Impax Asset Management Group (LSE:IPX) — Investor Presentation

0:00 Good morning, and welcome to the IMPAX ASSET MANAGEMENT GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just click Q and A, scroll to the bottom, type your question and press send. Company may not be in a position to answer every question received during the meeting itself. However, company review questions submitted there and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Ian Sim, founder and chief executive officer. Good morning.

0:30 Good morning, everybody. Thank you very much. So what I'm gonna do is give you an introduction to IMPAX ASSET MANAGEMENT GROUP PLC and also run through the annual results for our year ended thirty fifth September twenty twenty three, which we've recently published. So using the slides, so if we could have the first slide. IMPAX is a business that I founded in 1998. We are an investment manager operating for clients all over the world, pension funds, sovereign wealth funds, insurance companies, private banks. We have a particularly differentiated investment idea. We call it the transition to a more sustainable economy, which at its heart is an industrial revolution or a set of sectoral transformations in areas like energy, materials, infrastructure, finance, and health care, which are driven by falling technology costs, improving, opportunities and products for consumers in the context of changing regulation, all linked to this idea of a rising population globally, is living on a on a finite planet.

1:33 So IMPAX today is, one of the world's largest managers dedicated to investing in the sector. We have an investment team of over 80 people investing in listed equities, fixed income, and in private markets. We have offices, in North America, Europe, and Asia, a very broadly based clients group. Our business plan essentially is to grow from today's £37,000,000,000 under management to at least twice that. We think there's capacity in our investment ideas at the moment for double that amount of money, something like £75,000,000,000 or up to a $100,000,000,000, with a bit of a stretch. And also to ensure that we've got the products and capabilities to grow beyond that over the medium to long term. So I'll explain less in a bit more detail as we go through.

2:21 On the next slide. So what is this, in this transition to a more sustainable economy? Well, as I said, it's at its heart a capitalist idea, an industrial revolution based on things which are quite difficult for investment managers to understand. So cost of technology or the efficacy of technology, for example, in the hydrogen energy sector or sustainable food linked to advanced irrigation or materials reuse, processing of of waste on the one hand and smarter design on the other. So these are dislocations in the economy which are quite difficult for the generalist investor to understand. So by assembling a team of specialist analysts and fund managers that have got a long track record of investing in companies pursuing business ideas in this area, then we believe we can continue to make excess returns relative to a benchmark for our institutional investors.

3:19 Now, this is the first time I'm gonna use use the phrase ESG or ethical or impact. These words have been introduced recently, certainly in the last fifteen years or or less, twenty years or less. And what they signal is that there are some sophisticated investors out there and some less sophisticated investors who have values which are oriented around getting more out of money than just a profit. So that idea of improving the world, improving society through investing, ethical investing if you like, is something that we don't set out to achieve directly. But because of what we do, then the portfolios that we run tend to resonate very nicely with such value based or ethical type investors.

4:08 So that is an additional string to our bow, but we do not badge ourselves as an impact or an ESG investor because we find that that confuses the the more sophisticated part of the the market. Next slide, please. So what do we invest in? Well, at our heart, or simplifying, there are two types of portfolio that we run. The longest standing portfolios at IMPAX are in the areas of what we call environmental markets. And environmental markets is a phrase that my colleague Bruce Jenkins Jones and I invented in 1999 to signal this idea that there was money to be made by or for, companies, who were solving environmental problems or improving the efficiency with which resources are used.

4:55 So the six investment strategies that we run-in this area, which is slightly more than half of our total assets under management, cover areas like electric vehicles, precision engineering in the water sector, and advanced biofuels. The next slide, please.

5:15 So when our first client in this space, which was a Danish bank, asked us to help them establish an environmental markets fund in 1999, we helped them initially by writing down what we thought were the relevant industries that could fall under such an umbrella. So this classification system, which I'm not expecting you to digest in a brief moment on this call, but will be available in the slide deck afterwards if you're interested. This is our classification system which has defined this part of our work, as I said, just over half of our assets under management. And what's particularly attractive about this classification is it's a pretty conservative view of environmental markets and therefore it does resonate very nicely with those ethically or values based investors, for example, church pension funds or certain family offices or many retail investors.

