Executive Summary / Key Takeaways

• Vinci Compass Investments Ltd. ($VINP) is rapidly consolidating its position as a premier pan-regional alternative asset manager in Latin America, driven by strategic acquisitions and a diversified multi-strategy platform. The combination with Compass and the acquisitions of MAV and Lacan have significantly expanded its AUM, product offerings, and distribution capabilities, creating a "one-stop shop" for investors.
• The company is demonstrating solid financial performance, with Q2 2025 fee-related earnings (FRE) of BRL 65.2 million and adjusted distributable earnings (DE) of BRL 75.8 million, reflecting strong organic momentum in credit and Global IP&S, alongside the accretive impact of recent mergers.
• Vinci Compass is actively deploying capital into high-conviction private market strategies, particularly credit and real assets, which are expected to drive future performance-related earnings (PRE) and investment income, albeit with a typical J-curve effect where cash earnings impact shifts to net income before returning to DE in later years.
• A strong fundraising pipeline across over 20 credit products, new private equity vintages, and climate-focused infrastructure and forestry funds, coupled with a commitment to technological innovation, positions the company for continued growth and margin expansion, targeting low 30s FRE margins by Q2/Q3 2026.
• While macroeconomic factors like currency fluctuations and high interest rates present headwinds, particularly for liquid funds, Vinci Compass's diversified, regional approach and elevated due diligence standards are designed to capitalize on Latin America's improving macro landscape and increasing investor interest in alternative investments.

A New Era for Latin American Alternatives

Vinci Compass Investments Ltd. ($VINP) is rapidly emerging as a dominant force in Latin America's alternative asset management landscape. Founded in 2009 as Vinci Partners Investments Ltd., the firm has strategically transformed itself into a pan-regional powerhouse, offering a comprehensive suite of investment solutions across a diverse range of asset classes. This evolution is rooted in a clear strategy: to be the "one-stop shop" for local, regional, and global investors seeking exposure to Latin American alternatives. The company's journey, marked by organic growth and pivotal acquisitions, has positioned it to capitalize on the region's burgeoning demand for sophisticated investment products.

The broader macroeconomic environment in Latin America is increasingly supportive of alternative investments. The region is demonstrating resilience, with an improving outlook in Brazil, where real interest rates are showing signs of inflection from historical highs of 11% and rate cuts are anticipated towards the end of 2025. This trend is mirrored across Latin America, with central banks in Chile, Colombia, and Mexico adopting more dovish tones and initiating interest rate cuts. Such easing monetary policy, coupled with strengthening macroeconomic fundamentals and growing optimism around pro-market political shifts, creates a favorable backdrop for equity and credit markets. Furthermore, Latin America's insulation from geopolitical conflicts in other parts of the world enhances its appeal as a strategic allocation for investors seeking diversification. The region also boasts a significant head start in the energy transition, sourcing over 60% of its power from renewables, twice the global average, underpinning the investment thesis for climate-focused infrastructure.

In this dynamic landscape, Vinci Compass faces competition from established financial institutions like BTG Pactual (BPAC), Itau Unibanco (ITUB), and Banco Bradesco (BBD), which benefit from larger scale and integrated banking services. Digital platforms such as XP Inc. (XP) also pose a challenge with their rapid growth and tech-driven models. However, Vinci Compass differentiates itself through its specialized advisory services, deep expertise in real assets, and a focused Latin American presence. While larger rivals may have broader distribution channels and faster innovation in certain digital areas, Vinci Compass's emphasis on co-control investments in small-to-medium enterprises and its tailored solutions in infrastructure and private equity allow it to exploit niche markets and potentially achieve superior margins. The company's strong network in Latin America and proprietary investment solutions foster enhanced customer loyalty and recurring revenue, particularly in specialized mandates.

