Impax closed FY19 managing £15.1bn of assets, 20% up on the £12.5bn AUM of 30 Sep 2018, and beating our forecast of £14bn. Longer-term, we think the business remains well placed for strong revenue growth, capitalising on a global structural shift towards Environmental, Social and Governance (ESG) investing, and even stronger profit growth because of operational leverage.
AUM of London-managed listed equities (71% of total AUM, sourced mainly from institutional investors) ended the year on £11.7bn, 29% up year-on-year, an impressive performance considering the movement in major equity indices over the same period was mostly flat, typically varying between -1% and + 2%. London-managed Real assets AUM (3% of total AUM) closed the year on £445m, practically flat year-on-year with no capital raises or significant exits.
A shift of capital into ESG investments continues at pace around the world, and the outlook is for this trend to continue. The Global Sustainable Investment Alliance (GSIA) , using a very broad definition of sustainable investing, estimates that sustainable investing assets in the five major markets of Europe; the United States; Japan; Canada; and Australia & New Zealand; reached US$30.7 trillion in 2018, 34% up on 2016, and making up just over one-third of total managed assets.
The strategic positioning of Impax, coupled with efficiently run operations, makes the investment case from a capital growth perspective look attractive. In addition, it is our view that its strategic advantages are highly likely to attract consolidation interest in the future. From an income perspective, the investment case also has merits. The business is cash generative with a progressive dividend policy.
Impax has exceeded our previous year-end AUM forecast of £14bn, and we now look forward to seeing the impact on revenue and profits when the full-year financial results are released later this year.
