Vinci Partners Investments Ltd. (NASDAQ:VINP) Q2 2022 Earnings Conference Call August 11, 2022 5:00 PM ET
Anna Castro – Investor Relations-Manager
Alessandro Horta – Chief Executive Officer
Bruno Zaremba – Private Equity Chairman and Head-Investor Relations
Sergio Passos – Chief Financial Officer
Conference Call Participants
Ricardo Buchpiguel – BTG
Kaio Prato – UBS
Tito Labarta – Goldman Sachs
Good afternoon. And welcome to the Vinci Partners’ Second Quarter, 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder this call will be recorded.
I would now like to turn the conference over to Anna Castro, Investor Relations Manager. Please go ahead.
Thank you, and good afternoon, everyone. Joining today are Alessandro Horta, Chief Executive Officer; Bruno Zaremba, Private Equity Chairman and Head of Investor Relations; and Sergio, Chief Financial Officer.
Earlier today, we issued a press release, slide presentation and our financial statements for the quarter, which are available on our website at ir.vincipartners.com.
I’d like to remind you that today’s call may include forward-looking statements, which are uncertain and outside of the firm’s control and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our 20-F.
We will also refer some non-GAAP measures and you’ll find reconciliations in the release. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Vinci Partners fund.
With that, I’ll turn the call over to Alessandro.
Thank you, Anna. Good afternoon, and thank you all for joining our call. We are extremely pleased to join you all today, as we announce results for the second quarter of 2022.
Adjustable distributable earnings totaled BRL61.5 million in the second quarter or BRL1.10 per common share, when adjusted for non-recurring expenses related to our corporate M&A activities incurred in the quarter. This represented an increase of 11% year-over-year.
Vinci announced a quarterly dividend of $0.17 on the dollar per common share. Since our IPO, Vinci had distributed $1 per common share to shareholders as dividend proving our resilience and ability to generate significant amount of cash flow even in the most challenging macro scenarios.
Considering yesterday’s closing share price, Vinci Partners, stock is currently trading at close to 6.5% last 12 months dividend yield. The yield is secured by a highly visible management fee-driven revenue stream in a very conservative investment policy on our balance sheet’s cash position.
We continue to deliver solid results quarter-after-quarter, thanks to our asset-light and diversified business model, which translates into substantial amounts of cash flow and an attractive dividend distribution to our shareholders.
Vinci ended the second quarter with BRL60 billion in assets under management or a BRL62 billion proforma considering recently announced transaction with SPS Capital.
AUM expansion in the quarter is a result of BRL4.6 billion in total fundraising coming from both private and liquid sides of our business. Fundraising comes from all across our platform once more reinforcing the diversification of our business. The second quarter is an evident example of the power of this diversification, when we have different pools of capital working together and contributing to our AUM growth.
Our IP&S business raised BRL2.4 billion in AUM in the quarter. This AUM came from different parts of capital, a combination of our pension plan products and the activation of new, exclusive mandates. Even during a challenging market for in flow in liquids, our IP&S strategy continues to raise capital, given the differentiated product offering and allocation services Vinci provides.
In private markets we raised a BRL2.9 billion in new capital commitments this quarter with highlights to our private equity and credit strategies. In private equity, we started fundraising for a VCP IV the fourth vintage of our flagship strategy. The fund was activated as of June 23, with close to a hundred percent of capital commitments raised so far being reupped for existing LPs from previous vintages.
The first round of commitments represents a key milestone for VCP IV, as it enable us to leverage our extensive pipeline of opportunities and deploy capital into investments that we will build upon our track effectively contributing to fundraising efforts in following quarters. All management fees charged for VCP IV’s subsequent closings will redirect to the start of the fund in June, 2022. We are working on this fundraising window for VCP IV’s first close until September and subsequent closes should be held over the next 12 to 18 months.
Moving on to our private credit segment, we are pleased to announce the official launch of its newest strategy, Vinci Credit Infra, a fund designed to invest in infrastructure debentures focusing on high-grade credit assets in accordance with superior ESG guidelines.
The credit team have the first closing for this product with a total BRL900 million fundraise coming mostly for an anchoring local institutional investor. We will now broaden the fundraising effort to other local pools of capital. The launch of Vinci Credit Infra marks a decisive turning point for our private market segment.
