A solid first half demonstrates Impax’s ability to trade successfully in choppier markets. It added 6% to AUM to £13.3bn in the period, then another £0.4bn in April. An above-forecast 36% increase in the interim dividend reflects confidence in the underlying outlook, cash generation and enhanced competitive positioning. Fourteen consecutive quarters of positive net inflows reinforces an already strong investment case.
Impax is a leader in investment in the transition to a sustainable global economy, with over two decades’ experience of its bespoke strategies. Its fund portfolio is differentiated, diversified by strategy and geography, and includes quoted and private equity infrastructure funds. This adds proven resilience in periods of market volatility. The core focus on sustainable growth is of growing interest to institutional and retail investors worldwide that is reflected in an ability to win substantial mandates from institutions and pension funds. Impax has access to global distribution via own network, distribution partners and intermediaries in target markets. The business is cash generative with a progressive dividend policy. The interim payment backs a 1.9% prospective yield, supported by management’s stated intention to review its distribution policy this year. Based on our forecast 3.5p/share final FY19e payment, dividends have more than doubled over the last three years1 . The operation is highly scalable, and costs are closely controlled. AUM growth can be absorbed with limited additional expense, so margins should build progressively. Management holds 30% of the equity, well aligned with external investors.
Impax has navigated uncertain global stock markets very effectively. At this stage we’ve held our £14bn full year AUM forecast i.e. another c £300m net inflow over the final five months vs c £400m in April. We will revisit that as month end AUM updates are released.
The medium-term outlook is under-pinned by new mandates, the growing importance of sustainability and environmental, social and governance (ESG) factors to global investors. We expect that combination to continue to drive AUM growth, EPS and dividends, and further attractive returns for investors.