Breaking Down Patria Investments Limited (PAX) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and looking for a comprehensive analysis of Patria Investments Limited (PAX)? With a Fee Earning AUM reaching $33 billion, representing a year-over-year growth of 38%, and Fee Related Earnings of $170.1 million for the full year 2024, up 15% from 2023, understanding PAX's financial health is crucial for making informed decisions. But how sustainable is this growth, and what are the key factors driving its performance? Dive in to explore the critical insights that can help you navigate the complexities of PAX's financial standing and future prospects.

Patria Investments Limited (PAX) Revenue Analysis

Understanding Patria Investments Limited (PAX)'s revenue streams involves examining its primary sources, growth trends, and the contributions from various business segments.

Here's a breakdown:

• Primary Revenue Sources: Patria generates revenue through investment management services across several asset classes. These include:
• Private Equity
• Real Estate
• Infrastructure
• Credit
• Public Equities
• Global Private Markets Solutions

Patria generates income through multiple fee types:

• Management Fees: 1% - 2.5% of total assets under management
• Performance Fees: 20% of profits exceeding benchmark returns
• Transaction Fees: Charged for specific investment activities

Year-over-Year Revenue Growth: In 2024, Patria Investments had annual revenue of $374.20 million, reflecting a 14.22% growth rate. Looking at the historical data, we can observe the following trends:

Contribution of Business Segments: Patria offers six product lines. The company's product offering encompasses six product lines, such as private equity, infrastructure, credit, public equities, real estate, and global private markets solutions.

Analysis of Significant Changes: Patria exceeded its fundraising target in 2024, raising $5.5 billion, including $300 million from its Advisory business. Fee Earning AUM reached $33 billion, a 38% year-over-year growth. The company achieved its target Fee Related Earnings (FRE) of $170 million for the year, up 15% from 2023, with a 57% FRE margin.

Also, driven by strong FRE growth and Performance Related Earnings (PRE), Patria delivered $89 million of Distributable Earnings or $0.58 per share in the quarter and $189 million or $1.24 per share for the full year.

To gain further insights into Patria's values, see: Mission Statement, Vision, & Core Values of Patria Investments Limited (PAX).

Patria Investments Limited (PAX) Profitability Metrics

Analyzing Patria Investments Limited (PAX) requires a close look at its profitability metrics, which reveal the company's financial health and operational efficiency. By examining gross profit, operating profit, and net profit margins, investors can gain valuable insights into PAX's ability to generate profits and manage costs effectively.

Here's what we'll explore:

• Gross Profit Margin: Measures the percentage of revenue remaining after deducting the cost of goods sold (COGS).
• Operating Profit Margin: Indicates the percentage of revenue remaining after deducting both COGS and operating expenses.
• Net Profit Margin: Represents the percentage of revenue remaining after deducting all expenses, including taxes and interest.

These metrics help to evaluate PAX's profitability trends over time and benchmark its performance against industry averages. Furthermore, analyzing operational efficiency, such as cost management and gross margin trends, provides a deeper understanding of PAX's financial strengths and weaknesses.

Currently, up-to-date and specific financial figures for the 2024 fiscal year for Patria Investments Limited (PAX) are not available in the search results. Financial data can be sourced from reputable financial data providers such as Bloomberg, Reuters, or financial news websites that provide detailed stock analysis.

To provide a comprehensive analysis, it is essential to gather the actual 2024 figures for gross profit, operating profit, and net profit. These values will then be used to calculate the respective margins and compare them against previous years and industry benchmarks.

Here’s a general framework for how the analysis would typically be conducted, assuming we had the 2024 data:

1. Gross Profit Margin Analysis

The gross profit margin is calculated as (Gross Profit / Revenue) 100. A higher gross profit margin indicates that the company is efficient in managing its production costs.

2. Operating Profit Margin Analysis

The operating profit margin is calculated as (Operating Profit / Revenue) 100. This margin reflects the company's efficiency in managing both production and operating expenses.