AUM for our credit strategy has grown by 75% over the last 12 months with the launch of two new products. The first listed vehicle with perpetual capital VCRI and Vinci Credit Infra, mentioned before. This move increases our product offering in private market opportunities and solidifies our position as the player of choice for alternatives in Brazil. This quarter is particularly important as it marks the starting point of our previously announced BRL10 billion total target fundraising efforts across our private market strategies.
On top of fundraising for private equity and credit that have impacted us over the second quarter, Vinci has been selected by BNDES for seed investments of up to BRL500 million each in two of our products across credit and infrastructure. In total, the BNDES News represent up to BRL1 billion in future commitments for this two new strategic initiatives. Particularly, for VICC our new product and infrastructure, BNDES commitment increased visibility on the activation of the fund in the second half of the year.
We have been receiving a lot of interest on the VICC, which will be our first climate-driven fund. And the BNDES anchored investment has a substantial, positive impact on critical mass for the fund. We are very happy with the continued advance of ESG-driven initiative at Vinci. BNDES also approved a seed investment for Vinci Credit Infra, which will be activating the fund second close, expected to take place in the second half of the year.
With all that said, Vinci has begun what we believe to be a very successful fundraising cycle for private market strategies, which will be extremely significant for future FRE results and expansion of the platform across the alternative asset space in Brazil.
In addition to fundraising for our closed-end fund, we continue to present substantial long-term opportunities within our platform to raise capital for other strategies. As an example, our listed vehicles, including REITs in real estate and listed funds in credit and infra are all fully invested and with an extensive pipeline for deployment that as soon as market conditions improve, we should expect funds to come back to market with follow-on offerings.
The same goes for our liquid strategies, which have remained resilient in terms of outflows over the last 12 months, despite massive redemptions in the local market. According to public data disclosed by ANBIMA public equities and hedge fund managers have suffered close to a BRL100 billion in outflows only during the first half of the year. Our liquid products have once again, proved their resilience over the overall Brazilian tenancy for outflows giving our long-term oriented investor base as we have to ask once again, the value of our proprietary distribution channel’s strong relative performance and direct relationship with investors.
We believe the rising interest rate cycle to be towards its end and expect to see improvement in local markets as a consequence. As has been the case in prior cycles, we have once more, been able to post AUM growth on the back of an interest rate tightening cycle and are now well positioned to capitalize over the coming easing cycle with a broadened mix of products, attractive long-term track records and a strong brand.
Now, let me spend some time on our recently announced transaction with SPS Capital, our first M&A transaction since the IPO. At the end of July, we announced the acquisition of SPS Capital, one of the top independent special situations asset managers in Brazil, with BRL2 billion in assets under management.
I would like to highlight four key pillars of this transaction. First, the acquisition of the SPS will enhance the platform’s reach by adding a new strategy in which we currently do not operate. Second, we are bringing a high quality team with extensive experience and track record in the special situation sector in Brazil. We believe the combination of SPS track record in the special fit segment with Vinci’s distribution capabilities present a grand opportunity for fundraising across new vintages and complementary products.
I had already mentioned the breadth of our project offering and this adds an additional relevant layer to that. In addition, the complimentary investment experience, the SPS teams brings to Vinci will allow us to work on a collaborative fashion across our existing private market verticals to develop new investment solutions for our clients. This is especially true for the entire credit segment in Brazil, where the different angle brought by the SPS team will allow us to further enhance our penetration in this growing segment of the market.
A third highlight of this transaction is the strengthening of our FRE. As we are adding to our platform, long-term AUM, with extremely attractive fees. The transaction is immediately accretive on a low- to mid-single digit DE per share with an increase to high single digit accretion in the medium, which should come by investing current undeployed capital as there is a management fee step up when capital is deployed, there are additional upside from new products, good will amortization and additional fundraise for the current flagship strategy.
At last, we see a substantial long-term upside coming from performance fees from Vintage Tree and future funds. All vintages are performing well ahead of the benchmark with total track record posting above 20% net IRRs.
