Patria Investments' Strategic Expansion into Brazil's CLO Market: Assessing the Long-Term Value Creation Potential of a 51% Stake in Solis Investimentos

Patria Investments Limited has long been a standout performer in emerging markets and alternative asset classes, with assets under management (AUM) surpassing $50 billion as of Q3 2025, a 3.5x increase from its 2021 IPO. The firm's recent acquisition of a 51% stake in Solis Investimentos, a leading Brazilian collateralized loan obligation (CLO) manager, marks a pivotal step in its strategy to expand its credit platform and capitalize on high-growth opportunities in Latin America. This move not only underscores Patria's confidence in Brazil's CLO market but also positions the firm to leverage Solis's strong market position and growth trajectory for long-term value creation.

Solis Investimentos: A Market Leader in Brazil's High-Growth CLO Sector

Solis Investimentos has emerged as a dominant player in Brazil's CLO market, specializing in FIDCs (Fundo de Direitos Creditórios), a structured credit product unique to the region. As of H1 2025, Solis reported AUM of 26 billion reais ($4.8 billion), with a projected 20% growth in the second half of the year, reflecting an annual expansion rate of approximately 50% outpacing the Brazilian CLO market's historical 35% CAGR over the past five years.

The firm's success stems from its ability to address a critical gap in Brazil's financial ecosystem. High interest rates-currently at 15%-have prompted traditional banks to retreat from corporate lending, creating a surge in demand for private credit solutions. Solis has capitalized on this trend by offering non-bank financing to underserved small and mid-sized companies, supported by a rigorous credit selection process that mitigates risk in a high-interest environment supported by its proven track record. Additionally, the firm's operational scalability is evident in its rapid hiring: it added 12 employees in 2025 and plans to add eight more before year-end.

Strategic Synergy and Growth Potential

Patria's acquisition of a 51% stake in Solis is expected to significantly enhance its credit platform. The transaction adds $3.5 billion in fee-earning AUM to Patria's existing credit portfolio, increasing its total credit FEAUM by over 40% to more than $11.7 billion. This strategic move is projected to be accretive in the first year, aligning with Patria's broader goal of diversifying its revenue streams and expanding into high-conviction asset classes.

The acquisition also benefits from Patria's proven track record in capital deployment and value generation. Over the past two decades, the firm's private equity investments have delivered an internal rate of return (IRR) of 18.3%, far outpacing industry benchmarks. This expertise, combined with Solis's market leadership, positions Patria to capitalize on Brazil's structural trends, including rising private credit demand and regulatory tailwinds for structured products like FIDCs as reflected in its hiring trends.

Market Dynamics and Long-Term Value Drivers

Brazil's CLO market is poised for sustained growth, driven by macroeconomic factors and evolving investor preferences. The country's high interest rates have not only constrained traditional lending but also made private credit more attractive to investors. Meanwhile, FIDC issuance hit a record 40.7 billion reais in H1 2025, reflecting strong investor appetite. Solis's ability to scale its fund offerings-currently managing 120 funds and serving 30,000 investors-further amplifies its potential to capture market share.

For Patria, the acquisition represents more than a geographic expansion; it is a strategic bet on a sector with structural growth drivers. The Brazilian CLO market's 35% CAGR over the past five years suggests that Solis's 45% CAGR since 2021 is not an anomaly but a reflection of its competitive advantages. These include its deep local expertise, robust credit underwriting, and alignment with global trends such as ESG-compliant lending as demonstrated by its hiring patterns.

Risks and Mitigation

While the outlook is optimistic, risks remain. Brazil's economic volatility, regulatory shifts, and the potential for higher default rates in a high-interest environment could challenge Solis's performance. However, the firm's disciplined credit approach and Patria's operational rigor provide a buffer. Patria's Q3 2025 results, which showed a 22% year-over-year increase in FRE, to $49.5 million and a 31% rise in Distributable Earnings to $46.9 million, demonstrate its capacity to navigate macroeconomic headwinds while maintaining profitability.

Conclusion

Patria Investments' acquisition of Solis Investimentos is a masterstroke in its long-term growth strategy. By securing a controlling stake in a high-growth, high-conviction asset class, Patria is not only diversifying its revenue base but also aligning itself with Brazil's structural credit trends. With Solis's market leadership, Patria's operational expertise, and the Brazilian CLO market's robust growth trajectory, the investment is well-positioned to deliver substantial value creation over the next decade.