Impax Asset Management Group Plc · LSE:IPX
Impax Asset Management — H1 2023 Earnings Presentation
59 slides from Impax Asset Management's earnings presentation, May 31, 2023
Slide 1: Interim results for the six months to 31 March 2023
FOR INFORMATION ONLY. THIS IS NOT A MARKETING COMMUNICATION. NOT FOR FURTHER DISTRIBUTION Interim results for the six months to 31 March 2023 31 May 2023
Slide 2: Agenda
Agenda • Highlights and business update Ian Simm Karen Cockburn Founder & Chief Executive Chief Financial Officer • Financial update • Outlook • Appendices 2
Slide 3: Investing in the transition to a more sustainable economy
Investing in the transition to a more sustainable economy Investment manager – 24+ years’ experience Expertise in highly attractive areas recognised worldwide Large investment team (c.80 members) – Listed equities, fixed income, private markets Global client base of institutional & intermediary inve
Slide 4: Impax's investment philosophy
Impax’s investment philosophy The transition to a more sustainable economy Secular Sectoral Attractive for “active” drivers transformation investment managers • Resource/environmental • Large-scale, affecting constraints most sectors • Regulation • High growth rates • Technology change • Uncertain i
Slide 5: H1 2023 highlights
H1 2023 highlights Net inflows of Robust Continued £1.1bn, performance, Asia expansion: longer-term AUM increased with challenging opened Japan investment by 12.4% to macroeconomic office outperformance2 £40.1bn1 conditions Pensions Age “Active Manager of the Year” Environmental Finance £39.4bn AUM
Slide 6: Robust financial performance
Robust financial performance1 Financial highlights - KPIs Assets under management (£bn)² 88.0 H1 2023 40.1 Revenues (£m) 86.8 88.6 H2 2022 35.7 Adjusted 27.3 operating 33.4 profit (£m) 3 34.0 H1 2022 38.0 Adjusted 28.2 profit before 34.4 Shareholders’ equity (£m) tax (£m) 4 34.0 Adjusted 17.2 H1 202
Slide 7: H1 2023: Breakdown of AUM increase (£bn)
H1 2023: Breakdown of AUM increase (£bn) 31-Mar-23 40.1 Outflows (3.4) Inflows 4.5 Market movement 3.3 £39.4bn AUM as at 30-Sep-22 35.7 30 April 2023 Outflows (4.0) Inflows 4.4 Market movement (2.8) 31-Mar-22 38.0 As at 30 April 2023, assets under advice represent ~4% of total AUM. 7
Slide 8: Significant opportunities available in a challenging operating environment
Significant opportunities available in a challenging operating environment • Challenging macroeconomic and inflationary conditions… ― Mixed economic data, with indicators in US and Europe signalling contraction ― Investors’ attention focused on inflation, interest rates and impact on real economy •
Slide 9: Well-diversified AUM by strategy and client type
Well-diversified AUM by strategy and client type AUM by range1 AUM by strategy1 Other, 7% International Sustainable Economy, 2% 62% Global Women's Leadership, 2% Environmental Markets 67% US Large Cap, 5% Leaders, 20% 32% Sustainability Lens 27% Global Opportunities, 22% Water, 16% 6% Other 6% H1 H1
Slide 10: Well-balanced AUM by geography
Well-balanced AUM by geography AUM by region1 AUM by asset class Asia-Pacific, 4% North America, 25% Listed equities, 96% EMEA, 50% Fixed income, 3% Private markets, 1% UK, 20% All data as at 31 March 2023. Data may not add up to 100% due to rounding. 1Regional data is by fund/account country of dom
Slide 11: Movement in net inflows – breakdown by channel (£m)
Movement in net inflows – breakdown by channel (£m) Funds sub-managed for UK/Ireland BNP Paribas Asset Management1 North America 313 (196) St James's Place 79 Own-label Own labelfunds 1 funds 663 BNPP funds 563 (12) (3) (55) IEM plc Other mutual & advisory funds 467 46 Other EMEA distributors/funds
