Asked for clarification on the increase in 'other fees' and whether the new level of around $7 million is recurring, particularly with the Solis business.

Alex explained that the increase in 'other fees' is primarily from structuring and consulting fees charged by Solis for CLO origination. He expects an additional $2 million per quarter from Solis structuring fees going forward, making this a recurrent revenue stream. “So going forward, I think we have -- normally, we have other fees of around $1.5 million to $2. I think we're going to add to that moving forward another $2 million coming from the Solis structuring fees per quarter going forward.”

Inquired about the regions and client types driving the increased fundraising, specifically whether they are new or existing clients.

Alex highlighted strong fundraising from credit, infrastructure, and GPMS. New clients are coming mainly from Asia (large SMAs) and Latin America (day-to-day investing), while North America is seeing a resurgence with products tailored to its clients. Re-ups account for 35%-40% of commitments, but significant growth requires new clients. “New clients coming from different regions. I think we mainly Asia, we -- the top performing region and LatAm, second top performing region for us. Asia more on the SMA side, big tickets, SMAs, LatAm clients more on the day-to-day investing in our credit strategies, public equity strategies.”

Asked about Patria's M&A agenda for the next 12 months and the expected trajectory of transaction costs following the acceleration of deal closings.

Management stated that future M&A will be very selective, focusing on specific sub-strategies rather than new asset classes or countries, with organic growth being the primary driver. Transaction costs are expected to decline to $7 million-$8 million per quarter in H2 2026 and significantly in 2027, as the major acquisitions are now complete. “The transaction and restructuring costs were around $11 million in the second quarter of 2026. And of course, assuming no incremental M&A, we expect a small decline in 2026 with the third quarter and the fourth quarter running around $7 million to $8 million per quarter, followed by a significant decline in 2027 and beyond.”

PAX

Patria Investments (PAX) Q2 FY26 earnings call: guidance and Q&A

Q: Inquired about the slight decline in management fees as a percentage of AUM and the impact of acquisitions on the FRE margin, asking what it would take to restore the 58%-60% target.

Management clarified that the change in management fees is due to mix from recent acquisitions (Solis, WP, RBR) which have lower fee bases and margins, not pressure on specific products. They expect the FRE margin to return to 58%-60% by 2027 as synergies are realized and costs are managed, viewing the current dip as a timing issue. “It's just a timing issue. No, I don't see any blip on the way. You're going to probably see margins going up quarter-over-quarter as we reach the end of '26. But the overall yearly margin will be slightly down to the 58%, 60% because we incorporated this lower-margin business in the beginning of '26.”

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 31, 2026

Source: earnings call transcript

Executive summary

Patria Investments Q2 FY26 — Strong Fundraising and FRE Growth

Patria Investments delivered a strong second quarter, driven by robust fundraising momentum across its diversified platform and significant growth in fee-earning AUM. While recent acquisitions temporarily impacted the FRE margin, management remains confident in achieving its full-year FRE target and restoring margin levels in 2027. The firm continues to expand its global reach and product offerings, with a focus on organic growth and selective M&A.

Highlights

Fundraising totaled $2.3 billion in Q2, bringing year-to-date to $4.5 billion, on track to exceed the full-year target of $7 billion.
Fee-earning AUM reached $48.9 billion, up 7% sequentially and 32% year-over-year.
Fee-related earnings (FRE) were $57.1 million, up 13% sequentially and 24% year-over-year, on track for full-year guidance of $225 million to $245 million.
Distributable earnings per share (DEPS) of $0.32 rose 19% sequentially and 31% year-over-year.
Secured a new $1 billion commitment from an existing sovereign wealth fund client for a multi-asset separately managed account.