To finalize my remarks, I would like to reinforce the following message. Since our IPO, in the beginning of 2021, we have been facing a challenging macroeconomic scenario with rising interest rates and inflation. This was a phenomenal experienced not only in Brazil, but in the whole world. We continue to deliver solid results in a resilient growth in the period, despite headwinds pointing the opposite way, a testimony to the power of our platform.
The Brazilian Central Bank indicated that the rising cycle has come to an end and we should expect interest rates to reach neutral levels over the next two years. Our inflation projections are going towards the same direction with a significant reduction in local inflation rates is still in 2022, implying a good outlook for an easy interest rates in cycle to start in coming quarters. Brazil, ready withdrew all fiscal stimulus, being ahead of the global curve and it’s experiencing several upward GDP growth revisions unlike the rest of the world.
All of that reaffirm that we are very confident in Vinci’s ability to continue to grow, become more diversified and be a leader in the development of the alternative asset management industry in Brazil. We have several bottom-up drivers with several relevant, close-ended funds starting the funding cycles in addition to the acquisition of another asset allocation platform in SPS.
The opportunity ahead of us continue to be very significant with the currently a small penetration of the alternative asset management class in the Brazilian market, presenting a major opportunity to us, an opportunity that’s currently being explored by a limited number of competitors. The performance we had since the IPO have been raised or acquired over BRL12 billion of AUM in the last 18 months, solidifies our position as a leader in the transformation ongoing in the local asset management industry.
With that, I’ll turn it over to Bruno to go over our financial results.
Thank you, Alessandro. And good afternoon, everyone. Starting on Slide 9, we’ll go through AUM rollforwards for the quarter.
Vinci ended the quarter with BRL60 billion in AUM up 5% year-over-year. During the second quarter, we raised BRL4.6 billion with BRL2.9 billion coming from our private market strategies. We started fundraising efforts for our VCP IV, as Alessandro previously mentioned, and we’ll continue to do so for the next 12 to 18 months, with all fees being charged retroactively to the fund start date.
This quarter, we had another transaction effect in our AUM in private equity. We absorbed a non-fee earning vehicle from the structuring of Evino’s investment. Our final investment in our third vintage flagship fund VCP III.
Lastly, our credit segment launched its new product Vinci Credit Infra, raising BRL900 million backed by an anchor commitment from a local institutional investor. This fund has also been approved for a BRL500 million commitment from BNDES, which will impact the fund second closing expected for the second half of this year.
Moving on to the liquid side of the business, Vinci reported a BRL1.7 billion net inflow in the quarter, driven by strong fundraising in our pension plan strategy within IP&S. As we have stated in prior calls, we believe Vinci has a great long-term opportunity to grow in private pension allocation in Brazil. And we will continue to look for ways to capture this opportunity.
Our liquid strategies’ AUM remains resilient while navigating through this turbulent market scenario, having witnessed small outflows against what has been substantial market redemption cycle. However, the negative market performance has impacted us in a different way. Our AUM was impacted by depreciation of BRL1.7 billion in the second quarter, coming from the mark-to-market effect of liquid funds, tied to the Ibovespa index, which dropped almost 20% intra-quarter. So far, the index has recovered about 10% with a better environment for local markets. And we should see a positive mark-to-market impact on AUM for liquids in the third quarter if markets continue to perform better.
Moving on to Slide 11, we go over Vinci’s AUM pro forma after the acquisition of SPS Capital. SPS will represent our eighth asset management division and the fifth within our private market segment. Consolidating our position as a one-stop-shop for alternative investments in Brazil. This is one more step in our journey of diversification since the inception of Vinci. With SPS we have addressed the strategic and important gap in our asset management portfolio that we can now grow into synergistic and complementary funds like we historically did in other private market strategies.
SPS AUM of BRL2 billion is distributed across three vintages. Funds have a long-term structure up to an eight-year of lockup and carry attractive private market style fees higher than our current average fee rates. The transaction with SPS is accrued to Vinci in all fronts, adding a high visibility long-term FRE oriented product with great margins. Additionally, there is significant upside for PRE in the long-term starting Vintage 3 and subsequent products.
Moving on to Slide 13, we go over a crude performance fees in our private market funds. Performance fee receivable increase to BRL146.1 million in the second quarter, a 40% increase quarter-over-quarter driven primarily by appreciation in our VCP III strategy that currently totals BRL126 million in performance fees or 86% of total fees. Vinci had BRL9 billion at the end of the quarter in performance eligible AUM coming from private market funds still in investment period that can further contribute to our accrued performance fees as these funds enter their divestment periods. In addition, we expect SPS Capital products to add to the private markets performance potential over time.
