AUM closed FY23 (30 Sep 23) on £37.4bn, 5% up y-o-y. Net flows were slightly negative at -£92m, while investment performance added £1.8bn. Q4 however saw £893m of net outflows as retail investors in particular withdrew capital from markets. Impax has stressed that institutional client flows are more stable with these clients tending to delay investments, as opposed to withdraw funds. Q4 investment performance also pegged back AUM by £1.4bn (-3.6% compared to the FTSE Environmental Opportunities All-Share Index fall of -5.7%).
While comparative peer data is not yet available for Q4, Impax’s relative growth rate over the first nine months of FY23 was certainly impressive. This outperformance is again underpinned by being a leader in attracting assets. Impax’s net flow rate has exceeded peers in every quarter since 2021, through bull and bear markets. We think this can continue: flows into sustainable funds, particularly those with the strongest credentials, and especially climate funds, have held up far better than conventional funds
We are therefore surprised to see Impax’s share price pull back so sharply compared to other asset managers, to the point where its PER has fallen below a peer group median (9.9 vs 10.0).
While the Q4 AUM fall does lead us to reduce our forecasts and our fundamental valuation from 900p to 800p per share, this is still 76% above the current share price.
