome to Vinci's Combination with Compass virtual webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer 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 morning, everyone. Joining us today are Alessandro Horta, Chief Executive Officer, and Bruno Zaremba, President of Finance and Operations. Earlier today, we issued a press release and slide presentation about our combination with Compass, 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 or Compass fund.
With that, I'll turn the call over to Alessandro.
Good morning, everyone. Thank you for joining us today on this momentous occasion. It's my pleasure to talk a bit more about the combination of Vinci Partners and Compass Group, which today officially becomes Vinci Compass. This marks a transformative moment for our organization, a culmination of years of strategic planning and growth, and the beginning of an exciting new chapter. Since Vinci's IPO in 2021, we have been laser-focused on executing our vision of becoming a leader in alternative investments in Latin America. Our strategy centered around leveraging Brazil's under-penetrating alternative markets, driving substantial growth, and expanding our reach. Today, I'm proud to say that even in the face of less than robust market conditions in the region, we not only met but exceeded our expectations, showcasing the power of our platform and the effectiveness of our strategy and people in delivering exceptional results.
Let's start by discussing our organic fundraising and GP commitments. Organically, we raised over BRL 12 billion, leveraging our proprietary seed investments to catalyze larger commitments. This was part of the original use of proceeds from the IPO and has allowed us to substantially boost our long-term capital base. This fundraising allowed us to grow our long-term AUM organically to BRL 38 billion, or 52% higher than the levels we were at the end of 2020. By deploying BRL 1.1 billion of our own balance sheet capital into proprietary funds, we were able to generate interest from LPs approximately nine times the size of our original commitment, demonstrating the scalability of our model and our ability to attract significant investor interest.
This approach enabled us to power fundraising cycles across closed-end funds in infra, private equity, and credit, and our REITs, which have significantly enhanced our fee-related earnings and positioned us as a leader in the Brazilian market. In addition to leveraging LP interest in our strategies, we expect these GP commitments to be important contributors to investment income results over time, as we have been discussing in our quarterly calls. Considering historical investment performance of our current GP commitment mix, we expect to be able to double the value of these commitments in the next four to five years, generating significant accretion to our bottom line. On the organic side, our strategic M&A initiatives have played a pivotal role in shaping our platform. We adopted an opportunistic M&A strategy to build capabilities and expand our reach, identifying and executing acquisitions that complemented our existing platform.
For instance, since our IPO, we have identified the credit segment as one of the main growth opportunities in Brazil, and our strategic acquisitions of SPS and MAV have been essential in enhancing this area of our platform. SPS and MAV's expertise added significant depth to our credit segment, enabling us to offer innovative and high-value financing options, exposure to sectors where we were underserved, on top of potentially bringing foreign investors into the strategy, giving the attractive returns. Both SPS and MAV are currently fundraising for their new vintages, now with Vinci's backing, which further strengthens their capabilities and market appeal. Similarly, our acquisition of Lacan, a Timberland Investment Management Organization, allowed us to establish an added strategy in the real estate space in sustainable forestry, where we now manage 130,000 hectares in Brazil.
Lacan is also fundraising for the new vintage and will count on Vinci to expand their strategy going forward. But it didn't stop there. To accelerate our growth in Latin America, we partnered with Ares, a global leader in alternative asset management with over $460 billion in AUM, to collaborate on fundraising within Brazil and globally, and to accelerate M&A by investing $100 million in Vinci through a convertible preferred structure. This added capital has already been put to good use, with part of it being directed towards the close of Compass combination and Lacan's acquisition. The GP commitments, as well as our inorganic efforts, were not only transformative but also deeply strategic. Each commitment into proprietary funds, acquisition, or partnership were selected to strengthen Vinci's ecosystem while expanding our AUM, enhancing governance, earnings visibility, and creating new recurring revenue streams.
Since our IPO, our assets under management have grown by over 40%, fee-related revenues by 55%, and our distributable earnings per share have increased by 44%. Given the exceptional cash flow profile of our business, we were able to post this growth while returning shareholders $2.60 per share in dividends and an additional $50 million in share repurchase. Today, we will look at the next step in this journey as we combine with Compass Group. Compass brings an incredible legacy of success, a dominant presence in Latin America, and an exceptional team. Together, we have created Vinci Compass, a full-service platform in Latin America with BRL 296 billion in AUM and unparalleled expertise across all major alternative asset classes. This combination is rooted in a compelling strategic rationale of powerful business complementarity and a shared long-term vision that will redefine alternative investments in LatAm.
