Vinci Compass Q3 2025 Earnings Call: Contradictions Highlighted in FRE Margins, Institutional Interest in Alternatives, and Inflows/Outflows in Global IP&S

Date of Call: November 13, 2025

Financials Results

• Revenue: BRL 238 million total fee-related revenues (management fees BRL 202 million); capital formation and appreciation BRL 19 billion; AUM BRL 316 billion, up 4% Q/Q (negative FX impact BRL 6 billion).
• EPS: BRL 1.16 per share adjusted distributable earnings (adjusted distributable earnings BRL 73.1 million), up 28% YOY nominal and up 7% on a per-share basis; FRE BRL 77.1 million or BRL 1.22 per share.
• Gross Margin: 32.3% FRE margin, highest level year-to-date (management target 38% FRE margin by 2028); FRE margin improved Q/Q due to cost reductions and operating leverage.

Guidance:

• Expect FRE margins to remain in the 30% range going forward; Q4 likely a bit below Q3 but still >30%.
• Verde acquisition closing by end-November; will impact one month of Q4 and is expected to add several hundred basis points to FRE margin from 2026, pushing margins toward mid-30s.
• Target 38% FRE margin by 2028 supported by cost actions, fundraising and platform growth.
• Continued fundraising momentum across Credit and Global IP&S (TPD) with medium/long-term inflow tailwinds.

Business Commentary:

* FRE Margin Improvement: - Vinci Compass Investments Ltd. reported a FRE margin of 32.3% for Q3 2025, marking a significant improvement over previous quarters. - This was primarily driven by operating leverage from revenue growth, the cessation of transaction costs impacting the company, and cost reduction initiatives throughout the year.

• Asset Growth and Fundraising:
• The company achieved BRL 19 billion in capital formation and appreciation, increasing AUM to BRL 316 billion, just below $60 billion in U.S. dollars.

• Strong inflows from Global IP&S and Credit segments fueled this growth, with notable commitments from international investors and the successful launch of new funds, including SPS IV and the forestry vertical.

• Macroeconomic Environment and Strategy:

• Broad-based asset appreciation and easing rate bias across emerging economies, particularly in Brazil and other Latin American countries, created a favorable investment environment.

• This supported Vinci Compass' strategy of capitalizing on emerging markets' structural tailwinds, expanding FRE margins, and capturing demand for private market solutions.

  

• Credit and Alternative Investment Focus:

• The Credit segment gained momentum, with Latin American investors allocating over BRL 1 billion, and forestry vertical drawing international interest.

• The focus on credit and alternatives was due to their potential for uncorrelated returns and the strong appetite from both regional and global allocators, leading to further fundraising and expansion opportunities.

• Investor Relations and Strategic Acquisitions:

• Successful execution of the second Investor Day in New York, with positive feedback on Vinci Compass' growth prospects and strategic vision.
• The strategic acquisition of Verde was well-received, strengthening Vinci Compass' position as a leading alternative investment platform in Latin America.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted multiple positive datapoints: 'we crossed the 30% FRE margin... delivering a 32% FRE margin,' BRL 19 billion capital formation, AUM up 4% Q/Q to BRL 316 billion, strong TPD/credit fundraising, and expectation that the Verde acquisition will add several hundred basis points to margins—all signaling constructive operational and growth momentum.

Q&A:

• Question from William Buonsanti Barranjard (Itaú Corretora de Valores S.A., Research Division): You mentioned the first Brazilian pension plan commitment to SPS IV and that it should unlock further ones—how fast could this new demand come, what cross-sell opportunities does it create, and how big is this pocket for you?
  Response: Management expects additional pension commitments to SPS IV but cannot predict timing/size; believes the strategy's low penetration and uncorrelated profile should capture meaningful AUM over time and open cross‑sell opportunities across institutional channels.

• Question from William Buonsanti Barranjard (Itaú Corretora de Valores S.A., Research Division): FRE margins improved materially Q/Q—should we use this level as a base for next quarter or are there effects that might decelerate improvement (e.g., lower advisory fees)? How should we think about evolution from here?
  Response: Seasonality and prior combination costs explain part of the Q3 uplift; management expects margins to stay in the 30% range (Q4 slightly lower but >30% for the year possible) and anticipates Verde will add several hundred basis points from 2026, pushing margins toward mid‑30s.

• Question from Lindsey Shima (Goldman Sachs): Global IP&S inflows were exceptionally strong—how much was TPD alts, and how should we think about upfront fees next quarter and IP&S inflows going forward?
  Response: TPD alts were a key driver (alts contributed ~BRL 2 billion this quarter, including a large regional commitment); management expects medium/long‑term constructive flows driven by pension tailwinds in Chile/Mexico, retail uptake, and low Brazil penetration, though Q4 could moderate.

Contradiction Point 1

FRE Margin Expectations

It involves changes in financial forecasts, specifically regarding FRE margin expectations, which are critical indicators for investors.

