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ESG specialisation pays off for Impax

Ethical principles pays off for Impax in a strong year
ESG specialisation pays off for Impax
  • Dividends, profits climb
  • North America is a key source of funds

The emphasis on ethical investing paid off handsomely for Impax Asset Management (IMX) as the fund manager enjoyed a year of record investment flows into its trophy funds, with assets under management (AUM) surging by 84 per cent to £37.2bn. This was driven by £10.7bn of net new business, resulting in an enhanced dividend for the company’s patient shareholders.  

The manager’s investment performance held up well during the year, despite the rotation into value strategies in the early part, which increased the headwinds for those funds with limited exposure to the trend. Despite this impact, 91 per cent of total AUM, comprising eight different funds, outperformed their benchmarks over a three-year period. What tends to mark Impax out from its peers is its access to US retail investors through a longstanding presence in North America; AUM in the region increased to £9.4bn, with Impax benefiting from the integration of its Impax New Hampshire acquisition in January this year.

Management also hinted at diversifying away from Impax’s traditional focus on green power generation and looks set to take a greater interest in investing in sectors such as farming and the experimental science of replacement environmentally-friendly materials.

Impax’s forward price/earnings ratio for 2022 and 2023 of 34 and 32, respectively, is at the highest end of average valuations for the asset manager sector. At that rarefied level, the shares are priced for perfection, which leaves little incentive to load up when market trends could change. Hold.

Last IC View: Hold, 853p, 13 Jan 2021  

IMPAX ASSET MANAGEMENT (IMX) 
ORD PRICE:1,372pMARKET VALUE:£2bn
TOUCH:1,370-1,374p12-MONTH HIGH:1,448pLOW: 562p
DIVIDEND YIELD:1.5%PE RATIO:44
NET ASSET VALUE:83pNET CASH:£58m
Year to 30 SepTurnover (£m)   Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201732.75.856.502.90
201865.711.49.004.10
201973.718.912.25.50
202087.516.710.68.60
202114345.731.520.6
% change+94+142+158+275
Ex-div:10 Feb   
Payment:31 Mar   
*Includes intangible assets of £29m, or 22p a share