Forecasts trimmed, attractions intact

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.

Our FY19e AUM projections (update 14 December 2018) assumed steady underlying net inflows to existing and funds and flat y-o-y investment performance.  In the event, Impax’s end December AUM update revealed a £0.96bn fall in total AUM during Q1, from £12.52bn to £11.56bn. 

A strong January saw a 4.9% recovery in a single month to £12.12bn. That is unquestionably encouraging, but perhaps still leaves Impax with too much ground to make up in the next eight months to achieve our £14.5bn AUM forecast. We have therefore trimmed the latter to £14.0bn, and total fee income, operating profit and EPS now reflect the recent volatile market conditions.

In Q1, the UK funds were up £0.54bn, ahead of forecast, but their performance was offset by a £0.23bn net withdrawal reported by the Group’s US operation. Market movement, FX and performance knocked another £1.32bn off the total. Some £0.56bn of the £0.96bn aggregate AUM decline in Q1 was recovered in January. 

A more volatile investment environment has not changed our view on the fundamental strengths of Impax’s unique proposition. The latter remains intact and we believe current measures (PER, yield, EV/NOPAT) materially undervalue the business’s potential for total shareholder returns or its growing appeal to an acquisitive Fund Management major as ‘best in class’ in an increasingly important segment.