Impax is a market leading manager of both listed and private equity funds, which invest in ways that take advantage of more environmentally sustainable corporate and economic growth globally.
The Group has just reported outstanding FY17 results and a positive start to FY18. Momentum is being driven by organic growth and the proposed combination with US-based Pax World Management LLC, set to complete in Q1 2018. The underlying outlook remains compelling: record 61% growth in assets under management or advice (AUM) in FY17 included c £2.1bn of net inflows and £0.65bn from fund performance. Total year-end AUM was £7.3bn (FY16: £4.5bn), or £10.3bn including Pax.
Strong growth in fee income and operating margins - revenue and adjusted operating profit (excluding non-recurring items) up 55% and 121% respectively - followed further outperformance by Impax’s principal listed equity strategies (each has outperformed the global benchmark over one, three and five years) and a positive start by the new renewable energy private equity fund. Net inflows well spread by geographic source, confirm that Impax’s direct marketing and distribution partners have traction in key markets across the USA and Europe.
We expect the addition of Pax to enhance EPS from FY19. Impax’s recent share price performance means that the share based consideration should be priced above the 110p we’d assumed, so would be less dilutive. Impax’s valuation still appears undemanding relative to prospects: well supported by AUM growth, fee income and cash generation; underpinned by further potential from a broadened offer / distribution and cross sale opportunities.
NB you can see last week’s presentation by the CEO, Ian Simm, on the results and outlook at this address:
https://www.youtube.com/watch?v=nWyYelOf9bo
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