Turning to Slide 15, we will cover our fee related revenues. Revenues from management and advisory fees total BRL96 million in the quarter, up 6% quarter-over-quarter. Most of the fundraising across private market strategies in a significant amount of the capital raise in IP&S was activated in our AUM towards the end of the second quarter. It will start to positively impact revenues in a more significant way starting the third quarter. Total fee related revenues were down 5% year-over-year as a result of the capital return in FIP Energia PCH, in infrastructure during the first quarter of 2022. Another significant impact on management fees year-over-year was the local mark-to-market correction which resulted in over BRL1.7 billion in AUM depreciation in the quarter. Since these are charged over funds NAVs we had a significant impact over management fee revenues in our liquid funds when we compare to the fees charged over the same quarter of last year with the IBOVESPA trading at around 130,000 points, almost 30% higher than the closing levels of this year’s second quarter.
In Slide 16, we have our operating expenses for the quarter and year-to-date. Total expenses accounted for BRL50.5 million in the quarter, down 6% year-over-year. In the year-to-dates total expenses were BRL98.6 million, down 5% year-over-year. Excluding bonus compensation fixed and variable expenses increased slightly year-over-year due to the inflationary pressure on fixed costs, the return of travel expenses to pre-pandemic levels, and the investments currently being made in our Vinci retirement service vertical, which we expect to contribute to revenues in 2023.
Moving on to Slide 17, we go over our fee related earnings for the quarter and year-to-date. FRE totaled BRL46.9 million or BRL0.84 per share in the quarter. Overall trends started to reaccelerate with FRE up 7% quarter-over-quarter which increases in management and advisory fees. As previously mentioned, we should expect the majority of the impact in management fees from the recent fundraisings to translate into our FRE results starting the third quarter, as most of the AUM was activated at the end of the second quarter. In addition, we expect contribution from the SPS acquisition to positively impact FRE growth in the last quarter of the year, once the transaction is closed.
We continue to expect the transaction to close by the end of the third quarter of 2022. On a year-over-year basis FRE was down 15% as a result of lower levels of management fee fall in the previously mentioned capital return of FIP Energia PCH and the depreciation across liquid strategies and the previously mentioned cost prices. FRE was BRL90.7 million or BRL1.63 over year-to-date down 14% year-over-year, driven by higher levels of advisory fees in the first half of 2021. When the team closed pre-IPO advisory for B3 listed company Espaço Laser. FRE margin was 49% in the quarter, down 6 percentage points when compare to the same period of last year impacted partially by higher fixed cost following the rising inflation rate and previous dimension investments behind Vinci Retirement Service combined with capital return and mark-to-market effects on revenues. Our investment in VRS has cost us approximately 200 basis points in FRE margins headwind this quarter, as we develop the team and product line to build rolled out in 2023. As we explain the platform through organic and inorganic growth over the next quarters, margin should have a positive bias as fundraises that are in the pipeline carry substantially higher fees than our current average fee. In addition, the consolidation of SPS Capital, which carries a higher FRE margin than our current margins should also positively drive margins in coming quarters.
Moving on to Slide 18, we go over performance related earnings. PRE was BRL2.4 million in the quarter. Over year-to-date PRE totaled BRL4.6 million, down 74% compared to the same period of the year before, a combination of two factors. In the second quarter of 2021, the platform was positively impacted by an extraordinary unrealized performance coming from our IP&A international exclusive mandates. Most of our liquid funds haven’t been able to charge performance fees with the correction in local markets in 2022, due to their high-watermark causes. This is affecting the entire industry in Brazil as high-watermark clauses are common in liquid funds locally.
