Impax Asset Management is planning to establish a subsidiary in Ireland to deal with the potential fallout from Brexit
Impax Asset Management is planning to establish a subsidiary in Ireland to deal with the potential fallout from Brexit, as it reports a "landmark" year of rising AUM and profits.
The sustainable investment house has revealed it is in advanced discussions with the Central Bank of Ireland to launch a locally-regulated subsidiary through which it could route some of its European business, in an effort to prepare for the Brexit scenarios that appear plausible at the time of writing.
In its annual results, founder and CEO Ian Simm said post Brexit they estimate that less than 10% of their AUM would be re-contracted through this subsidiary; they believe that the operational impact of Brexit on the business would be manageable and that the financial impact, including foreign exchange exposure, would be immaterial.
Impax is not the first asset management firm to resort to Ireland to tackle Brexit uncertainty. So far, Aberdeen Standard Investments, JP Morgan and Legal & General Investment Management have opened offices in Dublin due to pressures surrounding the UK's exit from the European Union.
The group has reported a particularly strong financial year to the end of September, with assets under management growing 71% and profits more than doubling as it completed its acquisition of US-based Pax World Management.
During the period, AUM jumped to £12.5bn, although only £1.46bn of the increase came from net flows, predominantly from clients in Europe and North America.
At the same time, revenues doubled from £32.7m in 2017 to £65.7m, while profit before tax increased by some 150% to £14.6m.
Chairman Keith Falconer said 2018 was a landmark year for Impax, and he is pleased to report strong progress against all of their key performance indicators. Their assets under management have significantly expanded as they have attracted high levels of inflows and successfully integrated Pax World Management LLC.
Simm said positive net inflows have underpinned their expansion as asset owners around the world increasingly seek investment exposure to Impax's area of expertise. This momentum opens up new opportunities that they are ideally positioned to benefit from.
He said the solid foundations they have laid down over the last twenty years should support significant further growth for the company.
The majority of inflows came into the firm's thematic funds, as it says more investors are opening up to the idea of sustainable investing, while UK investors have also shown renewed interest in its existing Irish UCITS platform.
Of the net inflows, some £1.72bn went into thematic funds, while income, smart-beta and US equity strategies suffered outflows of £118m over the period.