Latin America, despite its size and potential, with over a GDP of over $7 trillion and a population of 660 million people, remains vastly under-penetrated in alternatives. Less than 5% of the AUM in the region is currently allocated to alternatives, representing a tremendous opportunity. Compass complements Vinci perfectly, offering an extensive pan-regional distribution network and a strong presence in key markets such as Mexico, Chile, and Colombia. From the outset, this partnership was designed to bring together two firms with distinct but highly synergistic strengths. Vinci has built a reputation for its proprietary investment expertise across alternatives in Brazil, while Compass has excelled as a leader in distribution across Latin America, with a vast network spanning eight countries. Together, we create a seamless ecosystem that combines best-in-class investment opportunities with outstanding distribution capabilities, ensuring a holistic and unmatched client experience.
One of the most compelling aspects of this combination is the minimal geographic overlap between the two firms, allowing us to expand our footprint across LatAm without duplication. By integrating Compass' pan-regional distribution network and the access to best global GPs in the alternative space with Vinci's product offering, we are uniquely positioned to serve diverse investor needs across local, regional, and global mandates. This natural alignment also provides a balance of regional expertise with global capital flows, creating a robust platform that thrives across varying economic conditions. At the core of this partnership is a shared long-term vision to become the leading one-stop shop for alternative investments in Latin America. We aim to build a platform that's not only dominant in its home markets but also capable of importing and exporting capital to and from the region.
This vision is underpinned by our mutual commitment to delivering superior value to clients, developing innovative solutions, and driving sustainable growth for all stakeholders. Together, Vinci Compass is not just expanding its reach. It's reshaping the landscape of alternative investments across Latin America with a platform for enduring success. With that, I'll hand it over to Bruno Zaremba, who will delve deeper into Compass business and what the future looks like for Vinci Compass.
Thank you, Alessandro. Good morning, everyone. It is a pleasure to speak with you all today and share more about Compass' remarkable journey, the transformative potential for Vinci Compass, and the immense growth opportunities that lie ahead of us. Let me start by telling you a bit more about Compass' history. Founded in 1995, Compass began with a mission of bringing innovative investment strategies to Latin American investors. Their history is a testament of innovation and sustainable growth. The firm has achieved an impressive 31% CAGR in AUM since its inception, reaching BRL 224 billion by September of 2024. During COVID, the company faced regulatory changes in Chile that allowed withdrawals from the local pension system, which created a temporary reduction in AUM. However, underscoring the underlying trend for growth in alternatives in Latin America, Compass bounced back quickly and returned to significant growth in the last couple of years.
Over the past 30 years, it has grown into a leading solutions provider for alternative investments in the region, with a footprint that spans eight countries. Compass has built an unparalleled reputation for excellence while serving 1,700 institutional and high-net-worth individuals. The firm's success is underpinned by a culture of collaboration with 19 executive partners averaging 17 years of working together and over 50 portfolio managers and analysts. The creation of Vinci Compass marks the union of two complementary platforms, each with unique strengths. We are now one firm, with teams working together from different countries for country-specific or regional efforts. The core aspect of this combination is the diversification across strategies, countries, and clients, which comes through in our revenues and different sources of growth going forward.
With combined assets under management of almost BRL 300 billion per firm as of September of 2024, Vinci Compass will serve as the leading full-service alternative asset manager in Latin America, offering expertise across private equity, real estate, credit equities, global investment products and solutions, and corporate advisory. Compass introduces a wealth of new opportunities to our platform. Its pan-regional presence enhances our distribution capabilities, while its broad client base expands our market reach. The combination of Vinci and Compass also brings a robust governance structure that integrates the expertise and leadership of both firms. Our unified leadership team reflects this alignment, with executives from both Vinci and Compass taking on critical roles. Gilberto and Alessandro will remain in their roles as Chairman and CEO for Vinci Compass, while Manuel Balbontin and Jaime de la Barra, founders of Compass, have taken on roles as directors on our board.