Slide 12: Sustainability Lens strategies: performance versus benchmark
Sustainability Lens strategies: performance versus benchmark (cumulative, %)1 Global Opportunities – AUM £9.0bn US Large Cap – AUM £2.0bn US Small Cap – AUM £0.5bn 107.9 Global Opportunities US Large Cap 92.8 US Small Cap MSCI ACWI2 88.7 S&P 500 Index3 Russell 2000 Index4 72.9 67.3 60.8 73.0 54.0 58
Slide 13: Environmental Markets strategies: performance versus benchmark
Environmental Markets strategies: performance versus benchmark (cumulative, %)1 Leaders3 – AUM £7.8bn Specialists – AUM £3.6bn Water – AUM £6.2bn Leaders Specialists Water MSCI ACWI2 MSCI ACWI2 MSCI ACWI2 86.8 78.3 76.6 78.9 70.2 73.4 58.6 58.6 54.0 58.6 54.0 54.0 5.9 5.6 (1.4) (1.3) (1.4) (1.4) 1 Y
Slide 14: Investment strategies and products: scope for further growth
Investment strategies and products: scope for further growth 1 Expanding our current strategies • Commingled funds: (e.g ABN AMRO) • Significant capacity headroom • US Large Cap sold into Europe & APAC 2 Developing new equities products • Social themes • Sustainable Infrastructure (Active) 3 Private
Slide 15: Enhancing the client experience beyond the pursuit of financial returns
Enhancing the client experience beyond the pursuit of financial returns Policy & advocacy Thought leadership and insights Financing Greening the transition to net-zero financial system Nature and Human biodiversity loss capital Partnerships and networks • Research with University of Oxford on physic
Slide 16: Beyond the pursuit of financial returns (continued)
Beyond the pursuit of financial returns (continued) Stewardship and engagement Reporting and analytics • 43% positive outcomes in company engagements1 • Expanded Impact reporting (fixed income; social • Areas of focus: environment; social issues; impact; environmental metrics) corporate governance.
Slide 17: Our people: aligning our hiring to market conditions
Our people: aligning our hiring to market conditions Number of employees3 165 • Continue to hire, but at slower rate, with total 30 Mar 23 30 Mar 22 employee number up 6% for the Period. – Opened Tokyo office in March 2023 133 • Strong employee engagement score 106 Total employees: 92 289 • Re-runni
Slide 18: Systems & infrastructure: investing selectively to increase resilience
Systems & infrastructure: investing selectively to increase resilience Compliance Risk • Investing in a scalable global team • Expanded Enterprise Risk team, new senior – Investment (trade surveillance technology) managers – Distribution (FCA Consumer Duty requirements) ― Investment risk – Oversight
Slide 19: Financial update
Financial update
Slide 20: 1.4% revenue growth since H2 2022
1.4% revenue growth since H2 2022 Revenue (£m) Average fee margin (bps) 46 46 45 H1 2023 88.0 Performance 0.2 Net flows 1.0 H2 2022 86.8 H1 2022 88.6 H1 2022 H2 2022 H1 2023 Mar-23 Mar-23 annualised run rate: run rate: 45 bps £182.5m 20
Slide 21: Revenue diversification
Revenue diversification Revenue by strategy Revenue by region Asia Pacific, Others, 14% 3% International Sustainable Leaders, 21% North Economy, 2% America, 35% Global Women's Leadership, 2% EMEA1, 46% US Large Cap, 5% UK, 17% Global Water, 12% Opportunities, 15% Revenue by client type Sustainable F
Slide 22: Operating expenses: controlled investment to support growth
Operating expenses: controlled investment to support growth Adjusted operating expenses (£m) Total staff (average)1 Period Ave: End: H1 2023 60.6 H1 2023 82 201 283 289 Staff costs 4.6 H2 2022 74 178 254 272 Non-staff costs 2.7 H1 2022 67 160 227 238 H2 2022 53.3 Investment Staff Other Staff 54.7 AU
Slide 23: Operating performance
