Impax Asset Management Company Research (IPX)

AUM fell 8.3% over Q1 of FY25 (1 Oct 24 - 31 Dec 24) from £37.2bn to £34.1bn. Net outflows were -£2.4bn with investment performance -£0.66bn. The termination of Impax’s smaller mandate with St James’s Place (announced Oct 24) contributed to the outflows (see also below), as well as redemptions driven by industry consolidation in the APAC region. But pleasingly, Impax has continued to see a slow-down in outflows from its largest European distribution partner, BNP Paribas Asset Management, and from its US mutual funds. Impax has stated it expects the Sky Harbour Capital Management acquisition (announced Jul 24) to close shortly. This will add c. £1.3bn of fixed income AUM. We remind readers that this is part of a strategic move to increase the proportion of AUM in this asset class, and in turn decrease the proportion of AUM in small and mid-cap equities. We have reduced our end-FY25 AUM, but other forecasts change only slightly downwards, and our fundamental valuation remains 600p, more than double the share price. It is worth noting that Impax is paying particular attention to cost management, and we do not assume any further cost reductions beyond bonus reductions which will filter through on AUM and revenue falls. Also, we flag the low PER v. sector peers (page 2). Additionally, readers may want to refer to our 28 Nov 24 note ("Solid FY24 results, triggers to reignite growth visible") for detail on Impax’s market environment, positioning, and growth prospects including a number of potential triggers for a return to inflows.