Jaime will also assume the leadership of our Global IP&S segment, leveraging our years of relationship with global GPs and working to expand our global distribution services in Brazil. Jaime Martí, who formerly served as CEO for Compass, will lead our client relations initiative globally and across all client profiles. This governance structure is designed to ensure seamless integration, operational efficiency, and a continued focus on innovation and growth. In addition, Leandro Bousquet, who formerly led our real estate team and brought that vertical from BRL 0-BRL 6.4 billion of mostly perpetual AUM, will assume the role of head of credit for Vinci Compass. We believe this move underscores our optimism about its growth potential across the region. In my case, I had already transitioned out of the day-to-day leadership of our private equity division a few years ago, while still maintaining a chairman role.
Going forward, I expect to continue to support the private equity group as a member of the investment committee, board member in selected portfolio companies, and in the strategic positioning of the group, as my long-term partners, Carlos and Gabriel, take our private equity strategy to the next level of excellence. In addition, I expect to support Alessandro and the board on generating shareholder value by leading the finance, operations, and corporate development teams with the help of Matías Rodríguez, now Group COO, and Sergio Passos, Group CFO, two long-time partners of Vinci Compass. Going deeper into the integration, we also must highlight the integration of our distribution teams, now a blend of top talent from both Vinci and Compass. Together, our client relations team includes 79 relationship managers spread across eight countries, ensuring deep local knowledge paired with a comprehensive understanding of alternative products.
These team strengths lie in the ability to navigate diverse markets, delivering tailored solutions from third-party or proprietary products to institutional investors, high-net-worth individuals, and intermediaries alike. One of the most compelling strengths of Vinci Compass is its pan-regional presence and the diversification it brings across geographies, products, funding sources, and currencies. The combined platform spans seven countries in Latin America and a global presence overall, mainly across the U.S. and Europe, with a significant diversification from a funding and asset allocation standpoint. This broad footprint enables us to effectively drive cross-selling opportunities across LatAm while leveraging the distinct advantages of the global markets. Our geographic diversity provides us with the ability to bring solutions to our clients that address investment needs on a local, regional, and global basis. Additionally, the combined platform's client base is exceptionally diversified, ranging from institutional investors to high-net-worth individuals and intermediaries.
This diversity ensures stability and positions us to capitalize on the increasing demand for alternatives across various client segments. Moving on to Vinci Compass segment, starting with Global IP&S. The Global IP&S segment is a cornerstone of Vinci Compass's diversified offerings, now representing BRL 226 billion in AUM. This segment provides clients with access to a curated network of world-class GPs and top-tier asset managers. Through global and local investment solutions, Global IP&S delivers bespoke portfolios tailored to meet the specific needs of institutional and high-net-worth clients. The platform spans liquid and alternative strategies, offering an open architecture that provides access to elite opportunities worldwide, both on a discretionary and non-discretionary basis. In addition, we also have our host of Vinci Compass-managed commingled and pension products available to clients.
As part of the combined entity, Vinci Compass will continue to expand this segment by leveraging the continuous trend of allocating capital into local and regional strategies, and especially the trend of exporting capital for long-term savings from LatAm into the best offshore investment opportunities. Moving to the credit segment, which we looked at as a critical growth driver for Vinci Compass, now managing BRL 27 billion in AUM. This segment is uniquely positioned to meet the diverse financing needs of both mature and growing businesses through a broad range of strategies, including private credit, structural credit, real estate and infrastructure credit, agribusiness financing, hard currency, high-grade and high-yield strategies, and finally, opportunistic capital solutions. Private equity has long been a hallmark of Vinci's platform, and this segment represents BRL 16 billion of AUM.
Our private equity strategies are focused on transformational growth through buyouts, growth equity, and turnaround investments, with a track record of delivering exceptional returns. With Vinci Compass's pan-regional presence, we are well-positioned to scale our private equity offering into new markets, leveraging our expertise to execute regional mandates. Additionally, the combination strengthens our ability to raise capital from investors across LatAm and globally, ensuring sustained growth in this high-impact segment. Equities represent another significant component of our platform, with BRL 15 billion in AUM across country-specific and regional strategies. The equity segment is focused on identifying opportunities in under-researched and overlooked markets, with strategies spanning long-only funds, small-cap, and dividend-oriented investments. The real estate segment, which includes real estate, infrastructure, and forestry, is a key differentiator for Vinci Compass, with BRL 12 billion in AUM. This segment focuses on tangible, income-generating assets and greenfield projects.
