Impax eyes more sustainable opportunities with SJP

Environmental fund house took over wealth manager’s sub-advised mandate this month

Impax

Impax Asset Management says it is eyeing more sustainable opportunities with St James’s Place (SJP), following its acquisition of the group’s sub-advised mandate earlier this month.

It was first announced in July that Impax had been appointed to run SJP’s £286m ethical fund after the wealth manager dropped Aberdeen Standard Investments following a sustained period of underperformance.

The transition finally took place in the first few days of December and the St James’s Place Ethical fund was renamed the Sustainable and Responsible Equity (SRE) fund.

Ian Simm (pictured), chief executive at Impax AM, told Portfolio Adviser that SJP is “keen to broaden its offering and expertise” in the area of sustainable responsible investing amid wider interest at industry level for these strategies.

“I think there’s a great potential from our perspective for both, for that type of SJP product to grow but also our thematic range to expand,” he said.

“[The sub advisory] is a big part strategy from the outset to be able to be sub-advising funds for groups with strong distribution and marketing capabilities.”

‘Great kudos’

Simm added: “SJP is very well known, it’s one of the most discerning private wealth managers in the country, if not in the world, so it’s great kudos to be selected by them and their consultants in the long search to manage this highly differentiated strategy.

“It will not only give us great prospects to build our business with SJP but there’s also credentials in that and a stamp of quality.”

Brexit

Impax also revealed it is in advanced discussions with the Central Bank of Ireland to establish a locally-regulated Irish subsidiary through which some of its EU business may be routed after Brexit.

The firm estimates that less than 10% of its AUM would be re-contracted through this subsidiary.

It added: “We believe that the operational impact of Brexit on the business would be manageable and that the financial impact, including foreign exchange exposure, would be immaterial.”

However, Simm said from an environmental standpoint, the whole Brexit debate is “completely up in the air at the moment”, but he does have confidence in the government’s approach.

“In Michael Gove, we do have a very passionate secretary of state for the environment who has quite a few ideas around how environmental protection could be enhanced, particularly in the agriculture state,” he said.

“The UK’s already indicated that post Brexit they’re committed to having a carbon promise to mitigate climate change and also follow through on plans to de-carbonise the power sector as soon as possible so we’re not worried that the UK will lose its enthusiasm for environmental protection.”

Results

In its results for the year ending 30 September, Impax AM reported its assets under management (AUM) increased 72% to £12.5bn, with net inflows of £1.46bn, predominantly from clients in continental Europe and North America. Almost half of these flows also came from wealth managers, it said.

At the same time, revenue doubled from £32.7m in 2017 to £65.7m. Pre-tax profit increased 150% to £14.6m.

Impax chairman Keith Falconer said 2018 was a “landmark year” for the firm. “I’m very pleased to report strong progress against all of our key performance indicators. Our assets under management have significantly expanded as we’ve attracted high levels of inflows and successfully integrated Pax World Management LLC.”

In the update, Simm said it has been a particularly exciting year for Impax.

“Positive net inflows have underpinned our expansion as asset owners around the world increasingly seek investment exposure to Impax’s area of expertise.

“This momentum opens up new opportunities that we are ideally positioned to benefit from.”

Simm said the SJP mandate was not included in AUM figures in the update but the £280m funds will be included in the December figures.

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