FY18 results show how effectively Impax converts a persuasive investment thesis into attractive shareholder returns. We see multiple reasons for AUM, margins and earnings to continue to grow, even in softer equity markets.
The key impetus remains an increasingly urgent need for products and services that encourage the transition to a more sustainable global economy. That’s a distinct, specialist investment class, with massive scale and genuine growth potential. Impax is amongst the world’s leading investors in companies and industries specifically positioned to make that transition happen. It capitalises upon a recent dramatic increase in demand for ways to tackle the consequences of a more crowded planet, backed by awareness that climate change represents both an acute risk and, with expert guidance, a considerable investment opportunity
The context supports the argument. The last decade has seen the five warmest years on record, the US and Australia have recently experienced severe weather events and 2017- 18 was a catastrophic hurricane season. Air pollution, plastic waste and access to clean water are major issues. An estimated three billion people currently live with water scarcity, possibly five billion by 2050, creating an urgent need to conserve, treat and recycle limited and increasingly, polluted water supplies.
FY18 results were impressively robust and the outlook is positive. The main drivers pivot on an expanding global population, rising living standards, natural resource constraints and climate change. Even in less supportive equity markets that should drive investment as the individual funds perform.
A 20 years track-record confirms Impax’s ability to grow AUM across market cycles. Recent growth has created a world leader in a fast-growing investment speciality. The operation is scalable and operationally geared, has broad competencies and global profile. That has positive implications for earnings and, as a unique asset itself, the group could attract consolidation interest in the future. It recently reported sizeable new investment mandates from UK, EU and US investors (not yet reflected in reported AUM) and share value metrics show scope for further material upside on successful execution.