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Impax’s Ian Simm discusses how the firm has progressed since transatlantic merger

David Stevenson, 13/05/2020

Sustainable investing focused Impax Asset Management has held up well during the COVID-19 crisis. In January 2018, the firm merged with US-based PAX World, adding fixed income and passive capabilities to its offering. It also raised Impax’s US-based assets from 10 percent of its total to 35 percent.

With a strong foothold in the US now, Impax has been able to analyse both the supply and demand for capital or appetite for the firm’s products in other words. Ian Simm (pictured), chief executive of Impax, told Fundeye , there’s been interest on the East Coast and the West Coast, Canada ‘a little bit in the Mid-West but not very much in the South or Middle. That’s where we’ve been most successful in raising assets’.

Also Mr Simm is keen to point out that while his firm invests in companies involved with sustainability, there are many other factors that dictate whether a company will be part of one of its funds’ portfolios.

“In the last 3 months investors have seen the resilience of the companies we are investing in, their strategic positioning in terms of long term trends. COVID-19 is an example of what Americans might call a curve ball coming out of unexpected quarters and really damaging sentiment and business prospects but the businesses that have resilient business models, risk controls and prudent management of their balance sheets will be ok.

“Similarly those companies orientated towards healthcare, telecoms and pollution control tend to do ok. You could put an ESG label on that but to avoid jargon it’s perhaps better classed as common sense,” he told Fundeye.

Why merge?

Some figures from privately owned asset managers have stated that the main driver for listed asset managers to engage in M&A activity is to increase AuM, as they’re struggling from the rise in passive investment products., Mr Simm said: “That (merge to boost AuM ) view doesn’t apply in this case. Pax gave us a much bigger US footprint and a great foundation to building our client base in the US. Secondly it gave us fixed income and passive capabilities.”

The deal certainly struck a chord with investors in the firm as its share price appreciated by a massive 100 percent which Mr Simm said “reflected the strong financial metrics of the deal”.

While ESG was certainly a major theme prior to COVID-19, Mr Simm is a realist and thinks that government ideas to further its sustainability plans might be waylaid for the time being. “It’s probably premature to say that with COVID governments have got the bandwidth to look more broadly at environmental issues rather than just fighting the virus,” he said.

There’s been a lot of noise about how to define ESG with many firms looking to avoid being labelled with the dreaded ‘greenwashing’ tag. For Impax it seems actions speak louder than words, as Mr Simm said there’s a lot of difficulty defining ESG as both environmental and social are pretty broad.

“What Impax has historically called environmental markets, the taxonomy was developed back in 1999, FTSE Russell adopted our classification back in 2010 and been using it ever since. The green taxonomy was largely based in the FTSE Russell so basically our thinking. What really counts is what is a company’s view of the future, where do they think the world is heading and are sustainable developments taking into account environmental limitations,” said Mr Simm.

With two Canadian deals won recently, it might seem that this was due to the PAX tie-up. However in both cases the firm had prior mandates and the management was done out of London. That said with the most recent appointment as sub-advisor for the NEI Global Sustainable Balanced Fund, given this contained both equity and debt, Impax was able to leverage PAX’s fixed income expertise to its benefit. The firm has been resilient from a share price point of view and once COVID-19 passes and governments focus once again on sustainability issues, Impax should be in a great position to benefit.

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