To recap, Impax is a market leading asset manager in a specialist, but substantial and fast-growing investment area. It manages funds designed to capitalise on trends driving demand for environmentally sustainable delivery of products and services to the global economy e.g. alternative energy, water and transportation. It manages a portfolio of distinct products and strategies which invest in listed and private entities. The three largest listed equity strategies outperformed their individual benchmarks in the last financial year.
As momentum behind these trends gathers pace Impax has seen significant growth in assets under management and advice (AUM), fund performance and inflows from new and existing clients/geographical markets. It reported 59% y-o-y growth in (AUM) to £4.5bn at end September 2016 (since rising to £4.9bn by end November). That will generate parallel increases in fee income revenue and an inherently scalable, operationally geared business model push up EPS and net cash.
Growth in AUM incorporated record £496m net inflows reflecting strong growth in its North American business and expansion of product offerings for UK clients. The outlook is supported by an ‘encouraging’ mandate pipeline. Revenue was £21.1m (FY15: £19.7m), with a £23.7m full year run rate by the year-end, reflecting H2 AUM growth. Pre-tax profit 2% up y-o-y at £5.2m reflected prior year one-offs, relatively faster growth in operating earnings to £4.2m (FY15: £3.1m) illustrates operational gearing and scalability. The 2.1p/share full year dividend (final 1.6p/share, up 33%) is comfortably covered by 3.62p EPS (FY15: 3.13p).
The outlook for growth in AUM/fees is underpinned by prospects for further net investment into the group’s outperforming fund portfolio, strong global distribution and contributions from the latest private equity fund, which had attracted €149m commitments at first close on 30 November 2016 and will continue to raise money during 2017. That supports the case for a rating above generalist and less specialised peers.