Shifted to Slide 19, we go over a realized GP investment and financial income. Vinci had BRL25 million in realized GP and financial income this quarter, up 71% on a year-over-year basis. Coming from gains in our liquid fund’s portfolio and dividend distributions from companies proprietary position in listed REITs. Financial income continues to be an important component of distributable earnings in 2022. As we have discussed in the past we expect this to remain a relevant trend in coming quarters. In the medium- to long-term we should see financial income component in our distributable earnings gradually migrating towards FRE results as we deploy capital into our private market products and leverage fundraising for this products. And additional use of capital selective M&A as was the case of acquisition of SPS Capital, which had an initial cash component. In the second quarter, Vinci committed an additional BRL537 million across private market products. This capital will be called over time as funded deployed capital into new investments. With these more recent commitments, we have reached almost $1 billion of IPO proceeds committed to private market funds leveraging the capital we raise in the IPO to fund additional AUM growth and FRE expansion.
Turning onto Slide 20, we go through our adjusted distributable earnings. Adjusted distributable earnings totaled BRL61.1 million or BRL1.10, up 11% on a year-over-year basis boosted by realized gains from our financial income. Adjusted DE totaled BRL118.8 million, BRL2.30 in the year-to-date, up 16% when compared to the same period last year. Adjusted DE margins posted another quarter of expansion with 49% in the second quarter increase of 5.3 percentage point year-over-year. We expect to continue to add shareholder value by expanding the Q2 earnings results over the quarters as a combination of organic growth through fundraisings across our platform and inorganic AUM expansion through acquisitions, such as the transaction with SPS Capital. We still have fully deployed listed product that are set to come back to market as soon as market conditions improve and liquid funds that remain resilient facing a challenging market, but are well positioned to further grow in a more stable scenario. In summary, our platform is highly diversified and ready to capture opportunities to enhance long-term value creation to all our stakeholders.
Finally in Slide 21, we show our cash and investment balance. We ended the second quarter with BRL1.4 billion in cash and net investments for BRL24.37 per share, or approximately $5 per share in cash.
And with that, I’ll turn it over to Sergio to go through our segments.
Thank you, Bruno.
Turn into our segment highlights. As you can see in Slide 23, our platform remains highly diversified, which we believe should be main contributor to the resilience of our business. 53% of our FRE individually came from our Private Market strategies followed by IP&S with 22%, liquid strategies with 21%, and financial advisory contributing with 4%. The same level of diversification is reflected in our segment distributable earnings.
Moving on to each of the segments is starting with our Private Market strategies on Slide 24. FIE totaled BRL24.3 million in the quarter, down 16% over the prior period. Driven by a combination of the following factors, our one-off advisory fee contribution in real estate during the second quarter of 2021, and the success of capital return was BRL1.1 billion in FIP Energia during the first quarter of 2022. The infrastructure vertical is in the process of raising a new strategy VICC, which we expect should be more than compensate management fee revenues for this recent capital return. Segment distributable earning were BRL57.3 million over the year-to-date, an increase of 6% compared to the same period last year, boosted by higher contributions from dividend distribution in our proprietary position across listed REITs totaling around was BRL24 billion at the end of the quarter, up 16% year-over-year, driven by strong fundraising in Private Market strategies. As previously discussed most of these capital raises or activate at the end of the product. Therefore we should start to see a positive impact for management fees across Private Market strategies from the third quarter going forward.
Moving on to Slide 25, the go over results for liquid strategies. Fee related earnings over the year-to-date totaled BRL19.9 million, down 14% when compared to the same period last year. This decrease was driven by the mark-to-market effect in liquid strategies AUM during the first half of 2022, have a direct impact on management fee revenues. Despite the depreciation effects, our liquid strategies funds have not been suffering from significant outflows, which means the decrease in AUM is mostly from the observed marked correction as there will be visible recoveries in the future we should also see a positive impact on our liquids AUM. Our future and proprietary built investor base has proven once again to be valuable assets to our platform, while the Brazilian asset managing industry experience strong outflows, our open end funds remain resilient with low-levels of redemptions.
Moving on to our IP&S business on Slide 26. FRE totaled BRL11.5 million in the quarter, up 24% on a quarter-over-quarter basis due to our strong fund raising in pension plan strategy. As we anticipated when talking about PRE results, we had an extraordinary unrealized performance revenue booked in the second quarter of 2020 coming from international separate mandates, which is a not core in the second quarter of 2022 and impacted our PRE results for IP&S. Segment DE totaled BRL11.9 million in the quarter down 80% year-over-year, primarily due to high levels of PRE in the second quarter of 2021.