Real estate investments include listed REITs in Brazil and opportunistic development strategies in Brazil, Uruguay, and Peru. Infrastructure assets target essentially sectors such as power, water and sanitation, and transport and logistics, while our timber or forestry strategy invests in greenfield and brownfield projects with native forests in Brazil, also with significant room for regional expansion. In addition, Compass also brings their joint venture with the CIM Group, a real estate manager based in the United States, with more than 30 years of experience, close to $30 billion in assets owned and operated. The JV between Compass and CIM created CCLA, a leader in multifamily real estate developments across Latin America. CCLA manages over 2,600 residential units in operation and 6,200 units under development in key urban centers across Mexico, Chile, Colombia, and Peru.
Please note that since this is a 50% JV for Compass, we will not consolidate CCLA results and AUM into Vinci Compass, and we'll look at it with an investment lens impacting our financial income line. With its vertically integrated approach, CCLA oversees every aspect of real estate investments, from acquisition to property management, making it a natural complement to Vinci's activity in real estate. Shifting to our pro forma numbers, we thought it would be interesting to share with you the roadmap forward AUM for Vinci Compass on a pro forma basis. Global IP&S and credit emerged as the main contributors, generating more than BRL 11 billion in inflows during the periods. These results underline the growing demand for our global distribution strategies and the increasing allocation towards credit, reinforcing the positive trends for the two segments going forward.
Additionally, the Global IP&S segment benefited from strong fund performance, further supported by a 9% appreciation of the dollar against the BRL from September 2023 to September 2024. Compass experienced a one-time outflow of approximately BRL 5 billion in 2024 due to the closure of a specific mandate in the equity segment. However, this outflow was an isolated event and does not represent broader trends within the equity business, which remains an integral part of our diversified offerings. We are very optimistic with both Brazil equities and LatAm equities products in coming years. Overall, the pro forma AUM for Vinci Compass increased 20% year-over-year, driven by robust netting flows and the continued expansion of our segments. Moving on to our financial overview of the transaction, the combination brings immediate and transformative financial benefits, nearly doubling our fee-related revenues.
On a pro forma basis, the combined entity's FRE for the third quarter year to date reached BRL 218 million, compared with BRL 169 million for Vinci standalone. This substantial increase reflects the scalability of our combined operations and highlights the strength of the Compass platform as a key contributor to our financial growth. From a shareholder perspective, the transaction is highly accretive. FRE per share on a pro forma basis represents a 9% increase to Vinci standalone, reinforcing the value created to our investors. Adjusted distributable earnings per share accretion is in the low single digits, highlighting our commitment to preserving our dividend per share and our distribution policy. There will be no changes to our current approach to dividend payments, ensuring continued capital returns to our shareholders. Looking ahead, management will focus on enhancing FRE margins for the combined entity.
The recent growth of both platforms, combined with opportunities for revenue and additional synergies from the integration process, creates a significant space to drive efficiency and profitability. FRE margins, which stand at approximately 33% on a pro forma basis for the third quarter year to date, will be a key area of attention as we optimize our operations and unlock further value from the combination. Finally, we anticipate Compass will contribute to our fourth quarter 2024 results approximately BRL 15 million in FRE coming from the months of November and December, following the close of the transaction at the end of October. This reflects the momentum of the Compass business and sets a strong foundation for the combined entity as we move into 2025. Now I would like to discuss the most exciting aspects of the transaction, which is the tremendous growth potential it unlocks.
The formation of Vinci Compass is not just about scale. It's about seizing the immense growth opportunities that lie ahead. During the six-month period between signing and closing, we partnered with an advisor to conduct a comprehensive assessment of opportunities across Latin America. This effort was a deep dive into the region's underserved markets, untapped cross-selling potential between Vinci and Compass, and ways to redesign our corporate structure to support the combined entity's ambitions. This rigorous analysis laid the foundation for a growth plan that will guide management's efforts to maximize the impact of this combination and unlock substantial value for our stakeholders in the years to come. Now let's dive deeper into the specific areas of opportunities that will drive our growth in coming years. We combine them in three main areas. The first is the expansion of alternatives into Latin America.