3. Net Profit Margin Analysis

The net profit margin is calculated as (Net Profit / Revenue) 100. This is a key indicator of overall profitability, reflecting how much profit the company makes for every dollar of revenue after all expenses are considered.

4. Trend Analysis

By comparing these margins over several periods (e.g., quarterly or annually), trends in profitability can be identified. Increasing margins suggest improving efficiency and profitability, while decreasing margins may indicate rising costs or pricing pressures.

5. Comparison with Industry Averages

Comparing PAX's profitability margins with industry averages provides context on how well the company is performing relative to its peers. This comparison can highlight competitive advantages or areas where PAX may need to improve.

6. Operational Efficiency

Analyzing operational efficiency involves examining cost management practices and trends in the gross margin. Effective cost management can lead to higher profitability, while consistent or improving gross margins indicate strong pricing power and efficient production processes.

Without the specific 2024 financial data, a complete analysis is not possible. However, once the data is available, these steps will provide a thorough understanding of Patria Investments Limited's profitability metrics.

Patria Investments Limited (PAX) Debt vs. Equity Structure

Understanding how Patria Investments Limited (PAX) finances its operations and growth is crucial for investors. This involves analyzing its debt levels, debt-to-equity ratio, and recent financing activities to assess its financial stability and risk profile.

As of December 31, 2023, Patria Investments Limited reported the following debt information:

• Total debt: $455.8 million
• This includes both short-term and long-term debt obligations.

The company’s debt-to-equity ratio provides insights into its leverage. As of December 31, 2023, the ratio stood at 0.74x, calculated as total debt divided by total equity. This indicates that for every dollar of equity, Patria has $0.74 of debt.

Here’s a more detailed breakdown of Patria Investments Limited's debt structure:

• Long-term debt: $398.8 million
• Short-term debt: $57 million

To provide a clearer picture, here's a table summarizing key elements of Patria's capital structure as of December 31, 2023:

In the third quarter of 2023, Patria Investments successfully issued $300 million in new debt. This capital was raised through a private placement at 9.250% senior notes due in 2028. The proceeds from this offering were earmarked for general corporate purposes, including but not limited to funding potential acquisitions, covering operational expenses, and managing existing debt obligations. Notably, the issuance was executed at par, indicating strong investor confidence and favorable market conditions.

Patria Investments Limited strategically balances debt and equity to finance its growth. The company’s ability to access debt markets, as evidenced by its recent debt issuance, provides financial flexibility. However, maintaining a reasonable debt-to-equity ratio is essential to manage financial risk and ensure long-term stability.

To gain further insights into investor behavior and ownership dynamics, explore Exploring Patria Investments Limited (PAX) Investor Profile: Who’s Buying and Why?

Patria Investments Limited (PAX) Liquidity and Solvency

Assessing the liquidity and solvency of Patria Investments Limited (PAX) is crucial for investors to gauge its short-term financial health and long-term stability. Key metrics and trends provide insights into the company's ability to meet its obligations and sustain its operations.

Here's a breakdown of Patria Investments Limited's (PAX) liquidity position:

• Current Ratio: As of September 30, 2024, the current ratio for Patria Investments Limited (PAX) was 0.96.
• Quick Ratio: As of April 2025, the quick ratio is 0.82.

These ratios provide a snapshot of Patria Investments Limited's (PAX) ability to cover its short-term liabilities with its most liquid assets. A current ratio of less than 1 may indicate potential liquidity concerns.

Working capital is a measure of a company's efficiency and its short-term financial health. It is calculated as current assets minus current liabilities. The trend in working capital can indicate whether a company is improving its liquidity position or facing challenges.

Here's an overview of Patria Investments Limited's (PAX) working capital trends:

• The change in working capital for the quarter ending June 30, 2024, was -$14.303 million.

Monitoring the change in working capital helps in understanding the company's operational efficiency and its ability to manage its short-term assets and liabilities.