Turning to his Slide 27, we cover our results for financial advisory. FIE for financial advisory was BRL3.3 million in the quarter, presenting a 525% increase over the prior period. Revenues for financial advisory carry a certain level of seasonality and although uncertain to predict advisory fees should be more modest in the third quarter, as we expect to be more active towards the end of the year.
Finally move on to his Slide 28, we go over results for the retirement service segment. Fee related earnings for the quarter was negative BRL1.7 million and over the year-to-date FIE represents i.e., negative BRL3.1 million. As announced in our last earnings call we are still in the process of structuring VRS, therefore we are only incurring expenses for the time being. Our expectation is that we’ll start from the reason for this segment in the beginning of 2023. Given the high expected growth nature of this new business vertical, we will continue to show this as separate segment. Those investors can keep track of its development.
That’s it for today’s presentation. Once again we do like to thank you for joining our call.
With that I’d like to open the call for questions. Operator?
[Operator Instructions] And our first question comes from the line of Ricardo Buchpiguel from BTG. Your question please.
Good afternoon everyone and congrats on a good results. I have two questions on my side. First can you please talk about what you expect in terms of fundraising and inflows for the second half of the year, both in terms of private market and liquid strategies? And also we saw BRL7 million loan synergy investment income mainly on realize impact, so I wanted you to understand a little bit more what drove this impact? Thank you.
Hey Ricardo that’s thank you for your question. That’s Alesandro, and I’ll take the first part of your question and leave Bruno to cover about the investment on the unrealized results on the investment side. Talking about the fundraising for the second half of the year we expect to continue the fundraising for the private market products as Bruno said before doing the presentation. We believe that we probably could have another closing for VCP for during the second half of the year. So probably have more on that front. Probably we have the first closing of VICC, that’s the other important product that we are launching and we’ll have a first closing probably in the second half of the year.
Also on the private credit we’ll have probably a few new closings and fundraisings for our other products. So we are pretty much optimistic about the prospects on the private market side. Talking about the, the liquid side as you saw we have been able to continue to raise money on the IP&S, so have a very strong pipeline for IP&S that we probably activate new mandates during the second half the year. And we are seeing a more benign environment for equities. So we are seeing that we are not having important redemptions and we are starting to see net inflows.
So we believe that the prospect for the second half of the year on the equity side also will be good. So we are pretty much optimistic about the fundraising activity doing the second half on both fronts. On the private side, because we have a very strong pipeline of new products that will probably do subsequent close or new or first closing doing the second half and also on the liquid side.
Okay. This is Bruno. Thanks for the question. So the investment – unrealized investment income mainly has to do with the GP commitment, we did on our listed REITs. So there were a few opportunities of capital raising that happened in the course of the last quarters that were attached to transactions and that were levered with additional capital from the markets. So we committed capital to those capital raises to anchor those capital raises and to anchor those transactions and since then, what happened was that the exchange – sorry, the interest rate in Brazil widen quite substantially. We obviously had the correction in the stock market and those REITs are trading a little bit below the levels that we invested. So that’s the unrealized explanation of the income statement. We obviously expect that over time these prices are going to come back up and we’re going to recover these losses.
Thank you. Very clear.
Thank you. [Operator Instructions] And our next question comes to line of Tito Labarta from Goldman Sachs. Your question please.
Tito, are you there? Let’s make sure we are not hearing you at this point. I think we can go to the next one operator probably we lost Tito.
[Operator Instructions] And our next question comes to line of Kaio Prato from UBS. Your question please.
Hello everyone. Good evening. Thank you for the opportunity for asking questions. I have two on my side, please. The first one is when could we expect this new fundraising especially in the private market strategy to positive contribute in terms of net management fees going forward? And the second one, if I may, we saw an increase of almost 14% in core [Technical Difficulty]
And our next question comes from the line of Kaio Prato from UBS. Your question, please.
Hello everyone. Good evening. Thank you for the opportunity for asking questions. I have two on my side, please. The first one is when could we expect this new fundraising especially in the private market strategy for next year please?
