Impax’s recent AUM progress during another period of market turmoil looks more impressive than we previously thought. Over H1-23 (Oct 22 – Mar 23), 12% AUM growth (+£4.4bn to £40.1bn) was the highest among a London-listed peer group. £1.1bn of net inflows translated to a 6-month inflow rate of +3.1% which was also the highest by some distance (peer group median: -2.3%). Investment performance contributed £3.3bn to AUM, one of the highest returns among peers. H1-23 revenue of £88.0m was up 1.4% on the preceding half-year (H2-22: £86.8m) and down 0.3% y-o-y from £88.6m in H1-22, impacted mostly by changes in average AUM over these periods. Adj. operating costs increased 11% y-o-y from £54.7m to £60.6m, mostly due to increased staffing levels over the last year and investment in systems and infrastructure to ensure the business remains equipped to support further growth. Hence, adj. operating profit fell 20% y-o-y to £27.3m and adjusted operating margin fell to 31%. We think there is a flight to quality underway as sustainable finance transitions to ‘phase 2.0’. With a 25-year track record; superior sustainability credentials; knowledge, experience, and systems for generating superior returns from pure-play sustainable investments; Impax is poised to thrive. Our AUM forecasts remain unchanged, but our near-term profit forecasts reduce with the costs increase, which means our fundamental valuation/share falls from 1,000p to 900p.