Alessandro Horta evaluates this moment as favorable to diversification and comments on the post-IPO phase, with a focus on the acceleration of alternative investment products in Brazil.
In line with internal expectations, Vinci Partners' IPO raised about $275 million on January 28. The amount evaluated as "super positive" by the CEO of the asset management firm, Alessandro Horta, will be strategic to accelerate the launch of private market products in Brazil. "We will use the amount raised to seed and attract resources from clients, putting Vinci's commitment to catalyze this process," said the executive, in an interview with ABVCAP.
The company's strategy is to use the money for Vinci to become a shareholder of the funds it intends to launch, with a smaller exposure, and to raise funds from third parties. The company targets four areas of activity in the private market segment: private equity, infrastructure, real estate and private credit. At the same time, says Horta, Vinci is looking at possible acquisitions, since it sees a consolidation movement in the financial sector, including alternative investment managers.
As a market in consolidation, Horta considers that there is an opportunity for growth for the private equity industry in the country. "The moment is favorable for the growth of the alternative investment industry in Brazil. When we look specifically at the private equity industry, there is a path, a large 'avenue' of potential growth," he says. According to the executive, the favorable scenario is reinforced by the current low interest rates and the migration of fixed income assets towards higher risk assets. Read excerpts of the interview.
Why the decision to go public at Nasdaq and not in Brazil?
Because there is no public asset management industry in Brazil, from a listed company perspective. The global investor is more used to analyzing public companies from the alternative asset management industry. The decision was made to widen the scope and to ease the conversation with investors who are used to look at this type of investment. The Brazilian capital market has a lot of qualities, but in the alternative investment industry, where we operate, there are not a lot of options. Outside of Brazil there are much more experience given the many options, depth and time with listed public companies in the industry. This facilitates the understanding and the universe of investors that look at this type of asset.
Does the IPO overseas strengthen Vinci's internationalization?
I believe so, but our focus is Brazil. The objective of raising capital, totally primary, without selling shares of the current partners, is to invest and expand in the Brazilian market. This is to take advantage of opportunities in the migration of investors from savings and fixed income products toward other types of assets, including alternative assets. Internationalization makes sense from the point of view of spreading the word abroad about our brand and the opportunities in the domestic market. At the current moment, however, an international expansion is not our focus.
How do you evaluate the $275 million raised in the IPO plus the greenshoe?
It is the number we wanted, exactly our target. We evaluated it in a positive way. We had a base offer focus of US$250 million and the greenshoe of US$25 million increased this value slightly more.
How will this raised capital be used?
The main idea is to accelerate the launch of private market products. We will use the amount raised to seed and attract funding from clients, putting Vinci's commitment to catalyze this process. I am referring to products in four business areas: private equity, infrastructure, real estate and private credit. We already have a pipeline for the capital raised. Our logic is to use the capital raised to become shareholders, with a smaller exposure, of all the funds launched, and to raise capital from third parties. We believe it is important that the company commits to participate as a shareholder in all the funds we launch.
Are acquisitions on your radar? If yes, which companies or sectors?
Yes, it´s on the radar and it will have to be done strategically as opportunities arise. We believe there is a path of consolidation in the alternative financial services and investment management industry. This process will eventually include acquisitions. On sectors, Vinci is a very diversified company from the point of view of the asset management strategy and asset classes. Thus, there may be opportunities for consolidation in a variety of areas, with a focus on private markets.
What was the experience of holding a completely virtual IPO outside the country?
It was super interesting. We were able to access many investors, especially since we didn't have to physically travel. It was quite easy to have meetings. For example, in the morning we were in Singapore in Asia, then in the afternoon we were in London in Europe, and finally in New York and San Francisco in North America to finish the day. We were able to have a large geographical scope and reach. In the future, this experience and that of everyone who has had to go public and do other operations digitally, such as virtual roadshows, will be the standard. Even after the pandemic, when the situation is normalized, we may have trips, but they will not circulate as much as before, because this new dynamic has proven to be very efficient.
What is the difference in dealing with institutional clients and dealing directly with investors for listing stocks?
There are some differences. Investors for listing stocks are more focused on the history of the company, unlike when we raise for a long-term fund, who look more at investment capability. The investors also have a more focused knowledge of this market and include portfolio managers who cover the alternative investment sector globally. The industry understanding of this investment profile is very deep.
How do you perceive the current situation and the potential for alternative investment products in Brazil, amidst the pandemic scenario and gradual recovery of the economy?
Everything is "to be done" on the alternative investments side in Brazil. The penetration of these products is small, in any type of metric or investor profile -- foreign, local, institutional, individual, among others. The macro variables that drive it are favorable: we have interest rates at civilized levels and a need for asset reallocation in savings and diversification. The potential growth is large. In private markets, it is gigantic; in asset allocation too. The moment is favorable for the growth of the alternative investment industry in Brazil. When we look specifically at the private equity industry, there is a path, a large "avenue" of potential growth.
How do you evaluate the current moment of the Brazilian stock market, with record IPOs: is it ahead of the curve?
As a private market player, we always look at these movements. The current activity in the segment is extremely beneficial and a consequence of the migration of resources from fixed income. Currently there is more capital, managers, funds, and volume under management in the country, which leads to more need for investments. Brazil had long periods of a closed capital market, and that is now becoming more liquid and deeper, which is a trend that I hope will continue. Now it is difficult to predict whether the current volume (movement through IPOs and follow-ons) and activity will remain at the same levels.