Impax Asset Management: 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 FY’16 (100% ahead of H1’16). That reflects six consecutive quarters of strong growth in assets under management and advisory (AUM). Total net inflow was a record £870m in the first half, equivalent to a 27% increase in AUM to £5.7bn by end March, while another very good month pushed that above £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.
Impax’s team culture means no dependence on ‘star’ 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.
Impax Asset Management Group is an investment firm, providing listed and private equity strategies primarily to institutional clients. As of Sep 30 2017, Co. has total assets under management and advice of £7.30 billion.
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