Although 50% of Latin American LPs invest in alternatives, the main asset classes, such as private equity, infra, credit, and real estate, account for only 1% of their total AUM. Latin America remains vastly under-penetrated in alternatives. Local investors are increasingly seeking country-specific strategies, particularly in high-demand markets like Mexico. Pension fund reforms in Mexico, for instance, are expected to drive substantial inflows into alternatives over the coming years. As a result of the changes in regulation, which increased the maximum allocation to alternative investments for Mexican pension funds from 15%-30%. This doubles the total potential allocation from pension funds to all alternatives, and we believe this market, which today represents $50 billion, can reach up to $140 billion in 2028.
Additionally, we see an upside coming from the increase in the minimum allocation to local alternative solutions that currently sits at 10%, leading up to 30% in coming years. Another key opportunity lies in scaling to regional mandates, particularly in private equity and infrastructure. By transitioning from country-specific to regional mandates, we can unlock access to global capital seeking diversified exposure to Latin America. Industry-wide, regional mandates represent over $70 billion in AUM, and Vinci Compass is uniquely positioned to capture a significant share of these markets. In fact, SPS IV will be the first pan-regional alternative product launched by Vinci Compass. As we mentioned in the third quarter earnings call, we expect the first close of this fund to take place in the fourth quarter, and we have been actively marketing it as a pan-regional strategy to investors.
The second major focus for us will be the increase of FRE margins through revenue enhancements. The integration of both platforms creates meaningful opportunities for cross-selling. Compass's strong distribution capabilities will help us market Vinci proprietary products to a wider audience, while Vinci's investment expertise will enhance Compass's offerings. A more short-term opportunity we are currently working on, other than SPS IV, are equities funds in Brazil, while VCP IV has already received its first check from a Mexican LP. This represents significant opportunities as we roll out our additional regional strategies. We also see significant opportunities to increase average fees in the Global IP&S segment by expanding allocations to proprietary products or advisory mandates across the alternative space. The same goes for offering Compass's third-party distribution services in Brazil to Vinci clients.
Additionally, Compass's broker-dealer presence in the United States offers direct access to Vinci's clients looking to increase allocation in global assets directly and offers services currently not available to existing Vinci clients. We believe the export of local capital to developed markets to be one of the ever-growing markets and continued strengths for Brazil, especially as local institutions do not have the access, not the expertise, to provide such tailored investment solutions as Compass's third-party distribution brings. For instance, the Brazilian mutual fund market's exposure to cross-border investments alone represents about BRL 400 billion in AUM and is expected to double in the next four years, and Vinci Compass will certainly be a participant in this trend. Additionally, for the closed-end pension fund market in Brazil, which represents over BRL 1 trillion in AUM, foreign investments represent only 1% of their total portfolio.
With Compass, we will tap into that opportunity, for which we are already deeply connected through our local distribution team, by being able to offer the best investment opportunities globally. Finally, the combination positions us to accelerate growth through additional M&A in Latin America. During the integration process, after a careful and extensive process, we narrowed down our research and identified over 30 potential acquisition targets across private equity, credit, real estate, and infrastructure, together representing more than $100 billion in AUM. Pursuing these opportunities would allow us to scale quickly and enter new markets, and as we did in our selective M&A in Brazil, help us complement our portfolio with strong teams running complementary strategies. In countries with limited M&A opportunities, we plan to hire top-tier local talent to establish a strong presence.
This is an initiative that our corporate development team is already working on, and we have live conversations across several Latin American countries. In closing, the combination of Vinci and Compass comes about, transforming the alternative investment landscape in Latin America. With a shared vision, complementary strengths, and a unified leadership team, Vinci Compass is uniquely positioned to capture the immense opportunities ahead. From expanding into under-penetrated markets to scaling regional mandates, we are entering an exciting new chapter of growth. Thank you all for your attention and support. With that, I'll hand it back to Alessandro for some closing remarks and open the floor for questions.