Operating performance Operating profit1 (£m) Operating margin H1 2023 27.3 H1 2023 31.1% H2 2022 33.4 H2 2022 38.6% H1 2022 34.0 H1 2022 38.3% • 31 Mar 2023 run rate operating profit: £58.0m Operational gearing trend Run rate operating margin (£m 200 45% 180 40% 160 35% Mar-23 31.8% 140 30% 120 25%
Slide 24: Strong cash position and robust capital buffer
Strong cash position and robust capital buffer Dividend (p) Cash movements¹ (£m) Capital resources (£m) H1 2023 61.8 79.9 79.9 2023 4.7 Other cash (1.9) movements 2022 4.7 22.9 Net seeding of 27.6 (2.2) investments Acquisition of own (10.1) Capital 2021 3.6 17.0 20.6 shares 57.1 buffer Dividends pai
Slide 25: IPX shareholder register
IPX shareholder register IPX shares 31 March 2023 (m) Share management • EBT purchased 1,413,454 shares in the period • Average weighted price paid £7.13 IPX shares in issue 132.6 • Continuation of EBT purchasing policy Shares held in EBT (3.6) Current ownership 31 March 2023 Net IPX shares 129.0 BN
Slide 26: Outlook
Outlook
Slide 27: Outlook
Outlook Supportive Rising Asset owner policy and environmental trends aligned regulatory and societal with “TSE” drivers challenges Established, Strong pipeline, Institutionally- despite current Authenticity diversified focused client weak market and heritage distribution base sentiment network TSE:
Slide 28: Appendices
Appendices
Slide 29: Adjusted IFRS performance measures
Adjusted IFRS performance measures IFRS PBT to adjusted PBT (£m) As a result of the acquisition, certain financial performance measures have been prepared on an adjusted basis. ‘Adjusted’ financial metrics are shown after removing the 28.2 Adjusted PBT effects of primarily: Foreign Exchange 4.3 • Fo
Slide 30: Additional information
Additional information Share awards outstanding1 Awards Number outstanding Vesting date End of exercise period RSS 2,793,550 2024-2027 LTOP 2,025,325 2024-2028 2029-2033 Total 4,818,875 Investments Theme Principal funds/investee Investments (£m) % of fund aum Comments Asian Opportunities Impax Asian
Slide 31: Background to the Company
Background to the Company
Slide 32: Strong track record of growth – assets under management (£m)
Strong track record of growth – assets under management (£m) 1998 15 1999 20 2000 39 2001 38 2002 55 2003 66 2004 69 2005 214 2006 429 2007 982 2008 1,099 2009 1,265 2010 1,823 2011 1,896 2012 1,828 2013 2,197 2014 2,755 2015 2,823 2016 4,502 2017 7,261 2018 12,515 2019 15,051 2020 20,183 2021 37,21
Slide 33: Global distribution
Global distribution North America Desjardins AM (Canada) FÉRIQUE (Canada) Mackenzie Investments (Canada) NEI Investments (Canada) Impax commingled vehicles Impax Funds vehicles1 Europe ABN AMRO ASN Bank BNP Paribas Asset Management Formuepleje St. James’s Place Lombard Odier Impax investment trust I
Slide 34: Our strategic priorities (products & clients)
Our strategic priorities (products & clients) Deliver superior, risk adjusted Optimise existing & selectively investment returns launch new strategies Widen & deepen Enhance client experience distribution channels beyond investment returns 34
Slide 35: Our strategic priorities (resources & results)
Our strategic priorities (resources & results) Attract & develop Increase operational outstanding team scalability & efficiency Build insights & advocacy Deliver excellent financials & around transition to a more sustainable stakeholder value sustainable economy 35
Slide 36: Our investment solutions: underpinned by proprietary tools
Our investment solutions: underpinned by proprietary tools Environmental Sustainability Gender Sustainable Multi-Asset Markets Lens Lens Infrastructure Sustainable Allocation Active Equities Active Equities Systematic Equities Systematic Equities Private Markets 1971 Specialists Global Opportunities