6:07 So the funds that we run-in the space are generally highly regarded as pure play. There's no smoke and mirrors or greenwashing. This is the genuine article, if you like. So if you're familiar with the sustainable finance directive regulations, SFDR, out of Brussels, which has, put some constraints around fund labels for investment managers, then the funds in this area that IMPAX run are very comfortably top tier, so called Article nine funds. And that does give us a, head and shoulders advantage over most of our peers who are struggling to to get the expertise to effectively invest in these industries. On the next slide is a brief summary of the other part of our business. So the, less thematic or more broadly based investment portfolios that we run, we call them sustainability lens because we use a tool to guide idea generation which is shaped like a lens but essentially is a set of indicators for how the whole of the economy is looking from a risk and opportunity perspective if you take a five to ten year view. So taking account for example the likely demise of the use of coal and probably oil in that time frame, the rise of weather related damage and the need for resilience and adaptation in infrastructure in the built environment, the further opportunities from fintech and advanced healthcare and

7:40 medicine. And so as I describe those sectors, I'm sure you can see that there's a broader range of opportunity than just solving environmental problems as is signaled by these photos. So the purpose of having two types of investment idea, if you like, is that we're able to serve different types of clients. There are some clients, for example, those institutions, pension funds found in Continental Europe who are comfortable with a strong thematic tilt and are very keenly interested in the impact metrics that come from environmental investing. So they may well be tempted to give us a mandate in the environmental market space. Whereas if we go to North America, particularly in The US, there's much more interest in the more core, broadly based sustainability lens products.

8:27 Next slide, please. So this is, this is my life over the last twenty five years with my colleagues. So each bar represents the assets under management at the end of our financial years. We started off with a £15,000,000 or in those days, $25,000,000 mandate from the World Bank. That was how we got started. And today, we're running 37 or so billion dollars. And you can see the the growth there. That's principally been an organic growth story, although we did make an acquisition which landed in the 2018 bar of a business in North America and The US actually, which had at the time I think about £3,600,000,000 under management. So very strong growth and then we've been plateauing the last couple of years as markets have been quite rough. But as I'll describe, we've weathered the tough markets very well, certainly compared to most of our peers.

9:21 And I think we're well placed for further growth as market conditions stabilize. Next slide, please. So moving on to the results for the last twelve months. The summary here is essentially that we have been able to increase our assets under management by nearly 5% in spite of quite choppy market conditions. We have had a creditable performance in the investment space, and we've done, quite a lot of work to develop and launch new products in equities, but also we're making a big push now into fixed income. So, what that's done is, give us more confidence to invest further in distribution and more sales resource in different parts of the world. We've also been paying a lot of attention to operational resilience and cost efficiency.

10:15 You can see on the right, we've continued to win a number of awards. Next page please. So the backdrop is quite challenging. So I'm sure everyone is familiar with the fact that it's been a really weird year for equity investing with the so called magnificent seven tearing away and offsetting quite weak, if not negative performance from almost all the rest of the the market on average. And looking ahead to 2024, then I think there's a degree of confidence that interest rates have plateaued now and may well be trending down. And in the run up to elections, particularly in the second half of the year, then there's a lot of attention being paid to geopolitical risk. So will there be a US recession in second half of twenty four, early twenty five?

11:04 To what degree will equity markets look through that and assume it's just a technical part of the cycle, or will we be facing more choppy conditions? So that's the key question for all investors. Our view is, to be honest, reflective of the fact that we're not macro specialists, but I think we are minded to, believe that sentiment has started to turn. That's certainly been the evidence from our, recent experience with client flows and, the scenario that markets remain a little bit volatile but broadly or upwardly trending into '24 is the one that we're backing at the moment. Having said that though, there's still plenty of very strong tailwinds in our sector. The continuing fall in cost of renewable energy in spite of high retail prices for energy suggests that margins for those supplying and delivering renewable energy should be well protected and should expand.

12:05 Costs in the supply chain for the companies we're investing in ought to be plateauing and potentially coming down as inflation moderates and starts to drop. And we like to see a continuation of weather related damage as El Nino hits the Southern Hemisphere and is compounding already the steady rise in global temperatures. So weather related damage, floods, risk is gonna be on the agenda, not just for policymakers, but, also for corporates looking to invest in resilience. Many of the companies that we are investing in are able to provide data, goods and services to monitor and respond immediately to that sort of problem and then put in place long term engineering solutions to mitigate future damage.

12:56 Next slide, please.

13:00 So, in that context, IMPAX is very well placed to come out of this turbulence, bottom of the cycle with high quality products, a global globally diversified client base and client service team of over a 100 people, a set of products which are, covering well established products on on the one hand and then new products which are providing new ideas and an opportunity for differentiated conversations with clients and prospective clients on the other. And a well established track record of turning all that into a nicely cushioned operating margin and prospect of rising operating margin and rising dividends into the future.

