Brazil’s Patria mulls listed continuation fund alternative

Brazil’s largest private equity firm is looking outside the secondaries market for a way to hold on to its best assets.

Patria Investments, which has $9.3 billion in private equity assets under management, is exploring the formation of listed “continuation-driven” vehicles for businesses it considers “champions”, its chief executive officer, Alex Saigh, said on a third-quarter earnings call earlier this month.

“I can give you amazing examples from our private equity fund, from our infrastructure fund, one or two champions per fund,” Saigh said. “I would love to continue investing in these companies, given that they continue to deliver 20 percent-plus returns per year.”

Patria has considered the London and Brazilian stock exchanges as possible destinations because they have a “bucket” for such vehicles, Saigh said, adding that investors are very supportive of their efforts.

“We actually placed the management there [in the portfolio company], we de-risked the assets – we know exactly what to do,” he said.

New York-listed Patria is investing its sixth private equity fund, which closed on $2.69 billion in January 2018. CPP Investments committed $200 million to the fund, with New York State Teachers’ Retirement System committing $150 million, according to PEI data.

The firm is in the process of exiting all the remaining assets in its 2014-vintage Fund V, which has returned a 2.1x net multiple and net IRR of 28 percent, Saigh said. It is not clear if any of these assets will be transferred into the listed vehicle.

Patria was founded in Sao Paulo in 2001 by managing partners Luiz Otavio Reis de Magalhães, Alexandre Saigh and Olímpio Matarazzo Neto. In 2010, Blackstone Group took a 40 percent stake in the firm, affiliate title PE Hub reported.

Patria did not respond to a request for more information on the plans and why it is pursuing the listed path.