Patria Investments Ltd (PAX) Balance Sheet

The balance sheet has grown from $1.1B in 2024Q1 to $1.8B in 2026Q2, a 64% increase, but this expansion is primarily attributable to strategic acquisitions rather than organic asset generation. The securities portfolio jumped from $59.5M to $247.2M over the same period, indicating deployment of capital into investments. However, the efficiency ratio spike to 73.2% in 2026Q2 suggests integration costs are pressuring operating leverage, and the modest 2.6% revenue growth in the latest quarter implies that the acquired platforms are not yet contributing meaningfully to top-line expansion.

The loan-to-deposit ratio is not applicable, and the liability side is dominated by debt and operational liabilities rather than customer deposits. The equity-to-assets ratio has declined from 0.47 in 2024Q1 to 0.35 in 2026Q2, suggesting increased leverage, possibly to fund acquisitions. This structure implies that Patria's funding is not sticky like a deposit franchise but rather reliant on capital markets and credit facilities, which could be sensitive to credit conditions.

The negative NII and loan loss provisions suggest that Patria's balance sheet includes some lending or credit-related activities, but they are not material to the overall business model. The provision reversal in 2026Q2 contributed to net income, but this is a non-recurring benefit. The credit quality appears stable, with no significant NPL formation, but the lack of a substantial loan book means credit risk is not a primary concern for investors.

While absolute equity has increased from $514.9M to $563.1M, the equity-to-assets ratio has deteriorated, indicating that asset growth has outpaced equity retention. This suggests that Patria is using leverage to finance its expansion, which could strain regulatory capital if the firm were subject to bank-like requirements. However, as an asset manager, capital adequacy is less about regulatory ratios and more about maintaining sufficient liquidity to support operations and distributions.

The combination of cash and investment securities now totals $306.1M, representing 17% of total assets, up from 8% in 2024Q1. This improved liquidity position provides a cushion for operational needs and potential capital calls. However, the reliance on wholesale funding, as evidenced by the increase in total liabilities, may expose the firm to refinancing risk, especially in a volatile Brazilian rate environment.

The negative net interest margin indicates that interest income is not a significant earnings driver, so the direct impact of rate changes on NIM is limited. However, sustained high Brazilian interest rates could dampen LP appetite for alternative assets, affecting future fundraising and management fee growth. The recent acquisition of Abrdn's European PE business may diversify this risk, but the integration and cross-selling success remain uncertain.