13:46 Next slide. So slightly more detail on the slide, but I wanted to give you a little bit of a flavor of how our business breaks down. So in the top right donut, you can see in the blue colors, this is the assets under management of the environmental markets funds. The six strategies I referred to beforehand representing just less than 60% of of total asset management, whereas the orange sectors are the sustainability lens strategies, which are still minority but are growing more rapidly. The bottom left, you can see the geographic breakdown of our client base with The UK and Europe being majority, but a healthy allocation from North American investors, both Canada as well as The US and a small but but growing set of clients in in Asia Pacific region. So that includes Japan, Australia, well as Hong Kong and the ASEAN region.

14:45 And at the bottom right, you can see that just over half of our assets under management come from our own label funds. So IMPAX funds, for example, in our Irish uses platform or our mutual fund range in The United States, or mandates where we have a direct contract with client, for example, a pension fund. BNP Paribas is our largest shareholder with about 14% of the shares, and they are also our largest distribution partner with, about 28% of our revenue coming from the the five funds that we sub manage for them. And then everything else is, third party white label or wholesale money that we manage, for for clients all over the world. Next slide, please. So, in the year just gone, we have had a, almost flat performance in terms of net inflows.

15:39 So very slightly negative £92,000,000, which in the context of £37,000,000,000 is is very, very small. That's compared compared to our peer group is very competitive, Certainly top quartile, not top decile in terms of the performance most of ASSET MANAGEMENT have seen net outflows over that time period. We have a very strong client following and client satisfaction is very healthy. And we are, as I'll explain in a moment, continuing to invest selectively into new products. Next slide, please. So looking at those those flows in a bit more detail. So what these bars represent is the the net flows.

16:29 So the dynamic version if you like with the bar to the left of the vertical line meaning positive and sorry. To the right of the positive let me start again. The part to the right of the vertical line meaning positive flows, inflows, and if it's to the left of the line, it's outflows. So starting on in the left hand side of this page, then The UK has been broadly net positive. Thanks to our strong relationship with Saint James's place.

16:57 Everything else being being reasonably flat. And then in Continental Europe no. Sorry. North America, we are we've seen a reversal of flows in in the twelve months from nicely positive the previous year to somewhat negative. But we have been seeing that North American investors are among the first to get more confidence or improve their their outlook for markets. And so, last four to six weeks, we've seen a bottoming out of the, the flow the the outflows from North American investors. Next slide, please.

17:47 So by contrast, the situation in with BNP Paribas has been negative for for some time. And what we are experiencing there particularly is the asset allocation decisions of central gatekeepers in places like Paris and Brussels who work for BNP Paribas to advise their private clients who have continued to be to be bearish about equities and recommending money market funds and fixed income.

18:16 That has, continued in the last six weeks or so, but at a lower rate. So we would I think we've seen the end of the outflows from the MP Paribas strategies yet, but sentiment could could turn quite quickly. Those asset allocators change their view of of equity market prospects for 2024. Situation's been more positive in Continental Europe with the other clients that we've got. So we we've seen good pickup with existing distribution partners and a couple of new wholesale mandates as well. And then the Asia Pacific region's been a very strong performer over the last twelve months with a big mandate win in Japan and some positive news coming out of Australia.

19:04 Next slide, please. In terms of our distribution architecture for the future, then we have been continuing to invest selectively in direct sales resource. We've appointed our first salesperson in Canada, building on a strong track record going back to to 2012, I think. In The Nordics, we've appointed our first salesperson as well, somebody covering Nordics directly. And, one of the big highlights for the last twelve months was the opening of, our second Asian office, this time in Tokyo, which was on the back of of the big pension fund mandate that I referred to, but also a grant that we got from the Tokyo government that was keen to attract green financial sector players into the Tokyo market.

19:55 And then our

19:56 indirect distribution or partnerships work was extended, particularly in The US where we've been deepening our relationship with the huge private banks like JPMorgan, Morgan Stanley and Bank of America Merrill Lynch. We've also appointed our first distribution partner in Latin America and have, recently launched a second fund with, Fidante Partners, which is our distribution, group partnership in Australia and New Zealand. Next slide. So as I mentioned a couple of times, new products has been a feature of our work recently. So just over a year ago, we launched a listed infrastructure product, which has got a strong tilt towards digital infrastructure and away from poured concrete.

