AUM fell 8% in Q2-26 (Jan 26 - Mar 26) from £24.2bn to £22.3bn. Investment performance was positive at +£0.1bn but net outflows totalled -£2.0bn. This was a quarter of very heavy outflows for equity funds generally, and active funds especially. Impax was no exception.
Since our last note in early Jan, the war in Iran has undoubtedly shaken markets and weakened investor sentiment. We reduce our end-FY26 AUM forecast from £28.1bn to £22.8bn. Impax has guided to FY26 revenue being in the £109m - £113m range, which is well below our previous forecast of £129m.
The group has, however, announced that it will be reducing costs via a new efficiency programme, which will mitigate the impact of the revenue fall on profits. And whilst geopolitical stress is prominent, Impax’s deep investment expertise in areas impacted by these events, such as energy efficiency, energy security, renewable energy, critical infrastructure (incl. energy, water, and digital) and environmental risk could make it a highly attractive manager for asset owners’ capital.
Our fundamental valuation/share reduces from 380p to 250p, but this remains around double the share price. This valuation disconnect is further reflected in a lowest-in-sector PER of 7.9x. We maintain that this discount seems excessive considering Impax’s strategic positioning, profit levels, and strong balance sheet.
