U.K. sustainable fund firm Impax Asset Management is to buy U.S. group Pax World Management in a deal worth $90 million in cash and shares, to create a combined business managing some £10.3 billion ($13.4 billion) in assets.
Impax is paying $52.5 million in the deal, with an additional $37.5 million due in 2021, subject to Paxs performance.
The tie-up is the latest in a long line of mergers between mid-tier managers as they respond to an increasingly competitive market on fees and increased competition from large passive asset management firms.
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Impax said investors are increasingly seeking exposure to sustainable investment opportunities. The group offers listed equity strategies in the alternative energy, water, food, and agriculture sectors, as well as renewable infrastructure funds. Pax, based in Portsmouth, New Hampshire, offers active and passively managed funds, some of which are focused on environmental, social and governance themes.
Joe Keefe, president and chief executive officer of Pax, said the merger would afford both businesses the benefits of scale.
Combining our two firms will create a leading sustainable investment manager with business on both sides of the Atlantic, he said in a statement announcing the deal. Pax World Funds shareholders stand to benefit in significant ways from our increased scale, research and investment capabilities.
Pax, founded in 1971, will be rebranded as a division of Impax Asset Management when the deal closes. Keefe will continue to lead the former Pax business but will report to Ian Simm, chief executive of Impax Asset Management. The Pax brand will be retained for mutual funds managed by the U.S. group.
Like Impax, Pax has a long track record as a pioneer in sustainable investing and a strong team, Simm said in the statement, adding, The combined group will start with a closely aligned business culture and be well placed to offer a broader service and more diversified range of products to existing and future clients.
Impax listed on the London Stock Exchanges Alternative Investment Market, the market for small-cap companies, in 2001, having won its first mandate from the International Finance Corporation back in 1998. In 2007, BNP Asset Management became a shareholder.
Todays announcement follows a ten-year working partnership between the two companies. The firms collaborated in 2007 on the Pax Global Environmental Markets Fund, which managed $511 million through the end of August.
The news comes as dignitaries from across asset management, banking and the political sphere gathered for Global Climate Week in New York, where the U.K.s minister of state for Climate Change and Industry is scheduled to lay out a series of new green finance policies.