Patria Private Equity Trust (PPET)

You mentioned that you've been a manager of both direct private equity investment and investing funds.

As I understand it, PPET is predominantly or is mainly focused on investing through other vehicles.

Tell us a bit about the way you invest.

Yeah, absolutely.

So when PPET was launched in 2001, it was a pure fund to fund.

So all it would do would be primary investments, as we call them, into funds or primary commitments even.

So that's basically committing to a private equity fund on day one when the fund has no assets in the ground, what's not made any investments into portfolio companies.

So you're really making a judgment call on the manager itself, that they're differentiated, that they're best in class.

Primary investments or primary funds, as they're known, bring a lot of advantages insofar as they They provide consistent exposure by vintage years.

So in private equity, we talk about vintage years a lot and performance by vintage year can vary a lot.

So if you take 2021, for example, There was a lot of activity in the market.

Pricing was high.

Returns in that vintage year probably not going to be as good as the returns in, say, 2023, 2024, when valuations had come down a bit.

So that's a big advantage of primary funds.

It's that diversification, consistent deployment, and the access to some of the best managers.

But also what we do is we also make secondary investments.

So that's when we buy a fund position from another investor part the way through the fund's life.

So that's slightly different risk return profile.

That would be like when you know the underlying portfolio companies, you can analyze them, you make more of a judgment call on the assets themselves as well as the manager.

But it's less of a leap of faith and a and the payback on your investments often quicker.

But importantly, over the last seven years, basically from the time that I became the manager of the trust, we've introduced direct investments to the investment objective.

And direct investments today are around 27% of portfolio value.

I should say secondaries are 9% or 10%, and then primaries are around 60% to 63% of portfolio value today.

But we're moving in that direction of becoming more direct.

The advantage of directs is you can take more concentrated judgment calls, concentrated investments.