Slide 37: NEF III status
NEF III status • €445 million invested, committed and reserved across a diversified portfolio ― 14 investments in eight countries across four technologies ― Four development platforms ― First exit in an adjacent sector: 320MW battery storage project • Over 100% invested, committed and reserved for t
Slide 38: NEF IV status
NEF IV status • Third close held in Apr. 2023 with additional commitments bringing total capital raised to €300.3 million ― c. 60% of €500m target fund size raised • Eight investments within nine months of the first close (Oct. 2021) with three further deals in exclusivity1 ― Investments diversified
Slide 39: The rapidly-changing landscape for investment managers
The rapidly-changing landscape for investment managers IMPAX WELL MAINSTREAM TRENDS A FORMULA FOR WINNERS POSITIONED • Pressure on generalists “Specialist” approach • Increasingly complex regulatory environment Differentiated strategies • Growing fee pressure on generic products Diversified inco
Slide 40: Additional information
Additional information
Slide 41: Leaders: GIPS report – USD
Leaders: GIPS report – USD Total Firm Assets Composite Assets Asset Weighted 3yr Annualized Std MSCI AC World 3yr FTSE EOAS 3yr Year Number of Portfolios Annual Gross Return Annual Net Return MSCI AC World Return FTSE EOAS Return (Millions) (Millions) StdDev* Dev** Annualized Std Dev** Annualized St
Slide 42: Leaders: GIPS report – USD
Leaders: GIPS report – USD Calculation Methodology Returns are calculated using the asset-weighted method and individual portfolios are revalued daily or monthly, depending on their structure. Results are based on fully discretionary accounts under management, including those accounts no longer with
Slide 43: Climate: GIPS report – USD
Climate: GIPS report – USD Tot al Fi rm Com pos i t e An n u al Ben c hm ark 3yr As s et s As s et s Nu m ber of An n u al G ros s An n u al Net Ben c hm ark As s et W ei ght ed 3yr An n u al i zed An n u al i zed St d Year ( M i l l i on s ) ( M i l l i on s ) P ort f ol i os Ret u rn Ret u rn Ret
Slide 44: Water: GIPS report – USD
Water: GIPS report – USD FTSE E O Wat er Tot al Fi rm Com pos i t e FTSE E O Wat er M SCI AC Worl d Tec hn ol ogy 3yr As s et s As s et s Nu m ber of An n u al G ros s An n u al Net M SCI AC Worl d Tec hn ol ogy As s et Wei ght ed 3yr An n u al i zed 3yr An n u al i zed An n u al i zed St d Year ( M
Slide 45: Water: GIPS report – USD continued
Water: GIPS report – USD continued Calculation Methodology Returns are calculated using the asset-weighted method and individual portfolios are revalued daily or monthly, depending on their structure. Results are based on fully discretionary accounts under management, including those accounts no lon
Slide 46: Asian Environmental: GIPS report – USD
Asian Environmental: GIPS report – USD Total Firm Assets Composite Assets Asset Weighted 3yr Annualized Std MSCI AC AP 3yr FTSE EO AP 3yr Year Number of Portfolios Annual Gross Return Annual Net Return MSCI AC AP Return FTSE EO AP Return (Millions) (Millions) StdDev* Dev** Annualized Std Dev** Annua
Slide 47: Asian Environmental: GIPS report – USD continued
Asian Environmental: GIPS report – USD continued Calculation Methodology Returns are calculated using the asset-weighted method and individual portfolios are revalued daily or monthly, depending on their structure. Results are based on fully discretionary accounts under management, including those a
Slide 48: Global Opportunities: GIPS report – USD
Global Opportunities: GIPS report – USD Annual B e n ch m a r k 3y r To ta l F i r m A sse ts Co m p o si te Nu m b e r o f A n n u a l Gr o ss A n n u a l Ne t B e n ch m a r k A sse t W e i gh te d 3y r A n n u a l i z e d A n n u a l i z e d Std Year (M i l l i o n s) A sse ts (M i l l i o n s) P