Should we use the improved FRE margin level as the baseline for next quarter, or could factors like lower advisory fees next quarter slow this improvement? How should we expect the trend to continue? - William Buonsanti Barranjard (Itaú Corretora de Valores S.A., Research Division)

2025Q3: We expect margins to remain above 30% for the fourth quarter. We hope to reach 30% for the year. Looking forward to '26, we should see margins above 30% without the combination with Verde, but Verde will push us towards at least the mid-30 level, and we expect continued improvement. - Bruno Sacchi Zaremba(President of Finance & Operations)

When will FRE margin reach a low-30s percent run rate and what drivers will enable this growth? What is the expected path of PRE realizations through 2027? - Lindsey Marie Shema (Goldman Sachs Group, Inc., Research Division)

2025Q2: Vinci Compass aims to migrate to a low 30s FRE margin by the second or third quarter of 2027, driven by ongoing cost optimization and productivity improvements. - Bruno Zaremba(President, Finance and Operations)

Contradiction Point 2

Institutional and High-Net-Worth Interest in Alternatives

It directly impacts expectations regarding the future growth and demand for alternative investment strategies, which are crucial for the company's future revenue and client acquisition.

How much of the Global IP&S inflow is attributed to TPD alts, and what is the outlook for this line and overall IP&S inflows going forward? - Lindsey Shima (Goldman Sachs)

2025Q3: TPD was very good this quarter, with a significant contribution from alts. The fourth quarter is expected to be slower on the outside, but liquid inflows have started strong. We are optimistic about TPD medium to long-term growth, driven by institutional and high-net-worth interest in alternatives. - Bruno Sacchi Zaremba(President of Finance & Operations)

What are the expected net inflow levels for H2? How much AUM remains to be deployed into fee-earning assets? What is the expected timeline for deploying remaining AUM? How should we model GP income and financial results given the current trajectory? - Guilherme F. Grespan (JPMorgan Chase & Co, Research Division)

2025Q2: Vinci Compass expects continued traction in credit and TPD strategies, staying constructive on fundraising for the second half of the year. - Alessandro Monteiro Morgado Horta(CEO & Director)

Contradiction Point 3

Inflows and Outflows in Global IP&S Segment

It involves the explanation of inflows and outflows in the Global IP&S segment, which directly affects the company's financial performance and investor expectations.

How much of the Global IP&S inflow was from TPD alts, and how should we view this business line and broader IP&S inflows going forward? - Lindsey Shima (Goldman Sachs)

2025Q3: TPD was very good this quarter, with a significant contribution from alts. The fourth quarter is expected to be slower on the outside, but liquid inflows have started strong. We are optimistic about TPD medium to long-term growth, driven by institutional and high-net-worth interest in alternatives. - Bruno Sacchi Zaremba(President of Finance & Operations)

What caused the net outflow in the global IP&S segment, and why was there a significant decline in accrued performance in private equity? - Guilherme Grespan (JPMorgan)

2025Q1: The net outflows were predominantly in the liquid portion of the TPD segment, driven by the market volatility, especially in equities. - Alessandro Morgado Horta(CEO & Director)

Contradiction Point 4

Impact of FX Exposure and Performance Fee Sustainability

It involves the company's exposure to FX risk and the sustainability of performance fee contributions, which are crucial factors for understanding the company's financial health and growth potential.

How much of the Global IP&S inflows were related to TPD alts? And how should we think about this segment and IP&S inflows more broadly going forward? - Lindsey Shima(Goldman Sachs)

2025Q3: The exposure is through convertible preferred debt with Ares, about 30% of our revenue is in dollars, and we expect to recover from this quarter's currency impact over the next few quarters. - Bruno Zaremba(CFO)

Can you clarify the FX-related debt exposure and the sustainability of performance fee contributions from the IP&S segment? - Guilherme Grespan(JPMorgan)

2024Q4: The exposure is through convertible preferred debt with Ares, about 30% of our revenue is in dollars, and we expect to recover from this quarter's currency impact over the next few quarters. - Bruno Zaremba(CFO)

Contradiction Point 5

Evolution of FRE Margins

It involves the company's financial performance, specifically regarding the evolution of Funds Raised and Expenses (FRE) margins, which are crucial for assessing operating efficiency and profitability.

Given the significant improvement in FRE margins quarter-on-quarter, should we use this new level as the baseline for the next quarter, or could factors like lower advisory fees in the next quarter slow this improvement? How should we view the outlook moving forward? - William Barranjard(Itaú BBA)

2025Q3: There is some seasonality on the expense line, but we expect margins to remain above 30% for the fourth quarter. We hope to reach 30% for the year. Looking forward to '26, we should see margins above 30% without the combination with Verde, but Verde will push us towards at least the mid-30 level, and we expect continued improvement. - Bruno Zaremba(CFO)

How will the FRE margin change with the Compass acquisition? What is the expected 2025 dividend payout? - Ricardo Buchpiguel(BTG)

2024Q4: We expect improved FRE margins through efficiencies and leveraging our combined strengths. Cost efficiencies are being identified, and we plan to enhance distribution capabilities in Brazil and introduce higher margin products globally. - Alessandro Horta(CEO)