Thank you, Bruno, for that comprehensive overview. As you have heard, this combination is about creating something truly exceptional. Vinci Compass is greater than the sum of its parts.
Together, we are entering a new era of growth, driven by our shared vision and commitment to excellence. Before we open the floor for questions, I want to reiterate how excited we are for the future and would like to thank you, our new partners from Compass, for the trust and collaboration during this process. With a strong foundation, unmatched expertise, and a clear strategic direction, Vinci Compass is ready to redefine the alternative investment landscape in Latin America. Thank you all for joining us today. We are happy to take your questions.
We are going to start the question and answer section 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 Tito Labarta with Goldman Sachs.
Hi, good morning, Alessandro and Bruno.
Anna, thank you for the call and taking my question. A couple of questions, if I can start. I guess first, you know, thanks for the chart and the additional color here on Compass. On the AUM for Compass, and Bruno, I think you mentioned there were some outflows, I guess, related to the withdrawals, the pension withdrawals in Chile. I guess that was in like 2022, and then you had a.
Good morning, everyone. Joining us today are Alessandro Horta, Chief Executive Officer.
Hello. Can you hear me?
Yeah, Tito, go ahead.
Okay, sorry about that.
Okay, so yeah, just to understand a little bit the jump that we saw from 2023 to 2024 at Compass, and if you can maybe, how do you think, just thinking about Compass on a standalone basis, how do you think about the growth in AUM at Compass, just so we could think about Compass growth for the next couple of years? And my second question on the FRE margin, right, I mean, you talked a little bit about, you know, some potential revenue synergies, improving that, but, and can you quantify it all? Any cost synergies? How long would it take to realize both the cost and revenue synergies? And is there a sense of where you can get the FRE margins to over the next few years?
You know, can you get back to the levels that Vinci has had, or what's the right sort of FRE margin that we should think about as you execute on these synergies? Thank you.
Okay. Tito, I'll take the first question. Yeah, I mean, as you said, we had, Compass had the effect from the FPs withdrawal just after COVID, was a way that the government had to stimulate economic activity in the country. That has been reversed, and we showed that in the numbers. For the next year, we're obviously now starting the budgeting process for both companies, but our expectations for 2025 for Compass are also positive. So there are several, there are several new funds that we represent on the third-party distribution side that are coming back to market. We feel that there are some opportunities on our proprietary products in the credit side.
There's really some exciting new products to come online as well on the pan-regional side of things. So if everything goes right in 2025, we could have a year in Compass similar to what we had in 2024. So that's more or less the outline that we have at this point in time. In Vinci, we had, obviously, as you have been tracking, very significant fundraising on the private side in the past couple of years. We are still with some funds opened up for 2025, but not as many as we had between 2023 and 2024. So 2023 and 2024, we had several of our flagships coming back. For 2025, we're going to have contributions from SPS, from VIR probably, also the tail end of the VICC fundraise, but it should be slightly lower than we had in the prior two years.
I would say Compass expectations, same trend as of 2024. For 2025, hopefully, if we are able to get everything that we have in store for that side of the business, and probably Vinci a little bit smaller, at least from the pre-known fundraising processes, obviously will depend more on the ability to raise money from market opportunities, but the flagships we have a little bit less impact in 2025 than we had in 2023 and 2024.
Tito, thank you for your question. That's Alessandro. I'll take the second part of your question regarding the FRE margin, how it will move in terms of our expectation. As you said, we moved down our margin to the level of the new business that's being incorporated, the IP&S, a large Global IP&S business from Compass.
We expect that we could move back to the '40s level in a five-year time. Basically, what will be very important to do that is, as you said, the costs and revenue synergies. We started by addressing the more low-hanging fruit type of synergies, both in costs and revenue, so we already incorporated in just one office in São Paulo, one office in New York. This is very clear and low-hanging. We also, as we mentioned, we got the first commitments for Vinci products from Mexican investors, for instance, like SPS and VCP. But what will really move the needle is the speed that we deploy the products that we manage, especially on the higher end in terms of management fees, like private equity, credit, real estate, and so on, in other markets, and for this, we are very optimistic.
