AUM declined over Q3 of FY24 from £39.6bn on 31 Mar 24 to £36.9bn on 30 Jun 24, a fall of 6.8%. That offsets a 5.9% increase over H1, resulting in AUM being down 1.3% over the first 9 months of FY24. Net flows and market movements / investment performance were negative in the quarter, -£1.89bn and -£0.81bn respectively. Impax noted that outflows were dominated by its wholesale channel, with some clients continuing to rotate out of equities, although outflows eased in key parts of its European operations. It noted the direct sales team enjoyed a busy period and that its new business pipeline is healthy.
Impax has previously stated that it had a strategic focus on increasing the proportion of overall AUM in this asset class, and in turn decreasing the proportion of its AUM in small and mid-cap equities. In this vein, it has announced an agreement (subject to terms and conditions) to acquire the European assets (cUS$2bn AUM) of US-based SKY Harbor Capital Management, LLC (SKY Harbor). It looks to be a very good fit. SKY Harbor was an early adopter of the integration of sustainability risks and opportunities into its investment process and specialises in the management of fixed income corporate high yield securities and leveraged loans.
Our FY24 & FY25 forecasts reduce slightly on the lower AUM level at the end of Q3. But overall, this update has a small impact on longer-term projections and our fundamental value remains at 800p per share (c90% above the share price) and Impax’s PER of 13.7 looks undemanding.