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Green Firm Impax Eyes Post-Merger Future

U.K. sustainable investment group Impax Asset Management is hoping to complete a merger with U.S. rival Pax World Management by the end of February 2018.

  • By Joe McGrath

In this year’s flurry of fund firm mergers, the proposal to combine the U.K.’s Impax Asset Management with U.S. peer Pax World Management, has been under the radar for many investors.

But, once complete, the newly combined business will be handling some £10.3 billion ($13.4 billion) in assets, all in dedicated sustainable investment mandates. On Wednesday, the U.K. business is to publish its results to the London Stock Exchange. Chief executive Ian Simm is hoping to give shareholders an update on the merger’s progress, which he wants to close before the end of February 2018, Simm told Institutional Investor in an interview.

[II Deep Dive: The Slippery Business of Manager Mergers]

Simm founded Impax 20 years ago. Back then, it was a far cry from the company it is today and focused purely on investments in environmental technology, such as alternative energy and advanced transportation systems.

At the time of founding the business, there was no mass awareness of environmental, social, and governance (ESG) principles. But times change and so do attitudes. Today, some of the largest investors in the world have ESG criteria embedded into their processes. Last month offered an example when Mark Machin, president and chief executive officer of the C$328 billion ($258 billion) Canada Pension Plan Investment Board, championed the merits of sustainable investing in an annual report. “Sustainable investing is the right approach for an organization that aims to deliver strong returns over decades,” he said. “ESG factors can be significant drivers — or barriers — to the success of the enterprises in which we invest.”

With such large investors now paying attention, mainstream fund firms have upped their games in this area and ramped up marketing on ESG-related matters to better appeal to their customers.

Despite this, Simm believes that Impax, as a niche player focused purely on sustainable investing, is perfectly placed to sweep up assets from the world’s largest asset owners.

“We have already demonstrated we can win business from asset owners looking for more compelling ideals in global equities and private equity buckets,” he told II. “The world is transitioning slowly to a more sustainable economy and our investment thesis is continuing to play out.”

When the merger completes, the newly expanded Impax Asset Management will have about 70 people working in Europe and a further 60 based in North America. And, while Simm refuses to set any specific asset targets, he is considering new products. “We are going to be rolling out a strategy that we have been incubating for three years, called the global opportunities strategy, which is taking a broad view on sustainable development.” The company also plans to increase resources focused on assessing climate change investment risk.

“If capital can be used to help industries that are good for solving environmental problems, that should be encouraged, but first and foremost, if you are not making good returns, you don’t have a sustainable business.”

Impax Asset Management is scheduled to report its annual results on Wednesday 29 November 2017 at 0700hrs GMT.

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