We are already working on a few products that we are launching soon, and that will be what will drive the margins up, because the IP&S business of both Vinci and Compass, as you know very well, carries a lower type of margin, even though it's very resilient and very sticky. But to really grow back the margin to the levels of Vinci that we expect to do, it's in our plans in a five-year space. Hopefully, we can do it earlier than that. It's really the pace that we deploy products that we manage in a proprietary basis in the other markets and also in Brazil, but also addressing the other Latin American markets.
Okay, great. That's good. Thanks, Alessandro. Thanks, Bruno.
Our next question comes from Ricardo Buchpiguel with BTG.
Good morning, everyone, and thank you for the opportunity of making questions.
I just wanted to understand that after the acquisition ahead with Compass, how does the 2028 goal set that you guys set for the during the investor day change? So naturally, I believe that there's a lot of moving parts, especially in terms of FRE margin given the mix in Compass. But if you could comment, if the how do you see the BRL 500 million-BRL 600 million FRE guidance you set after this acquisition? And also looking beyond FRE, if you could also mention how Compass acquisition should impact other lines such as financial results, tax rate, and even the net cash position will also be helpful. Thank you.
Okay, Ricardo, this is Bruno. I'm going to take both of them. So on the balance sheet, I think that the two main short-term impacts are the fact that we had a cash payment, right, to close the transaction.
So part of the deal was paid in cash. So that obviously is an outflow of our cash position. So it's going to impact the financial income line. The numbers that we have shown on a pro forma basis already incorporate that impact. So we are already doing the math net of the cash payment and net of the share issuances that we had to do. The other thing that will have an impact over time, but obviously at this point in time, it's difficult to anticipate, is that the currency balance of Vinci Compass is going to be very different, right? So we had a situation before in Vinci standalone where we had around 80% of our revenues in reais and about 20% in dollars.
With the new company, we're going to about 40% reais, about 40% dollars, and then the balance between Argentinian, Chilean, and Mexican pesos mainly, right? So this is going to obviously affect the balance sheet and the income statement going forward. The idea is to have as little as possible exposure on the balance sheet side. We're going to look at that with a lot of detail. But we are a more dollarized business going forward because we have more of our revenues in dollars and more of our costs in regional currencies, right, between Brazil, Chile, and the other countries. In regards to the guidance, that guidance, when we talked about that in our investor day, we also mentioned that the guidance was guidance for Vinci standalone. So it didn't include any acquisition. So it was only math on organic initiatives, launching new products and existing strategies.
We didn't even have added strategies on that number. So obviously, the targets are going to change substantially, right? So I think we could think about that continuing to be the case for Vinci standalone. But our idea is to host another investor day at some point in 2025 to revisit the goals and the objectives for the company as a combined entity. So certainly, there's going to be a lot of changes because we're going to not only incorporate Compass numbers themselves, but also all the things that we mentioned in this call, the margin trajectory, the opportunities on the synergy side, new product launches, regional products. We feel that there's a lot of different things that we can do moving forward to generate value. And all of them, hopefully, are going to impact favorably the distributable earnings per share number and dividends going forward.
So the idea is to revisit those, the standalone Vinci numbers. They continue to hold, but we are likely going to host another investor call to go into more details on the combined entity numbers and the new targets for the medium term going forward. Very clear. And just a quick follow-up, if you could mention what is the blended tax rate you're seeing for the group after the acquisition? So Compass is in the low double digits tax rate. We are continuing to see ours at the same levels that you saw as a standalone. Our contribution to distributable earnings is higher. So I would say probably between 15%, a little bit over 15%. So we see that there's opportunity in the medium term to improve the way that we structure the revenues in the company, given that now we have seven different countries.
But I think the short term would be something between 15%-20%.
Perfect. Thank you.
Next question from Guilherme Grespan with J.P. Morgan.
Thank you, everyone, for the presentation. Two on our side. The first one is just related to Compass IP&S business. If you can share a little bit more light on what has been driving the strong growth when we look in the last three quarters or even a year window, net inflows were super strong. So just want to understand what type of mandates, if it was Chilean pension funds, just a little bit more granularity behind this very strong growth. And the second question is just on one of the growth plans you guys mentioned, increase average fee by allocating into proprietary products.
Just to get a sense on how easy it is to make that, because I tend to imagine it's not easy to shift the allocation as put. But if you believe it is effectively easy and how relevant can be to overall fees on the IP&S strategy. Thank you.