Slide 49: Sustainable Food: GIPS report – USD
Sustainable Food: GIPS report – USD T ot al Fi rm Com pos i t e An n u al Ben c hm ark 3yr As s et s As s et s Nu m ber of An n u al G ros s An n u al Net Ben c hm ark As s et W ei ght ed 3yr An n u al i zed An n u al i zed St d Year ( M i l l i on s ) ( M i l l i on s ) P ort f ol i os Ret u rn Ret
Slide 50: Sustainable Food: GIPS report – USD
Sustainable Food: GIPS report – USD Calculation Methodology Returns are calculated using the asset-weighted method and individual portfolios are revalued daily or monthly, depending on their structure. Results are based on fully discretionary accounts under management, including those accounts no lo
Slide 51: Specialists: GIPS report – USD
Specialists: GIPS report – USD Tot al Fi rm Com pos i t e M SCI AC Worl d FTSE E T 3yr As s et s As s et s Nu m ber of An n u al G ros s An n u al Net M SCI AC Worl d As s et Wei ght ed 3yr An n u al i zed 3yr An n u al i zed An n u al i zed St d Year ( M i l l i on s ) ( M i l l i on s ) P ort f ol
Slide 52: Specialists: GIPS report continued – USD
Specialists: GIPS report continued – USD Custom Benchmark Description The MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. It covers 23 developed and 23 emerging mar
Slide 53: US Large Cap: GIPS report – USD
US Large Cap: GIPS report – USD Tot al Fi rm Com pos i t e S&P 500 3yr As s et s As s et s Nu m ber of An n u al G ros s An n u al Net S&P 500 An n u al As s et W ei ght ed 3yr An n u al i zed An n u al i zed St d Year ( M i l l i on s ) ( M i l l i on s ) P ort f ol i os Ret u rn Ret u rn Ret u rn
Slide 54: US Small Cap: GIPS report – USD
US Small Cap: GIPS report – USD T ot al Fi rm Com pos i t e Ru s s el l 2000 As s et s As s et s N u m ber of An n u al G ros s An n u al N et Ru s s el l 2000 As s et W ei g ht ed 3yr An n u al i zed 3yr An n u al i zed Year ( M i l l i on s ) * ( M i l l i on s ) P ort f ol i os Ret u rn Ret u rn
Slide 55: US Small Cap: GIPS report – USD
US Small Cap: GIPS report – USD Calculation Methodology Returns are calculated using the asset-weighted method and individual portfolios are revalued daily, with pricing information supplied by State Street Bank & Trust. Results are based on fully discretionary accounts under management, including t
Slide 56: Impax Core Bond: GIPS report– USD
Impax Core Bond: GIPS report– USD Bloomberg Bloomberg Barclays US Barclays US Aggregate 3yr Total Firm Assets Composite Assets Number of Annual Gross Aggregate Annual Asset Weighted 3yr Annualized Std Annualized Std Year (Millions)* (Millions) Portfolios Return Annual Net Return Return StdDev** Dev*
Slide 57: Impax High Yield Bond: GIPS report– USD
Impax High Yield Bond: GIPS report– USD ICE BofA US Cash Pay ICE BofA US Cash Pay High Yield High Yield Constrained (BB-B) Total Firm Assets Composite Assets Constrained (BB-B) Asset Weighted 3yr Annualized Std 3yr Annualized Std Year (Millions)* (Millions) Number of Portfolios Annual Gross Return A
Slide 58: NEF Performance notes
NEF Performance notes IRR, multiples and other return calculations All Internal Rates of Return ("IRR"), multiples and other return or performance information calculations include realised values and unrealised values, as applicable and include all returns generated by reinvested capital and proceed
Slide 59: Important information
Important information NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION The information contained in this confidential document (the “Presentation”) a
Impax Asset Management Group — H1 2023 Earnings Presentation on 6ix