So still very excited — and I think because of everything that’s going on geopolitically around the world, we never wish that we were in such this geopolitical situation as of now with several awards around the world. But given the situation, Latin America does actually stand out on that front as well, it’s a safer supply chain place to be — as a safer place on the geopolitical side. So I think that’s an additional reason why we’re getting that FDI up this year and probably will continue into the next year. Thank you, Craig.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Ricardo Buchpiguel of BTG Pactual. Your line is now open. Please remember to unmute. Once again, our next question comes from the line of Ricardo Buchpiguel of BTG Pactual. If your line is muted, please unmute.
Ricardo Buchpiguel: Hi. Good morning. I have two questions on my side. Can you hear me okay?
Alexandre Saigh: Yes, Ricardo, we can. This is Alex here. Thank you very much.
Ricardo Buchpiguel: Great. So first of all, I believe you mentioned that you have now a far target for 2024 of $170 million. If you could comment in more detail what level of margin implying this guidance, will be helpful. And also, could you also get a little bit more on the environment for inflows related to the Moneda funds. And based on this level of sort in 2024, what you can expect for fundraising in the next year? Thank you.
Alexandre Saigh: Okay. Ricardo, thank you very much again for your questions. On the first question, I think we are very much aligned in delivering our PAX Day guidance. But to be honest, I’m very proud of the team that we managed to deliver. The guidance that we gave late last year and late last year, I think the conditions — at least the vision that the market would be a little bit better in the second half of 2023 as they are today. So we set out the guidance of $150 million of FRE for this year, which I mentioned we expect to deliver. Then we mentioned $225 million of FRE in 2025. So the bridge between $150 million and $200 million and $225 million, $170 million. The exact middle would be $175 million. We’re saying $170 million because some of the inorganic growth that we did, we did mostly later in 2023.
So they’re going to kick in later in 2024 as we close the deals. So that’s why they’re going to be just fully in our P&L 2025. So I was already confident on hitting those numbers. When, of course, I gave the guidelines in the end of 2022, $150 million of FRE this year, $100 million to $125 million FRE for 2025. Now I’m giving the guidance of $170 million, which is the middle of the way for 2024. And with the inorganic growth of Bancolombia, VBI, now the Aberdeen carve-outs, which we call the private markets solution business, I think the chances of hitting those numbers actually increased because we are already at $31 billion of fee paying AUM, we were expecting to be at $35 billion of fee paying AUM end of 2025, December of 2025. So I’ll probably finish the year 10% off of the number that I was expecting end of 2025.
So it’s two years before. And as you know, revenues are driven by fee paying AUM. So the revenues for next year and for 2025 in this what I’m saying here that we are ahead of the curve. So the chances of us hitting those numbers increased with this inorganic growth. In addition, I also try to transmit the message here that we will hit the number of approximately $5 billion of organic fundraising for this year. And we are also giving the guideline that we will raise next year between $5 billion to $6 billion, answering the second part of your question. And that $5 billion to $6 billion organically for next year, $5 billion to $6 billion this year. We’re going to hit close to $5 billion, $5 billion to $6 billion next year as a guidance. And it’s between several funds, the ones that I mentioned when I was answering Craig’s answer, which is private equity fund 7, infrastructure fund 5, private equity growth, private active venture capital, infrastructure credit, infrastructure, FIDC, the [indiscernible] that you know, the real estate investment trust, the FEEs, et cetera, for public equity that is doing very well.
All of our public credit funds, the high-yield strategies, Latam, et cetera. So we have over 30 products. So when I see, again, the pipeline, the funnel between leads to subscription document line or investments in our funds. I can I’m comfortable to give out the guidance for next year of $5 billion to $6 billion of organic fundraising as well. So again, I’m happy to be able to be in this position today, which puts me in a more comfortable position to deliver the PAX Day guidance. And I hope I answered your questions. Sorry, on the margin side, Marco is reminding me that I forgot to answer the margin side. We finished — as you know, this quarter, with a margin of 58%, FRE margin of 58%, up from 56%. We expect to be in the mid-50s next year.
And why is that? Mid-50s, why does it drop a little bit because we are — as we do these acquisitions, we take on businesses that have a lower margin and then we work on raising the margin again. So very interesting, if you follow our quarterly margins as of the IPO, first quarter of 2021, we came out with a little over 60% FRE margin than we did associate ourselves with Moneda. The margins dropped a little bit to 54%, 55%. We integrated the business with Moneda. The margin went up again to 56%, 57%. Then we integrated other business and went down a little bit, and now it’s back to 58%. So I feel comfortable with our ability as a group of managers to integrate these businesses and a couple of quarters later, bring this this margin up again.
But as 2024, we’re going to be integrating big businesses, that’s why we’re giving the guidance of mid-50s margin because once we integrate the business margin comes down, but I am confident that as we look into the future, 2025, 2026, we will integrate this business as we have integrated Moneda and integrated the other acquisitions that we did and bring the margins back to 60%. I hope I answered your question.
Ricardo Buchpiguel: Very clear. And if I may have another one. We saw that in Q3, there was like almost $600 million outflow in the infrastructure strategy impacting the fee AUM. So I want a more color about that would be helpful. Thank you.
Alexandre Saigh: Yes. Thanks for the question. I actually read your notes here, and I saw that you did mention that on your note as well. And thank you for asking it. The way that it works is the following, we did sign some infrastructure deals end of 2022, but we closed them in the second quarter of 2023, April of 2023. Once we close them, that’s when we take the cost basis out of our AUM. And so you only saw in 20 — in the third quarter, the reduction of that because that’s when we actually had the close of this — we charge fees on a semester basis, which is at the head of the semester. So January of 2023, these — some of these infrastructure assets were already — were still on the cost basis because we have not closed the deal — we closed a deal in the second quarter, and then we removed it or subtracted from our cost base, and that’s the $500 million that you see there.
So it is completely related with the businesses that we sold. Remember that we gave back $2 billion worth of money to our infrastructure investors. The cost of those $2 billion is the $500 million that you’re looking at right now in the third quarter number. So it has only to do — it’s a very positive sign because we are recycling the money. We are giving $2 billion back on a $500 million cost. So we’re making a lot of money for our investors. Investors are happy. They commit to the next fund, the whole cycle, we have to keep this cycle moving the wheels turning. So it has nothing to do, but with a very healthy and natural cycle of our business that we then took off from the fee paying AUM of the infrastructure business, $500 million linked to the $2 billion that we gave back to investors, okay?
Ricardo Buchpiguel: Very clear. And just to make sure, for Q4, do you have any major movements like that expected or not?
Alexandre Saigh: If we do sell businesses during the Q4, it will only hit — you will only see the numbers affecting the first quarter of 24%. So if we do so business, sorry, in the Q4 2023, you will only see this number in the first quarter of 2024 when we then will announce to you in an earnings call late April, beginning of May. So for the Q4, there is no reduction of that sort.
