Impax Asset Management Issues Profit Warning Amid Client Withdrawals

A former standout in the Aim junior share market has issued a profit warning following a significant loss of client mandates. Impax Asset Management, known for its commitment to sustainable investments, revealed that it faced a challenging quarter as clients, including St James’s Place, have pulled a net £7.7 billion from its management during the most recent period.

The firm’s predicament was worsened when St James’s Place decided to withdraw a £5.1 billion mandate, parting ways with Impax after more than two decades of collaboration. This decision was prompted by St James’s Place’s desire to seek broader investment options beyond the sustainable investments Impax typically offered.

Following the significant client outflow, Impax’s total assets under management (AUM) declined sharply, tumbling by over a quarter to £25.3 billion. The asset management group has faced disappointing investment performance that has further compounded the challenges it currently encounters.

In light of the tumultuous circumstances, analysts have downgraded their forecasts for Impax’s pre-tax profits this year, revising estimates from £42 million down to £34 million. The firm’s stock suffered a notable drop, declining by 20 per cent, reflecting deteriorating market sentiment around green investments.

Impax’s chief executive, Ian Simm, described the recent quarter as difficult, attributing the declining assets partially to global market fluctuations and escalating trade tensions. He maintains optimism about the company’s long-term strategy, stating that its particular investment style typically performs well in volatile conditions.

Amid these challenges, Impax has begun implementing cost-reduction measures, with a reduction of its workforce from 320 employees down to 290. The firm’s cash reserves remain relatively strong, reported at £90.8 million as of September 30, indicating potential resilience in the face of ongoing market uncertainties.