Hello, Guilherme. This is Alessandro. I'll take the first part of your question. Regarding the IP&S business, the recent developments for especially the Compass business have been related more in a broad sense of exporting capital from Latin America, not just in one specific country or one specific group of clients, but really all across the board, Chilean pension funds, Mexican AFOREs, family office, all across the region, intermediaries, because we do have a relationship with a lot of multi-family offices and intermediaries across the region from Uruguay to Mexico.
So it has been a consequence, I would say, of the strong markets outside the region and not so attractive in the perception of the investors, the markets inside the region. So this is more a consequence of, I would say, a more widespread trend of allocating more capital outside the region. This is not really related to Brazil. It's the only exception that still it's under- penetrated in that sense, but the other Latin American markets we saw through Compass, a very strong trend on that direction. So this we expect to continue. And one of the ideas is that with our presence here in Brazil, together with the Compass expertise, we will also bring the Brazilian, all the participants of the Brazilian market, pension funds, family office, high net worths, and intermediaries to the table in terms of this diversification.
To the second part of your question, if I understood correctly, I think it's I cannot say that it will be easy, but there are several at this point, more specific country by country possibilities and opportunities to really deploy these products besides the IP&S business, so this is well known that, for example, in Mexico, there is a change in regulation that requires the AFORES to invest more in the domestic market in alternatives if they want to export capital that has been the trend recently, so with that, and with not many managers, with size in the market, institutional managers, we can bring to the table solutions, for instance, in private credit for this market, and this repeats itself for different markets across the region, so we think that we can bring the Vinci expertise in their own products in alternatives to each of the markets.
And of course, each one will depend on the trends, the allocations, which would be the best products that this market would absorb.
Yeah, and Guilherme, just to complement Alessandro, I think in the IP&S side, we have two ways to help our clients, right? We have a discretionary way when we allocate the capital. So we give them a target portfolio and understand what are their needs and work with them to get a target portfolio that makes sense in that situation. And also on a non-discretionary way, when we just structure the vehicles and people allocate the capital depending on their necessities on a direct basis. What we believe is that the discretionary part of Global IP&S has a lot of room to grow. So in Brazil, we already had this view. It's an area that we have been investing to increase our capabilities.
But with Compass, together with us, we have really an offering that is unmatched in the marketplace because we have all of the best names globally on our shelf as an allocation standpoint, potential for these clients. And hopefully, over time, we can translate this into more discretionary mandates in Global IP&S. In the case of the other verticals, as Alessandro was saying, we have the knowledge locally of the decision makers on the client side. So Compass has this 35-year history. They know all the institutional clients very well, the high-net-worth clients very well. They have relationships with all the intermediaries. So the question is really track record for us to be able to attack these opportunities, right? In some cases, we already had some internally developed track record that was already being done by Compass.
So for instance, we have some private credit funds in Peru and Colombia that we're exporting to Mexico now in 2025, factoring funds that we're going to start rolling out to Mexico as well. And obviously, credits, as we have said in the past, and we continue to believe is the first step towards alternatives for most of the investors because it's the lowest risk yielding class. And we understand that this was exactly the move that we saw in other countries with private credit growing a lot. It's the same that's happening in Latin America. And you can see that on our roll forward as credit was a very strong group for us in 2024 on a combined basis. So what we need to understand and approach is how we create the track record that we have in Brazil for these other countries.
Some of that track record will be done potentially through M&A. Some of that track record can be done through joint venture with local investors. It's very likely that we're going to do a combination of the two at some point. But the idea and the focus going forward is going to be very strong on bringing that track record into Vinci Compass because we feel comfortable that we have visibility on the marketplace to understand which are the asset lines that have more demand from clients and how to capitalize on those opportunities. But we do need to work on the track record in several of these cases. And thank you for the question, Guilherme.
That's clear. Thank you.
I would now like to turn the floor back to Mr. Alessandro Horta for the closing remarks. Please, Mr. Horta, you may proceed.
We would like to thank you all for your continued support, especially at this very important moment for us. We expect a very bright future for Vinci Compass. So a good morning and a very good week for everybody. This does conclude today's presentation. We thank you all for your participation and wish you a very good morning.