20:44 We just this past ten days or so launched our our new thematic fund, is we're calling social leaders. It's essentially a combination of investing in healthcare and financial stocks linked to improving the fabric of society and dematerialization on the one hand, but also a strong filter for high quality companies as evidenced by metrics such as low employee turnover and, high degree of employee satisfaction. In The US, we have been, building out new fund structures alongside our mutual fund range to reflect, the evolving market and the opportunity to get cost down for for clients.

21:28 And we've also launched a a US only version of our of our leaders strategy, the environmental markets flagship all cap product. And then finally, in the private equity space, we are very close to completing the the raising of our fourth private equity fund, which, should beat the the size of the third fund. That fund was €330,000,000 which should be north of €400,000,000 with the fourth fund and that's set to complete by the end of January. So that's lots of work in equities. And then on the next slide, just a summary of our work in fixed income, which is an area where we've had capabilities now for for six years pretty much and is focused at the moment just on US assets for US clients with The US based IMPAX team.

22:22 So we've been hiring into that team to give it additional strength and depth and improve the the clarity and and resources for communicating with investors. We've also recently appointed a new person to a new role in London, is head of global fixed income, somebody who's got a twenty year career of building up fixed

22:46 income businesses, credit businesses in particular. And he will be looking around for investment opportunities around the world to complement our US capabilities. And we're also signalling that we're open to tuck in acquisitions and or bringing onboard teams in this area and potentially in private markets to give us some more capabilities and widen the range of products that we have for clients. Next slide, please. So IMPAX is known for our work on the transition to a more sustainable economy, but what had been happening until recently was that our specialist resources in this area were all over the company. So what I've done in the last six months is brought together these resources in a newly named sustainability center, which is a, if you like, a center of expertise within the company that's providing

23:44 supports in a number of areas to the investment teams on the one hand and to the distribution teams on the other. So there there will be expertise in these markets all over those investment teams in particular, but, they want deep research expertise and they need to go to the sustainability center. So the four areas where this group will focus are in investment research and stewardship. So that's really making sure that we've got a handle of the risk and opportunity of individual companies and that we've got an informed perspective on governance. In impact measurement where we've been measuring the non financial outcomes of our investment work. For example, CO2 emissions or water conservation for nearly ten years.

24:34 Thirdly, in policy advocacy and there we are usually in the front row of international groups, if not doing work ourselves unilaterally to engage with policymakers and help them to shape the design of new markets, for example, new power grids or water regulations.

24:53 And then finally, in, more broad based research and thought leadership, we recently, sponsored and and co produced a, quite interesting piece of research with Imperial College on how to how companies can improve biodiversity through acting in their own corporate self interest. For example, a paper mill that's got an incentive to invest upstream in the water catchment area to make sure that it's got a reliable supply of clean water in the future. Next slide, please. So looking to the future then, we are, of course, wanting to make the most of opportunities in the technology area. So we've recently installed, adopted Salesforce to make sure that our customer relationship management was or is as effective as possible. We've got experiments going on in AI, of course, in a control fashion to help particularly investment side.

25:52 And we are investing in our client service and client reporting area, which has got quite complex over 85 or so client accounts. This year, we've also been investing in the resilience of the firm, particularly around risk management, extending our compliance team, and also sharpening up our governance. We've we've got touch points with six market regulators around the world and with a PLC structure and subsidiaries with different roles and responsibilities. We've needed to

26:26 streamline the communication and decision making. So that's been another investment in future capabilities. Next slide please. Inevitably, in what is essentially a people based business, then our ability to recruit and retain high quality talent is right at the heart of our success. So you can see from these bars, the most recent being the the dark blue bars that we've been increasing our headcount, but actually at a slower rate than in the in the prior year. You can also see that the the majority of our staff are in the London office, but we have quite a sizable team now in North America and well staffed teams in Dublin and Hong Kong, and then a small team from growing from from the start in Tokyo.

27:19 We're also very pleased to see the staff satisfaction results, which has been done for the last three years. And so a 90% engagement score is the the HR jargon for, top decile staff satisfaction. And you can see also a very high degree of alignments the staff have with the the purpose of the the business. And that's part of the reason we've got, very low staff turnover. Next slide. So just a few words on the financials. Again, the dark blue bars represent the numbers for the year ended September 30. So a slight increase in assets under management has meant there's been a slight increase in revenue. However, with the headcount increase and further investments in new products and, those IT initiatives, then our costs have gone up a little bit faster. So as a result, operating margin was down at just over 32%.

