Impax CEO Says Worst Is Over After Clients Pull $14 Billion

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(Bloomberg) — The chief executive officer of Impax Asset Management Group Plc said the pool of money it oversees is unlikely to shrink further, as the firm tries to right itself after a series of client redemptions.

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In the six months ended March 31, Impax saw net outflows of more than £10 billion, or roughly $14 billion, according to its latest half-year report. Of that, £6.2 billion was pulled by St. James’s Place Plc. In all, assets under management have dropped by roughly a third since a 2023 peak, to just over £25 billion.

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After those losses, Impax is now expecting to see a “pretty flat” development in its managed assets through September this year, CEO Ian Simm said in an interview. 

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It’s been a tough half year for an asset manager that, since its inception in 1998, has otherwise enjoyed steady growth. But Impax’s focus on stocks tied to the low-carbon transition, combined with its late arrival to the Big Tech party, led to long stretches of underperformance that ultimately proved too much for many of its clients. 

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Aside from St. James’s Place, outflows were led by funds sub-managed for BNP Paribas Asset Management, according to Impax’s half-year report. It also saw sizeable redemptions from clients in North American, where Impax now gets 39% of its revenue.

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The outlook for assets tied to the clean-energy transition remains unclear. Though many have been pummeled by an extended selloff that’s driven down valuations, the political headwinds in the US remain a major threat. This week, the Republican-led House agreed to drastically scale back Biden-era green incentives, leading investors to flee solar and wind stocks. The House bill now heads to the Senate, where its fate is unclear.

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“Clearly the tax bill in the US is absolutely critical in the context of confidence around direction of travel of the US economy,” Simm said.

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However, the House bill “stops short of repealing” the Inflation Reduction Act through which the previous administration channeled green incentives. “The IRA and its policy outcomes are far from final, with further substantive changes likely during the next month during the Senate’s mark up,” he said.

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The market turmoil that’s accompanied Donald Trump’s second term in the White House has actually helped remove the stranglehold that Big Tech had on stocks, Simm said. That’s created some room for other strategies to gain ground, he said.

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“Having been out of favor for the last couple of years, our key strategies are looking attractively priced,” he said. “It’s like buying the dip or profiting from a turnaround — it’s usually a good entry point.”

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And despite efforts to dismantle the IRA, “the cost competitiveness of solar and wind alongside state-level renewables targets will continue to drive durable demand growth,” Simm said. “As history has shown, getting rid of federal solar and wind credits is also challenging in practice. And if the IRA is indeed impacted by the final legislation, it is probable that the US would see a return to the shorter horizon” credits that predated it, such as the production tax credit, he said.