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Impax Asset Management Issues Profit Alert as Assets Under Management Decline
Shares in Impax Asset Management experienced a sharp decline on Tuesday following a предупреждение that annual profits are anticipated to fall short of market forecasts. The downturn follows a significant decrease in the fund manager’s assets under management (AUM), which contracted by approximately a quarter to £25.3 billion in the three months leading up to March. This development comes amidst broader market uncertainty and client withdrawals.
Significant Client Mandate Losses Impact AUM
The reduction in AUM is partly attributed to the loss of key client mandates. Wealth management firm St. James’s Place (SJP) previously announced its intention to withdraw Impax’s management of its £5.2 billion Sustainable and Responsible Equity fund in December.
Prior to this, SJP had also decided to terminate Impax’s co-management role for its £9.9 billion Global Quality Unit Trust two months prior. These decisions by a major client like St. James’s Place have significantly impacted Impax’s AUM and market confidence.
Share Price Plummets, Reflecting Market Concerns
Consequently, Impax shares fell sharply, dropping by 15.5 percent to 127.4 pence by midday trading. This placed them among the most significant decliners on the AIM All-Share Index.
Over the past year, the group’s shares have dramatically decreased by about 70 percent. This substantial drop is attributed to considerable client withdrawals and increased short selling activity by financial institutions including JP Morgan and GLG Partners.
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Redundancies Implemented to Counter Financial Headwinds
Compounding the challenges from account closures in its institutional division, Impax has initiated staff redundancies, cutting 10 percent of its workforce, which equates to over 30 positions.
The company estimates that these job cuts will generate annual savings exceeding £30 million, aimed at mitigating the financial impact of reduced AUM and challenging market conditions.
CEO Comments on Challenging Market Environment
Ian Simm, Chief Executive Officer of Impax, acknowledged the firm’s difficulties, stating that they had ‘experienced a demanding quarter regarding net flows.’
He further commented on the uncertain economic outlook: ‘Market conditions in the latter half of FY25 remain highly unpredictable. Considering the decrease in our AUM and the effect of an intensifying trade war on global markets, we project that full-year profits will be lower than market expectations.’
Global Market Instability and Trade War Fears
The profit warning coincides with increased global economic uncertainty. Recent announcements by President Donald Trump regarding extensive tariffs on imported goods to the US have heightened concerns about a potential trade war.
These measures include tariffs on goods from various countries, including a 10 percent tariff on products from the UK, Brazil, and Saudi Arabia, a 26 percent tariff on Indian imports, and a 49 percent tax on Cambodian goods.
Market Reaction to Trade Policy and Recession Fears
Following President Trump’s trade policy announcements, financial analysts have increased their predictions of a global recession occurring within the current year. Stock markets worldwide, spanning from Europe to the US and Asia, have experienced considerable declines.
Last week saw significant drops in major indices, with the FTSE 100 and Nasdaq both falling by more than 5 percent, and the S&P 500 declining by over 6 percent. These represent their most significant weekly losses since the Covid-19 pandemic period, highlighting investor apprehension in the face of growing economic uncertainty.