The cash flow statement provides a detailed look at all the cash inflows and outflows a company experiences during a reporting period. It is generally split into three main sections:

• Operating Activities
• Investing Activities
• Financing Activities

Here's an overview of Patria Investments Limited's (PAX) cash flow trends:

Free cash flow (FCF) is a measure of how much cash a business generates after accounting for capital expenditures. It represents the cash a company can use for things such as expanding its operations, paying dividends, reducing debt, or making acquisitions.

Here's an overview of Patria Investments Limited's (PAX) free cash flow:

• Free Cash Flow (TTM, Sep 2024): $147.2 million.
• Free Cash Flow (Year ended Dec. 2023): $141.7 million.
• Free Cash Flow (Quarter ended Sep. 2024): $67.0 million.

Analyzing these cash flow trends helps investors understand how Patria Investments Limited (PAX) is generating and using cash, which is vital for assessing its financial flexibility and sustainability.

For more in-depth information, you can also check out: Breaking Down Patria Investments Limited (PAX) Financial Health: Key Insights for Investors

Patria Investments Limited (PAX) Valuation Analysis

Assessing whether Patria Investments Limited (PAX) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Let's delve into these critical areas to provide a clearer investment perspective. For further insights into the company's foundational principles, explore: Mission Statement, Vision, & Core Values of Patria Investments Limited (PAX).

To determine whether Patria Investments Limited (PAX) is accurately priced, several key valuation ratios are essential:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of Patria Investments Limited’s earnings. A high P/E ratio might suggest overvaluation, while a low P/E could indicate undervaluation, relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares the company’s market capitalization to its book value of equity. It can help identify if the stock price reflects its net asset value appropriately. A lower P/B ratio may suggest the stock is undervalued.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio provides a more comprehensive valuation measure by considering the company’s debt and cash. A lower EV/EBITDA ratio compared to its peers could indicate undervaluation.

Examining Patria Investments Limited's stock price trends over the past year, or longer, provides context on market sentiment and performance:

• Reviewing the stock's historical performance, noting any significant peaks, troughs, and overall trends.
• Comparing Patria Investments Limited’s stock performance against relevant market indices and industry benchmarks to gauge relative performance.

For investors focused on income, dividend yield and payout ratios are crucial (if applicable):

• Dividend Yield: This is the annual dividend payment relative to the stock price, indicating the return on investment through dividends.
• Payout Ratio: This ratio shows the proportion of earnings paid out as dividends. A sustainable payout ratio suggests the company can maintain its dividend payments.

Here is a sample table illustrating valuation metrics for Patria Investments Limited and its peers. Please note that the figures are hypothetical and should be replaced with actual data for an accurate analysis.

Finally, gathering analyst consensus on Patria Investments Limited's stock valuation is beneficial:

• Tracking the overall sentiment of analysts (buy, hold, or sell recommendations).
• Considering the price targets set by analysts and comparing them to the current stock price to assess potential upside or downside.

By analyzing these factors—valuation ratios, stock price trends, dividend information, and analyst opinions—investors can form a well-rounded perspective on whether Patria Investments Limited is overvalued, undervalued, or fairly priced in the current market.

Patria Investments Limited (PAX) Risk Factors

Patria Investments Limited (PAX) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, and volatile market conditions. Understanding these potential challenges is crucial for investors.

Here's an overview of key risk areas:

• Industry Competition: The asset management industry is highly competitive. PAX competes with global financial institutions, regional players, and boutique firms. Increased competition could lead to lower fees, reduced deal flow, and decreased profitability.
• Regulatory Changes: PAX is subject to extensive regulation in the markets where it operates. Changes in laws or regulations, including those related to tax, securities, or anti-corruption, could increase compliance costs and limit operational flexibility.
• Market Conditions: Economic downturns, political instability, and fluctuations in interest rates and currency values can adversely affect PAX's investments and its ability to raise capital. These market conditions can lead to decreased asset values and reduced investor confidence.
• Operational Risks: PAX faces operational risks, including those related to IT systems, cybersecurity, and business continuity. Failures in these areas could disrupt operations, damage its reputation, and result in financial losses.
• Financial Risks: These include risks related to leverage, liquidity, and counterparty creditworthiness. PAX uses leverage to enhance returns, which also increases the risk of losses. Maintaining sufficient liquidity is critical to meet obligations, especially during market stress.
• Strategic Risks: Strategic risks involve decisions related to business development, investments, and geographic expansion. Poor strategic choices can lead to wasted resources and missed opportunities.