Vinci Compass is also keenly focused on technological differentiation and innovation to sharpen its competitive edge. The firm has expanded access to generative AI tools across its entire workforce, aiming to integrate AI into daily workflows to improve productivity and decision-making. Significant progress has been made in unifying its technology infrastructure, including implementing integrated cloud environments and a centralized platform for managing activities and projects. These operational advancements are expected to generate a positive margin impact over the next 12 to 18 months, with full integration benefits contributing an additional 2 to 3 percentage points to the FRE margin on an annualized basis by the third quarter of 2026. This commitment to technological evolution positions Vinci Compass to lead in an increasingly dynamic and expansive market, enhancing efficiency and reducing operational risk across its platform.

Strategic Expansion and Operational Excellence

The year 2024 marked a transformational period for Vinci Compass, highlighted by several strategic acquisitions that significantly expanded its platform. The successful combination with Compass, which closed in October 2024, was a pivotal moment, bringing Compass's $41 billion in AUM (as of September 2024) into the fold and boosting the combined entity's total AUM to $54 billion. This merger immediately scaled Vinci Compass's distribution capabilities and extended its product offerings, fostering collaboration and unifying expertise across management and commercial teams. The integration quickly yielded tangible benefits, such as the consolidation of offices in Sao Paulo and New York and the first commitment from a Mexican LP for VCP IV through the integrated Compass distribution network.

Further solidifying its market position, Vinci Compass acquired MAV in early Q3 2024, bolstering its agribusiness credit offerings, and Lacan in early Q4 2024, launching a new forestry strategy. Lacan, a prominent timberland investment management organization, brought R$1.5 billion in AUM and deep expertise in managing 130,000 hectares of planted land. The integration of Lacan's team and its fourth vintage fund, which will incorporate carbon credit returns, is expected to boost underlying returns and attract climate transition capital. These strategic moves underscore Vinci Compass's commitment to building a diversified, multi-asset platform capable of delivering comprehensive solutions across Latin America.

Financial Performance and Value Creation

Vinci Compass has demonstrated solid financial performance, reflecting the accretive nature of its strategic initiatives and robust organic growth. For the second quarter of 2025, the company reported fee-related earnings (FRE) of BRL 65.2 million, or BRL 1.03 per share, and adjusted distributable earnings (DE) of BRL 75.8 million, or BRL 1.20 per share. These results were driven by healthy FRE numbers, fueled by additional AUM from diverse strategies, with infrastructure, credit, and global IP&S being key highlights. Total AUM at the end of Q2 2025 stood at BRL 304 billion, with BRL 8 billion in portfolio appreciation and BRL 3.5 billion in capital formation. However, a 5% appreciation of the Brazilian real against the U.S. dollar resulted in a BRL 12 billion negative FX variation, offsetting some of the AUM growth. In U.S. dollar terms, AUM expanded from $53 billion in Q1 to $56 billion at the end of H1 2025.

Fee-related revenues reached BRL 233 million in Q2 2025, an 85% year-over-year increase, primarily due to the strategic inorganic growth from Compass and organic momentum. Advisory fees contributed BRL 26 million, including upfront fees from third-party distribution alternative commitments. The Corporate Advisory segment delivered over BRL 80 million in advertising revenues, signaling a normalized quarter. Excluding net catch-up fees, FRE grew 25% year-over-year. Performance-related earnings (PRE) saw a 50% year-over-year increase, with net performance fees recognized across credit, equities, Global IP&S, and real assets. Notably, the full divestment of the remaining asset in FIP Infra Transmissao generated realized performance fees that benefited distributable earnings, with a consolidated pretax impact of BRL 50 million on cash earnings in Q2 2025. Realized GP investment and financial income also increased by 49% year-over-year to BRL 35 million, driven by capital returns and strong liquid portfolio results.

