Impax lacks impact

Given that asset managers are currently as popular with equities investors as one of Vladimir Putin’s historical essays, Impax Asset Management’s (IPX) performance was highly creditable during a half where the market has been utterly unforgiving of any sign of companies in the sector not pulling their weight. True, the share price has cratered since the full-year results in December, but Impax should still benefit from the rapid imposition of ESG investing requirements in the long-term.

Assets under management closed the period at £38bn, before falling back marginally by the end of April. Inflows, with some signs of slowing organic growth, were positive at £2.5bn, though again this was offset by a volatile market performance lopping £1.7bn from valuations. Impax hasn’t been helped, either, by what was a clear market shift towards value stocks and commodities. Management noted that many sustainable technology companies tend to be classed together with technology shares and the retreat in equities meant that the FTSE Environmental Opportunities Index dropped by 4.5 per cent in the first quarter. The company said it had “moderated” its hiring after clearly going on a spree in 2021. Operating costs were 37 per cent higher at £54.7 million as the full impact of all the new bodies took hold.

Impax is essentially a sound asset manager with a niche that attracts investors who must increasingly comply with ESG investing regulations on types of asset classes and individual companies. While our doubts that the share price before Christmas could maintain its lofty valuation were correct, there is still time to wait for a better entry point than 17 times Berenberg’s forecast earnings for 2022. Hold.

Last IC view: Hold, 1,372p, 6 Dec 2021