Concerns

Private Equity Funds IV and V have not performed well and were marked down in the quarter, with no accrued performance fees since Q4 '25.
Full-year 2026 FRE margin is expected to fall modestly below the 58% to 60% target due to the short-term impact of recent acquisitions operating at lower margins.
Shareholders' equity declined by $40 million in the quarter, primarily due to the accounting recognition of gross obligations related to put options over minority interests in certain subsidiaries.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year fundraising target	exceed $7 billion high materiality	FY 2026	High
3-year fundraising target	exceed $21 billion high materiality	2025-2027	High
Full-year FRE	$225 million to $245 million high materiality	FY 2026	High
Full-year FRE per share	$1.42 to $1.54 medium materiality	FY 2026	High
Full-year FRE margin	modestly below 58% to 60% medium materiality	FY 2026	Medium
FRE margin	58% to 60% medium materiality	FY 2027 and onwards	High
2027 FRE target	$260 million to $290 million high materiality	FY 2027	High
2027 FRE per share target	$1.60 to $1.80 medium materiality	FY 2027	High
Long-term share count	158 million to 160 million shares low materiality	Long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Credit Credit remained a strong contributor to fundraising, driven by strong performance across public credit strategies and growing interest in dollar-denominated private credit funds. Solis, the recently acquired CLO business, has raised significant capital and contributes structuring fees. Fundraising Q2: $650 millionFundraising YTD: $1.6 billionFlagship LatAm high-yield strategy fee-earning AUM: $5.5 billionFlagship LatAm high-yield strategy annualized net returns since inception: 11%Flagship LatAm high-yield strategy outperformance vs benchmark: 360 bpsSolis funds raised since acquisition: $500 million	—	—	—	—
Infrastructure Infrastructure is a primary area of interest for SMAs, including the new $1 billion multi-asset mandate. The Infra Core strategy is targeting a first closing later this year. The segment added $5 million in annual recurring net revenues in H1 from SMA and co-investment deployment. Latest 3 vintages pool return outperformance vs benchmark: >750 bpsAnnual recurring net revenues added from SMAs and co-investments (H1): $5 millionPending fee-earning AUM with visible line of sight to deploy: $1 billion	—	—	—	—
Global Private Market Solutions (GPMS) GPMS saw the final close of SOF V, exceeding its fundraising target. The WP Global Partners acquisition was closed and integrated, expanding the lower middle market private equity solutions platform in the U.S. Older co-mingled secondary funds continue to outperform benchmarks. SOF III outperformance vs benchmark: 650 bpsSOF IV outperformance vs benchmark: 560 bpsSOF V total commitments: $676 millionSOF V commitments exceeding target: 35%SOF V re-up investors: 36% of commitmentsSOF V North America capital commitments: >50%SOF V Europe capital commitments: ~40%	—	—	—	—
Private Equity Older vintages (Funds IV and V) have underperformed and were marked down, but they do not impact current management or performance fees. Newer vintages (Funds VI and VII) are performing well with deleveraged portfolio companies, growing EBITDA by approximately 10.5%. Fund IV and V fee-earning AUM: <$1.3 billionFund IV and V accrued performance fees: None since Q4 '25Fund IV management fees: None for last 2 yearsFunds VI and VII portfolio companies EBITDA growth (average over 2 years): ~10.5%	—	—	—	—

Product announcements

Product	Type	Timeline	Details
SOF V	milestone	—
Infra Core strategy	launch	later this year

Deals & partnerships

Sovereign wealth fund client New $1 billion commitment to a multi-asset separately managed account (SMA). $1 billion

This mandate allows capital to be deployed flexibly across asset classes and strategies, primarily expected to be allocated to infrastructure and credit.

Solis Acquisition of a CLO business in Brazil.

Closed at the start of the year. Solis has raised over $500 million since the transaction and has been integrated into Patria's operations.

WP Global Partners Acquisition to expand lower middle market private equity solutions platform in the U.S.

Closed on April 1 and onboarding completed. The team is integrated into Patria's New York office.

RBR Acquisition of a real estate investment trust in Brazil.

Mentioned as one of the three acquisitions completed this year that came with a lower fee base and ROA.

Risks & headwinds

Underperformance of older Private Equity funds Ongoing

Funds IV and V marked down in the quarter; no accrued performance fees since Q4 '25 for both, Fund IV no management fees for 2 years.

Mitigation:Significant changes made to PE team and strategy; Funds VI and VII performing well with deleveraged portfolio companies; future fundraising not significantly reliant on these older funds.

Short-term pressure on FRE margin from acquisitions FY 2026

Full-year 2026 FRE margin expected to fall modestly below 58% to 60% target; Q2 FRE margin at 54% vs 54.6% in prior quarter.

Mitigation:Acquired businesses (Solis, WP, RBR) operating at lower margins are being integrated; management expects margins to return to 58%-60% by 2027 through cost management and synergies.

High interest rates in Brazil Ongoing

Not quantified directly, but mentioned as 'very, very high interest rates in Brazil'.

Mitigation:Private equity portfolio companies (Funds VI and VII) are deleveraged and cash flow generative, with solid capital structures to face high interest rate environments.