Mitigation strategies are essential for managing these risks. While specific plans may vary, common approaches include:

• Diversification: Spreading investments across different asset classes, geographies, and industries to reduce exposure to any single risk factor.
• Compliance Programs: Implementing robust compliance programs to ensure adherence to laws and regulations.
• Risk Management Frameworks: Developing comprehensive frameworks to identify, assess, and manage risks across the organization.
• Insurance: Obtaining insurance coverage to protect against certain types of losses, such as those related to property damage, liability, or business interruption.

Understanding these risks and mitigation strategies is crucial for investors assessing PAX's financial health and future prospects. You can also get more insights on the company's values at: Mission Statement, Vision, & Core Values of Patria Investments Limited (PAX).

Patria Investments Limited (PAX) Growth Opportunities

Patria Investments Limited (PAX) is strategically positioned for future growth, leveraging its expertise in Latin American markets and alternative investments. The company's growth prospects are underpinned by several key factors.

Key Growth Drivers:

• Product Innovations: Patria is expanding its product offerings to meet investor demand, including the launch of a new Growth Equity strategy.
• Market Expansion: The company is focused on strengthening its presence in existing markets and exploring opportunities in new regions.
• Strategic Initiatives: Patria is actively pursuing strategic initiatives and partnerships to drive growth and enhance its competitive positioning.

CEO of Patria, Alex Saigh, stated that the company raised $5.5 billion in 2024, exceeding their $5 billion target. He also mentioned that a wide variety of strategies and products contributed to the fundraising, most of which did not exist at the time of their IPO four years ago.

Future Revenue Growth Projections and Earnings Estimates:

Analysts estimate that Patria Investments' earnings should grow by 51% per year over the next three years. The rest of the market is forecast to only expand by 11% per year, which is noticeably less attractive.

For the full year 2024, Patria generated Fee Related Earnings of $170.1 million, up 15% from $147.7 million in 2023, with an FRE margin of 57%. Distributable Earnings were $189.2 million for the full year, or $1.24 per share.

As Patria looks ahead to 2025, they believe they are well positioned to generate $6 billion of fundraising and $200 to $225 million of FRE for the full year.

Strategic Initiatives and Partnerships:

• Partnership with Kamaroopin: Patria has partnered with Kamaroopin, a private markets investment group, to launch a new Growth Equity strategy.
• Diversification: Patria is actively diversifying its business to increase resilience in the face of near-term macro headwinds. For example, Brazil represents less than a third of their investment exposure versus 90% plus at the time of their IPO only four years ago.

Competitive Advantages:

• Strong Reputation: Patria has a strong reputation in the Latin American business community, attracting talented entrepreneurs and investment opportunities.
• Alternative Investment Expertise: Patria's expertise in alternative investments allows it to offer attractive investment products and generate consistent returns.
• Diversified Platform: Patria has a diversified platform with strategies that include Private Equity, Infrastructure, Credit, Real Estate, Public Equities and Global Private Markets Solutions.

Patria has a strong competitive positioning as the largest alternative asset manager in the region. The company has outperformed the market across all major asset classes, including private equity, infrastructure, credit, and commercial real estate. Over the past 20 years, the internal rate of return (IRR) of PE funds managed by Patria has been 18.3%, significantly exceeding the industry average.

Despite significant growth potential, strong positioning, and high dividend yield, Patria trades at a discount to the industry average on the following multiples: EV/Sales – 5.66x, EV/EBITDA – 11.63x, FWD EV/EBITDA – 9.81x, P/Cash Flow – 10.48x, P/E – 16.27x, FWD P/E – 8.81x.

See also: Exploring Patria Investments Limited (PAX) Investor Profile: Who’s Buying and Why?