AUM on 31 Jan (four months into FY21) reached £26.8bn, already 33% up on FY20 closing AUM of £20.2bn. Q1 21 inflows totalled £2.8bn, compared to average quarterly inflows of £0.87bn in FY20 and £0.35bn in FY19. This step-change makes our previous inflow estimates of around £3bn per year look overly conservative. In addition, it is also almost certain to ratchet up profit margins as operational leverage kicks in.
Both London-managed listed equities and Impax North America are performing well. London attracted £2.7bn of inflows in Q1 (16% of starting AUM, compared to 4% of starting AUM in Q4 20), while Impax North America attracted £0.32bn (8% of starting AUM, compared to 4% in Q4 20).
Within the sustainable investing universe, we believe that Impax will continue to outperform. While most sustainable funds are still focused on ‘broad ESG’ offerings (which tend to focus on individual company business practices, not targeted themes), the trend is toward the latter - which is Impax’s strength
We increase our fundamental valuation to 925p per share, based on our projections of Impax reaching £50-55bn AUM by 2025. While market swings will inevitably make AUM progression non-linear, we believe Impax is well placed to achieve this growth.
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