Impax Asset Management
Impax is a market leading and multi award winning manager of both listed and private equity funds, which invest in ways that take advantage of more environmentally sustainable corporate and economic growth globally.
AUM racing ahead of forecasts
By 31 August 2020, 11 months into the financial year, assets under management had grown to £19.3bn, substantially above our previous year-end forecast of £17.2bn, and 28% up on the FY19 year-end level of £15.1bn. Impax’s strong and continued progress since the March 2020 market lows sees it set to exceed our year-end forecasts for revenue (£77.9m), adjusted operating profit (£20.9m), and net cash position (£32.1m) by some margin.
Such AUM performance is indicative of both being in an asset management sweet-spot and being a winner within it. Impax has obviously benefited from positive market moves, but also continues to see substantial client inflows, which we believe will continue. The share price has reacted accordingly, closing at 493p on 8 September 2020, 27% up on the 31 December 2019 price of 389p and far in excess of broader equity indices.
Impax is scheduled to provide a more detailed breakdown of its AUM position for FY20 in early October 2020 – splitting out client flows versus market moves and providing operating unit AUM performance (London-managed listed and real assets and US-listed assets). At that time, we anticipate updating our forecasts and valuation.Download Now Missing Out Get our research first
V-shaped share price recovery looks justified
Client inflows remained strong during the Q1 market rout, when many funds around the world saw some of the largest outflows in decades . That has contributed to achieving year-on-year revenue growth of 22% (£41.2m in H1-20, up from £33.8m in H1-19), adjusted operating profit growth of 36% (£10.5m vs £7.7m), and probably most importantly in such uncertain times, a further strengthening of Impax’s net cash position, up 112% from £9.7m to £20.6m. The interim dividend has been increased by 20% to 1.8p (2019: 1.5p).
In the post-results period, AUM has recovered rapidly, jumping from £14.4bn on 31 March 2020 to £17.3bn on 31 May 2020. That is a 27% annual increase measured from 31 May 2019 to 31 May 2020.
Impax has proven itself a top performer when it comes to producing long-term returns for investors. That, alongside having an attractive product suite and established distribution channels in the major capital markets of Europe, the USA and China, has resulted in it being a clear winner when it comes to attracting AUM. In a comparison with a London-listed peer group of asset managers, it ranked first in net AUM inflows during the Jan-Mar 2020 quarter and was in the top quartile over the year Apr 2019 – Mar 2020.
The V-shaped share price recovery from the March crash looks justified, and the current price of 381p is only slightly higher than our discounted cash flow valuation of 360-370p. We also remain encouraged by the macro-trend of huge amounts of capital shifting to Sustainable Investing, with Impax being a leader in that space.
Impax AM: Interim Results Presentation June 2020
Ian Simm, CEO, and Charlie Ridge, CFO, report on a record 6 months of £1.8 billion net inflows, with AUM then rising from £14.4bn at end March to £15.8bn at end April. Despite Covid-19.
Investors want more exposure to Sustainable assets, and Impax has a unique record built on 2 decades' experience. The funds are performing well and the business is both scalable and well positioned to win further mandates.
Impressive AUM inflows despite market rout
Clients of Impax continued to show their confidence in the face of a collapse in equity markets, with £1.1bn of net inflows during the recent quarter and, impressively, £6m during March. This bodes well strategically.
A key attraction will be the downturn-resilience provided by Impax’s cash-flush balance sheet. On 30 Sep 2019, cash reserves stood at £26.2m, with no debt. Our estimates show Impax has remained comfortably cash-flow positive during H1, and over the FY to Sep 2020 will actually increase its cash position by over £9m.
The trend of capital moving into the sustainable investing space is now well established and is unlikely to merely be a short-term phenomenon. Indeed, we think investors are intensifying their hunt for ‘post-corona portfolios’ and more are turning to Impax. Consequently, the 11% decline in its shares this year seems strange.
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Full year results discussion
Foundations laid for further growth
AUM impresses, ESG stars continue to align
An interview with Ian Simm, CEO and Founder, about prospects
A template for sustainable growth
Strong Q2 AUM update underpins FY19e
Forecasts trimmed, attractions intact
Not your average asset manager
Full Year Results Interview 2018
Q4 above forecast, underpins strong outlook
Still motoring ahead
Interview with CEO post results
Making one plus one equal three
Delivering a sustainable future
Investor Forum November 2017
Impax Asset Management Webinar
No trumping AUM growth
Earnings driven by strong momentum
Impax is a market leading manager of both listed and private equity funds, which invest in ways that take advantage of more environmentally sustainable corporate and economic growth globally.
Impressive first half earnings were 23% up on the second half of FYâ€™16 (100% ahead of H1â€™16). That reflects six consecutive quarters of strong growth in assets under management and advisory (AUM). Total net inflow was a record Â£870m in the first half, equivalent to a 27% increase in AUM to Â£5.7bn by end March, while another very good month pushed that above Â£6.0bn by end April. The interim figure included $1bn for North America, an important medium term milestone.
We have upgraded both our FY17, and FY18 AUM forecasts, as Impax has already hit our previous target with five months remaining. Furthermore, the outlook remains positive since the robust performance by all group investment strategies underpin its profile as a leading global investor in environmental markets. It continues to attract attention from institutional investors in the UK, Continental Europe and the US.
The drivers which helped AUM double over the last two years remain intact. The financial model is cash generative, benefits from a declining cost ratio/improving operating margin. That will finance seed investment in new funds, possibly acquisitions, but also increases in dividends and the pay-out ratio, which we regard as relatively conservative, despite the latest, 40% increase in the interim distribution.
Impaxâ€™s team culture means no dependence on â€˜starâ€™ fund managers (whose departure might result in loss of assets) and its core investment focus is in strong demand from investors. Yet its stock-market value is just 2.2% of AUM that are themselves growing rapidly.Download Now Missing Out Get our research first