Valuation increased on AUM inflow momentum

A step-change in client inflows is what Impax’s FY20 should be remembered for. The global structural shift towards sustainable investing continued at pace - most notably through the Feb-Mar 2020 market crash - and Impax once again proved to be a leader in this space.

It ended FY20 (30 Sep) with £20.2bn AUM, 34% up year-on-year (end-FY19 £15.1bn) and 11% up in Q4 alone (£18.1bn on 30 Jun). We increase our per share valuation from 370p to 495p, mostly on higher AUM inflow expectations.

Momentum for sustainable investment continues. As CEO Ian Simm noted: “The pandemic has reinforced the imperative of a transition to a more sustainable economy, while society’s response has given us an indication of what will be needed to address climate change and other challenges of sustainable development.”

Looking forward, the repeatability of £3.5bn of inflows remains unproven, but we believe net inflows of £2.0 - £2.5bn per annum over the next few years is a realistic expectation.

We have updated our discounted cash flow model accordingly and increased our fundamental valuation to 495p.