Patria Q3 Fee Earnings Rise as AUM Expands, IFRS Profit Falls

Patria Investments Limited (NASDAQ: PAX) reported higher third-quarter fee revenue and assets under management, supported by organic inflows and acquisitions, but rising costs and a less favorable fee mix limited earnings growth. Fee Related Earnings increased 7% year over year, while IFRS net income attributable to Patria fell to $7.2 million from $22.5 million.

For the quarter ended September 30, management fees rose 17% to $101.7 million. Total fee revenues increased 16% to $98.3 million after taxes and rebates, helping lift non-GAAP Fee Related Earnings, or FRE, to $52.8 million from $49.5 million.

The FRE margin narrowed to 53.7% from 58.5% a year earlier as personnel and general and administrative expenses increased. Personnel expenses rose 26% to $28.1 million, while administrative expenses climbed 38% to $16.8 million. Patria attributed the year-over-year cost increase mainly to acquisitions, foreign-exchange movements and continued investment in the business.

Compared with the second quarter, personnel and administrative expenses declined 7% to about $45 million. However, FRE also decreased sequentially because of lower management, incentive and structuring fees. Management fees declined from $103.7 million in the second quarter, primarily reflecting realizations in Private Equity Fund V and Infrastructure Fund III.

Distributable Earnings were broadly unchanged year over year at $46.9 million, or $0.30 per share. For the first nine months of 2026, Distributable Earnings increased 14% to $139.9 million, equivalent to $0.88 per share. Year-to-date FRE rose 16% to $160.4 million, or $1.01 per share.

Under IFRS, revenue from services increased to $104.2 million from $86.5 million. However, higher personnel, administrative and amortization expenses, together with a $17.5 million net financial expense, reduced income before tax to $11.5 million from $24.5 million. Net income for the period was $9.2 million, of which $7.2 million was attributable to shareholders of the parent.

AUM Growth and Fundraising

Total assets under management reached $62.4 billion at quarter-end, up 22% from $51.2 billion a year earlier. Over the preceding 12 months, Patria recorded $8.6 billion of organic capital inflows and $7.1 billion from acquisitions, alongside positive valuation and currency effects. These additions were partly offset by $5.1 billion of outflows, including $3.1 billion of divestments and distributions.

Fee-earning AUM increased 24% year over year to $48.1 billion. Growth reflected $6 billion of organic inflows, $6.1 billion from acquisitions and a $2.1 billion positive valuation impact, partially offset by divestments, distributions, redemptions and fund step-downs. The effective management fee rate was 0.84%, and Patria said management-fee growth trailed FEAUM growth because of changes in the asset mix.

On a sequential basis, FEAUM decreased from $48.9 billion, reflecting realizations and distributions, redemptions, currency and other effects. Pending FEAUM, representing committed capital that could begin generating fees if deployed, increased to $4.8 billion from $4 billion in the second quarter.

Patria raised $2.4 billion during the quarter and $6.9 billion during the first nine months. Credit accounted for $1.13 billion of quarterly fundraising, including $439 million from Brazilian CLO business Solis, $167 million for a dollar-denominated high-yield strategy and $169 million for Private Credit Fund II. GP Management Solutions raised $845 million, including $750 million through a customized investment solution for a Latin American institutional investor.

More than 90% of year-to-date fundraising was eligible to generate management fees. Investors outside Latin America supplied 33% of funds raised during the period.

Performance Fees, Capital and Dividend

Net accrued performance fees totaled $260 million, or $1.64 per share, at September 30. The quarterly increase was mainly driven by share-price appreciation among portfolio companies in Private Equity Fund VI. Patria had $15.1 billion of performance-fee-eligible AUM, more than 40% of which was either undeployed or had been invested for less than four years. Accrued performance fees represent potential earnings based on current valuations and are not equivalent to realized performance-related earnings.

The company declared a quarterly dividend of $0.1625 per common share, payable December 11 to shareholders of record on November 13. It also completed a total return swap covering an additional 1.3 million shares, reducing total shares outstanding to approximately 158.9 million at quarter-end.

Patria said it expects cash generated from Distributable Earnings through 2028, together with available credit facilities, to be sufficient to cover contracted liabilities, future dividends, additional share repurchases and reinvestment in the business. Its schedule of acquisition-related liabilities and completed share-repurchase expenses showed a cumulative cash position before operating inflows of negative $187.8 million through 2028, compared with negative $175.4 million in the second-quarter presentation, mainly because of currency movements and contract indexation.

The third-quarter IFRS figures are preliminary and unaudited. Patria cautioned that acquisition-related financial-instrument adjustments and purchase-price allocations could cause audited balance-sheet and net-income figures to differ. Results also remain exposed to fund realizations, redemptions, currency movements, changes in fee mix and the timing and value of performance-fee realization.