- AUM Decline and Outflows Assets under management fell to £26.1B from £37.2B, driven by £11B in outflows, primarily due to mandate losses and negative net flows.
- Share Buyback and Balance Sheet A £10M share buyback program was executed, with plans to cancel up to 4% of share capital, supported by a healthy cash surplus and 23.7% operating margin.
- Fixed Income Growth Acquired SKY Harbor, adding 23 investment team members and expanding client bases in Europe and the US, signaling strategic focus on scaling fixed income.
- Operating Profit and Margin Decline Adjusted operating profit dropped to £33.6M (£28M revenue decline), but cost savings of £9M helped offset losses, with EPS at 21.3p (down 33%).
- 2026 Recovery Outlook Anticipates market recovery by 2026, with improved equity valuations (PEG discount vs. 5-year average) and diversification into fixed income and private markets.
Business Diversification Efforts
The company is actively diversifying its revenue streams, with a focus on growing its fixed income and private markets businesses. The acquisition of SKY Harbor in April has contributed to the growth of the fixed income business, adding 23 investment team members and establishing a client base across Europe and the US. Impax is also making progress in private equity, with plans to expand its fourth fund. The Board does not have a formal target for the split between listed equities, fixed income, and private markets, but the company is working towards achieving a more balanced revenue mix.
Valuation and Outlook
Impax Asset Management's valuation metrics indicate a relatively attractive position, with a P/E Ratio of 6.13, P/B Ratio of 1.62, and Dividend Yield of 18.42%. The company's strong brand and diversified client base position it well for future growth. Management expects a recovery in 2026, driven by a broader market and less dominance by major tech stocks. The company's client base is expected to ride out the current cycle, with longer-term clients being more resilient due to their better understanding of the business. Analysts estimate next year's revenue growth at -9.1%, but the company's efforts to diversify its revenue streams and grow its fixed income and private markets businesses are expected to drive future growth.
Operational Efficiency and Cost Management
The company has taken steps to optimize its operating model, reducing headcount by 15% to 275 in response to the decline in AUM. The average fee margin improved to 46.9 basis points, and the company remains committed to delivering strong investment performance. The systematic equities products involve creating universes of thematic stocks and using computer models to pick stocks, with human intervention limited to ensuring consistency with the process. The company's strong distribution network and investment professionals are in place to support growth.
Geographic Presence and Distribution
North America accounts for around 40% of Impax Asset Management's revenues, with the US and Canada being roughly 80-20 split. The company sees opportunities in both countries, with Canada being more pro-sustainability and the US having a larger economy. The BNP channel has stabilized in recent months, with outflows dropping as the sales force has become more focused on the company's products. The acquisition by BNP Paribas Investment Management of AXA Investment Management is expected to increase distribution potential.