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Impax’s unprecedented tailwind

The asset manager’s specialism has rapidly morphed into a mainstream concern
December 4, 2019

The past year has been marked by “unprecedented concern globally about environmental issues and rapidly expanding opportunities”, in the words of Impax Asset Management (IPX) chairman Keith Falconer. It’s hard to contest that view. Equally, it is hard to think of a UK-listed financial services group better placed to capitalise on this momentous, even exponential, shift.

IC TIP: Buy at 300p

As previously disclosed, Impax saw its assets under management climb 21 per cent to £15bn in the 12 months to September. While all but one of its funds beat their MSCI All-Country World Index benchmark and contributed to the asset rise, the balance came from a raft of new mandates. That outweighed a negative aggregate dip in flows to the Pax World business acquired in early 2018, despite big improvements in the performance of its funds.

Two years of growing fee income has also allowed Impax to pay off a $13m (£10m) debt facility it signed to fund the Pax deal. Although a revolving credit facility has been retained, a strong cash position has led Impax to adopt a new policy to pay dividends equal to between 55 per cent and 80 per cent of adjusted profit after tax.

Broker Peel Hunt flagged the possibility of upgrades “as the year progresses”, but currently expects adjusted EPS of 11.5p for the year to September 2020, rising to 12.2p in FY2021.

IMPAX ASSET MANAGEMENT (IPX)  
ORD PRICE:300pMARKET VALUE:£391m
TOUCH:291-300p12-MONTH HIGH:306pLOW: 176p
DIVIDEND YIELD:1.8%PE RATIO:25
NET ASSET VALUE:48.5p*NET CASH:£11.9m
Year to 30 SepTurnover (£m)

Pre-tax profit (£m)

Earnings per share (p)Dividend per share (p)
201519.75.143.161.6
201621.15.203.622.1
201732.75.856.502.9
2018**65.714.69.04.1
201973.718.912.25.5
% change+12+29+36+34
Ex-div:27 Feb   
Payment:19 Mar   
*Includes intangible assets of £37m, or 29p a share. **Excludes HY special dividend of 2.6p a share.