The company's capital deployment strategy involves a "J-curve" effect for proprietary commitments. Initial investments in closed-end funds temporarily shift earnings from distributable earnings to net income as the funds appreciate. Subsequently, as funds mature and return capital, distributable earnings benefit from capital gains, and finally, performance fees (PRE) are recognized. Management anticipates these funds impacting net income starting in 2026, distributable earnings around 2027, and combined PRE and financial income (carry mode) "probably starting '28." This long-term value creation mechanism is a crucial part of the investment thesis.

Outlook and Strategic Trajectory

Vinci Compass is poised for continued growth, underpinned by a robust fundraising pipeline and strategic initiatives. The company expects continued growth from its credit segments in the second half of 2025, planning to launch a LatAm Fixed Maturity Corporate Debt Fund in Peru and a Vinci Special Opportunities Fund, with over 70% of its AUM expected from re-ups by clients of the successful Argentina fund. The fifth vintage of its flagship private equity strategy (VIR V) is set to launch in the second half of 2025, and the company is preparing a global USD conservative fund in Chile for high-net-worth clients. The Infrastructure Climate Change fund (ICC) reached its final closing in Q2 2025, raising close to BRL 2 billion, with deployment plans to expand distributed solar generation to 100 megawatts and invest in larger-scale renewable energy projects, energy storage, 5G tower infrastructure, and data centers.

Management anticipates the FRE margin to reach the low 30s percentage range by the second or third quarter of 2026. This improvement is expected from ongoing cost control initiatives, the conclusion of non-recurring expenses related to the Compass transaction by Q4 2025, and the full realization of integration benefits, which are projected to add 2 to 3 percentage points to the margin on an annualized basis by Q3 2026. While the initial target for double-digit AUM growth in 2025 (on an FX-adjusted basis) faced headwinds in Q1, management remains optimistic, citing strong performance in Q2 and early Q3. The dividend payout target of approximately 80% of distributable earnings is expected to be maintained for 2025.

Risks and Considerations

Despite the compelling growth narrative, investors should consider several risks. Macroeconomic uncertainty and market volatility, particularly in Latin America, can impact fund performance and fundraising efforts. High real interest rates in Brazil have historically led to outflows from liquid funds and the IP&S segment, which remains a cyclical part of the business. While management expects a moderation of these outflows, a sustained high-interest-rate environment could continue to pose a headwind. Currency fluctuations, particularly the depreciation of the Brazilian real against the U.S. dollar, can negatively impact reported AUM and distributable earnings, as evidenced by the BRL 12 billion negative FX variation in Q2 2025 and the R$16 million impact on adjusted DE in Q4 2024 from partially unhedged U.S. dollar debt. The company's active capital deployment strategy, while crucial for long-term value creation, also entails a medium-term negative impact on cash earnings as capital is deployed into closed-end funds before realizations occur. Furthermore, the intensified risk environment necessitates elevated due diligence standards, focusing on transactions with stronger collateral and resilient business models.

Conclusion

Vinci Compass Investments Ltd. is strategically positioned as a leading pan-regional alternative asset manager in Latin America, leveraging a series of transformative acquisitions and a robust, diversified platform. The integration of Compass, MAV, and Lacan has significantly expanded its AUM, product offerings, and distribution reach, enabling the firm to act as a comprehensive "one-stop shop" for a broad investor base. The company's commitment to technological innovation, including the adoption of generative AI and unified infrastructure, underpins its drive for operational efficiency and margin expansion.

While navigating the inherent complexities of emerging markets, including currency volatility and interest rate dynamics, Vinci Compass's disciplined capital deployment into high-growth private market strategies, particularly credit and real assets, is expected to unlock substantial long-term value through a well-defined J-curve effect. The strong fundraising pipeline and clear guidance for FRE margin improvement underscore management's confidence in its strategic trajectory. For discerning investors, Vinci Compass represents a compelling opportunity to gain exposure to the growing alternative investment landscape in Latin America, driven by a diversified business model, strategic foresight, and a clear path to enhanced profitability, even as it continues to solidify its competitive standing against larger regional players.