Impax closed FY19 managing £15.1bn of assets, 20% up on the £12.5bn AUM of 30 Sep 2018, and beating our forecast of £14bn. Longer-term, we think the business remains well placed for strong revenue growth, capitalising on a global structural shift towards Environmental, Social and Governance (ESG) investing, and even stronger profit growth because of operational leverage.
AUM of London-managed listed equities (71% of total AUM, sourced mainly from institutional investors) ended the year on £11.7bn, 29% up year-on-year, an impressive performance considering the movement in major equity indices over the same period was mostly flat, typically varying between -1% and + 2%. London-managed Real assets AUM (3% of total AUM) closed the year on £445m, practically flat year-on-year with no capital raises or significant exits.
US operations (23% of total AUM) were not as strong, with AUM falling slightly by 3% to £3.0bn (adjusted to remove double-counting). Challenging market conditions prevailed as skittish retail investors, which make up the bulk of the US-managed book, exited equity markets, particularly during the turbulent months of December 2018, May 2019, and August 2019. Notably, in the last quarter of FY19, Impax’s US operations recorded a small inflow of funds, bucking the trend of a continued broader move out of US equity mutual funds.
The Global Sustainable Investment Alliance (GSIA)3 , using a very broad definition of sustainable investing, estimates that sustainable investing assets in the five major markets of Europe; the United States; Japan; Canada; and Australia & New Zealand; reached US$30.7 trillion in 2018, 34% up on 2016, and making up just over one-third of total managed assets.
By 30 June 2019, signatories to the UN-backed Principles for Responsible Investment (PRI) reached 2,450 (roughly doubling over five years). Combined, these signatories manage assets of US$82 trillion.
Indeed, according to Morningstar: “Over 170 ESG-related regulatory measures were proposed globally in 2018—more than in the prior six years combined. And more than 80% of the measures target institutional investors rather than companies or issuers.