Okay. Thank you for your question. that’s Alessandro speaking here. And on the first part of the question regarding when we start to kick in the revenues for the fundraising? We will start already on the third quarter, because for example, the – some closings regarding VCP IV for example, start charging from the first closing. Of course as we do subsequent closings we’ll have this retroactive, but will be booked in the quarter to come. That will be the reality for some of the other products including the VICC for example and even the credit fund that they start to invest. So we expect some of the, of course not the full effect, but we start having an effect of this fundraising already on the third quarter.
And regarding the corporate expenses is more like a seasonality. We are talking about expenses regarding to travel expenses because doing the fundraising of this products, we start traveling with the teams after the COVID we start getting present – in present with the client. So we are traveling more regarding the fundraising, but it’s not specific to any important expenses, really more like seasonal. And of course, we have the decision, the correction of the compensation, the fixed compensation that kick it in also in this quarter
Kaio, just to add to what Alessandro said and going back to the prepared remarks, the fundraisers that we had this quarter, they were very like towards the end of the quarter, right. So we had the closing VCP IV was at the very end of the quarter and the inflow – that the strong inflow that we had in IP&S wasalso during the last month or the last half of the quarter.
So the impact on the – on these fundraisings, although we did see a maturing impact in AUM at the end of the quarter. We did see quarter-on-quarter acceleration for a year, growing high-single digits against the last quarter. We expect the management feedback to be more pronounced in the third quarter. Then we signed the second. So that’s – I think that’s another factor that just prefer to have in our mind. Thank you.
Okay, great. Thank you very much, Alessandro and Bruno.
Thank you. [Operator Instructions] And we have returning to the queue Tito Labarta from Goldman Sachs. Your question, please.
Hi, try again, I don’t know if you can hear me now.
Yes, Tito. We can hear you fine. Thank you.
Okay. Yes. Sorry. I don’t know what happened before. But yes, thanks for the call, taking my question. Just curious on the a crew performance fees seem to have some increase there in terms of the ability to realize performance fees sort of like for the rest of the year and going forward.
Okay. Tito, so the slide that we present on the accrued performance fees that encompasses basically our private market fund, right? So we have there are two main components. We have VCP III. VCP III, the fund is already within the carry parameters. So any increase in NOC going forward is going to impact positively our expected performance.
And we have reached full colocation in the fund now. So now we have a 100% of the capital being committed into portfolio companies. And this will likely I mean as companies go and grow their equity value. We should be able to see this line going up. For VCP III specifically, we might see increase beginning of a capital return cycle. Probably let’s say between this year and next year, but for us to be able to realize the carry of that particular fund is going to take a little bit longer because we need to return 100% of the called capital. So it takes some time before we’re able to start monetizing on those performance fees.
The other components in that slide is our other assets in the infrastructure funds, transmission funds and that asset is closer to being realized and that’s capital has already been returned. So what we have in that fund is only carry, right? So the point here is really monetizing the assets. It’s something that we – I think you remember, we had an impact in the fourth quarter of last year, which was the let’s say the initial half of that fund being realized, and we expect this other asset to be realized in the next several quarters, probably between two and four quarters. We’re going to be able to realize this last asset in the fund, which will likely have a very interesting positive impact in our numbers.
Talking about the liquid side, we are a little bit dependent on performance of the markets in the liquid side. As we have said in the prepared remarks, most of our funds in the liquid side, they carry a high water mark clause. And obviously the stock market is still substantial below the highs that we had last year.
We are still about 20,000 points below the highs more or less, a little bit more than that. So although, we are generating alpha in the funds for us to be able to trigger those performance fees, we need to get to the high water mark of the fund. So that has some better components into it. As we have seen in the past, when we look back into 2019, 2018, the liquid side of the business can be a material contributor to performance.
So we saw a very big numbers in 2018, 2019 coming from the performance deciding liquids that can resume at some point, but we would depends on the little bit better markets environment for us to be able to trigger those high water marks and be able to start charging performance again. So it would be a factor of some a little bit more recovery in the market. And if that happens, we should be able to start having more relevant performance from the liquids coming into the distributable earnings number of the company.
Okay. That’s helpful. Thanks, Bruno.
Thank you. [Operator Instructions] And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Alessandro for any further remarks.
Thank you very much for your continuous support and for attending our call and we are very happy with the results that we got during this quarter, and we are very optimistic for the rest of the year. So thank you very much and have a good night.
Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.