Can Impax bounce back?
Today, Impax Asset Management entered into an agreement with European giant BNP Paribas, where the asset manager will provide investment advisory services for one of its funds.
But after hitting its lowest stock price in eight years earlier this month, analysts are split on whether Impax Asset Management will be able to bounce back.
Impax’s stock price has fallen almost 90 per cent in the last three years [to 136p], as the weak performance of the sustainable assets it focuses on has greatly reduced investor appetite for its funds.
Over the last three years, the AIM-listed fundhouse has seen assets under management plummet from £40.1bn to just £23.5bn.
However, today’s announcement has given hope that the asset manager might have a path back towards success.
Impax’s stock price is up 13 per cent since its low earlier this month, when it issued a profit warning due to a sharp decline in assets from losing St James’s Place as a key customer.
“I believe any of the asset managers, including Impax Asset Management has scope to bounce back,” said Jens Ehrenberg, senior equity research analyst at Investec.
“We are currently in a situation that sees both cyclical and structural challenges for the asset managers, which Impax clearly has not been immune to.”
However, the analyst noted that Impax still had a material global distribution network, and the BNP relationship may be evidence that there is potential to turn investor sentiment around.
“I see Impax as a specialist asset manager that is challenged by the cyclical backdrop as well as relatively less interest in ESG/sustainability-focused investment products but that has the potential to recover and prove its differentiation as the cycle turns going forward,” added Ehrenberg.
Investec are currently projecting that Impax’s revenue will fall from £138.2m this year to £123.7m next year, before bouncing back to £134.5m in 2027.
But Ben Yearsley, director at Fairview Investing, was more pessimistic, arguing that like most UK listed asset managers, Impax was “in the doldrums with no real sign of getting out”.
“Someone needs to come in and mop up virtually the whole listed asset management sector,” he added.