Shareholders' equity decline due to accounting obligations Q2 FY26

Shareholders' equity declined $40 million in Q2 FY26.

Mitigation:Related to accounting recognition of gross obligations for put options over minority interests (e.g., Solis 49% minority interest); not a cash outflow in the quarter.

What to watch in Q3 FY26

Fundraising momentum

Next quarter / FY26

Current $4.5 billion YTD

Target Exceed $7 billion for FY26, potentially surpass $7.7 billion (2025 record)

Why it matters

Fundraising is a key driver of fee-earning AUM and future FRE growth, critical for achieving financial objectives.

Given the strong momentum in investor demand, we continue to believe fundraising can surpass our 2025 all-time record of $7.7 billion, and we are on pace to exceed our 3-year fundraising target of $21 billion from 2025 through 2027.

Find out whether PAX delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired about the slight decline in management fees as a percentage of AUM and the impact of acquisitions on the FRE margin, asking what it would take to restore the 58%-60% target.

Management clarified that the change in management fees is due to mix from recent acquisitions (Solis, WP, RBR) which have lower fee bases and margins, not pressure on specific products. They expect the FRE margin to return to 58%-60% by 2027 as synergies are realized and costs are managed, viewing the current dip as a timing issue.

“It's just a timing issue. No, I don't see any blip on the way. You're going to probably see margins going up quarter-over-quarter as we reach the end of '26. But the overall yearly margin will be slightly down to the 58%, 60% because we incorporated this lower-margin business in the beginning of '26.”

asked by Tito Labarta · answered by Alexandre Teixeira de Assumpção Saigh

2 min read 6 chapters

Detailed narrative

Fundraising Momentum and Diversification

Patria achieved strong fundraising of $2.3 billion in Q2, bringing the year-to-date total to $4.5 billion, positioning the firm to exceed its full-year target of $7 billion and potentially surpass the 2025 record of $7.7 billion. This momentum is supported by diversification across asset classes, with credit, infrastructure, and Global Private Market Solutions (GPMS) being key contributors.

The firm has expanded from two flagship strategies at IPO to at least ten, strengthening the quality and resilience of its earnings base.

Investment Performance and Private Equity Markdowns

Investment performance remains consistent, with over 85% of fee-earning AUM (excluding SMAs and third-party managed funds) performing at or above benchmarks. Flagship strategies in credit and infrastructure have significantly outperformed their benchmarks. However, two older private equity vintages (Funds IV and V) were marked down due to macroeconomic adversities and sector-specific shocks, though these do not impact management fees or accrued performance fees for the firm's overall FRE guidance.

Strategic Acquisitions and Integration

Patria completed three acquisitions this year: Solis, WP Global Partners, and RBR. Solis, a CLO business in Brazil, has raised over $500 million since its acquisition and contributes structuring fees to other fee revenues. WP Global Partners, acquired on April 1, has been successfully integrated into the GPMS platform.

These acquisitions, while strategically expanding the platform, temporarily impacted the FRE margin due to their lower operating margins, but management expects margins to normalize by 2027.

Multi-Asset Mandates and Client Relationships

A key highlight was a new $1 billion commitment from an existing sovereign wealth fund client for a multi-asset separately managed account. This mandate reflects growing demand for Patria's solutions-oriented approach and deepens strategic partnerships. Such mandates offer stable, long-duration capital and are expected to primarily allocate to infrastructure and credit over the next 4-6 quarters, contributing to future fee-earning AUM.

Macro Context and Latin America Outlook

The geopolitical backdrop remains supportive of Latin America, particularly South America, with a shift towards more market-friendly governments. Institutional investors from Asia and Europe are increasingly engaging across a wider range of strategies, and North America is showing renewed interest in Patria's products, especially for mid-market private equity, infrastructure, and private credit in LatAm.

This positive macro environment underpins the firm's confidence in its growth objectives.

Balance Sheet and Capital Management

Patria completed a $350 million bond offering, using proceeds to repay outstanding credit facilities and fund M&A, share repurchases, and growth initiatives. The firm repurchased 1.5 million shares for $18.3 million via a TRS facility maturing in Q2 2027 and is refinancing another facility to repurchase an additional 1.3 million shares for $31 million by Q3 2027.

Despite a decline in shareholders' equity due to accounting for put options, Patria maintains ample liquidity and a strong financial position.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.