28:17 In spite of that, we have felt it's perfectly possible and appropriate to keep the final dividend flat in line with what we paid out last year. So that's our recommendation going into the AGM next March. Next slide. So a little bit more color here on the left hand side, how the revenue increase broke down between investment returns and market movements. And then on the right hand side, how our revenue margin has evolved. So the the dark blue bar again, most recent, showing a very slight reduction in revenue margin compared to last year. But the revenue margin goes from 30 basis points all the way up to 80 or so basis points across those 85 accounts. So this is the the weighted average of all those accounts.

29:06 And therefore, we do have, a high degree of resilience. Now, I'm sure I'll be getting a question about how that margin is is set to, set to evolve. So, give a brief summary now, but if if the question comes in, I'll I'll go into a bit more detail. So essentially, we are pretty confident that that margin will remain in in the forties, probably around the mid forties because we're getting good delivery through from our direct sales group as it expands and pitches to institutions without the intermediary. Therefore, can generally command a higher fee if that's the case. Next slide. And yeah, a little bit more color here on costs and on how the margin has evolved. So I'll just leave those numbers to speak for themselves. But it is perhaps worth looking at how the margins evolved in the bottom slide and also in particular how the business has scaled over the last six or seven years.

30:12 So that's of course put quite significant stress on the management team and the business in general. And I think our delivery of healthy margins, high degree of staff retention and very strong staff loyalty and staff engagement means that we've, I think, done an incredible job in managing that growth. Next slide. Also wanted to just summarize the board changes that we've announced recently. So our chair, Sally Bridgeland, and chair of Remuneration Committee, Lindsay Martinez will be stepping down next July after nine years in in those roles. And the chairman elect is Simon O'Regan, who's been on the board for for around three years.

31:05 His appointment is still subject to FCA approval. The regulated entity level, and I think at the controlled controlling company PLC level as well. And that Wilson will step up to be the senior independent director as Simon vacates that that role. And then we've also been very pleased to announce the appointment of a new board member last week, Julia Bond. And if you followed us for while, also know that Karen Coben joined us just over a year ago and became PLC director in the spring this year. So she's our finance director and she is the other executive alongside me on the main board. Next slide, please. So I think just moving to a conclusion.

31:50 You've seen this slide before, but just wanted recap the key points. Active investment management has been under pressure for the last five or six years or so as interest rates have come down and markets have just gone up. There's been a rising tide in almost everything and therefore passive investing has been quite easy. But I think there's a very strong consensus now that those days are over. Interest rates are not gonna be quite so predictable and in what's likely to be quite choppy markets for the next five or even up to ten years, then active management should be able to to earn its crust. So in that context, the tailwinds that we're getting from the drivers around the secular, transition to a more sustainable economy are a great differentiator and signal for where there's money to be made. There's interest in the space from both institutional investors and wholesale investors around the world. And IMPAX is probably the leading brand now in this area with a twenty five year track record, great range of diversified products, and now over a 100 people in client facing and client support marketing roles around the world who are reaching out to support the current client base, but also look for for new business.

33:01 So, I'm gonna stop there and, let's just move to to questions. That's fantastic, Ian. Thank you very much indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions. Just while the team take a few moments to review those questions already submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. Ian, as you can see, you've had a number of questions come through, both pre submitted and throughout today's presentation. So perhaps if I can start off the Q and A session with these. The first one reads as follows: In the past year, the management has mentioned the tailwinds of The US inflation reduction act. Could you elaborate on how IMPAX would benefit from IRA exactly? When we'd like to see such benefits show up in the AUM? Well, the inflation reduction act is a piece of legislation which essentially is providing tax breaks and grants to to those companies that are investing in certain range of industries in the the domestic United States.

34:03 Those industries essentially are those linked to, resource efficiency and, renewable energy and pretty much overlap with what impacts cause a transition to a more sustainable economy. So that would be electric vehicle manufacture, renewable energy, equipment supply, and a range of industrial, processes around around efficiency. So that piece of legislation is attracting a lot of inbound investment from Asian and European companies as well as American companies deciding to set up factories in The US rather than going overseas. That of course is then leading to a lower cost of of goods coming out of factories because those companies are able to pass on cheaper financing and lower tax bills to their customers and that's improving prospects for earnings right across the areas that IMPAX is investing in.

35:04 So we're already seeing the benefits of the inflation reduction act in the forward earnings expectations and guidance from many of the companies in our portfolios. And and so when when sentiment stabilizes for equities and global growth in general, then we think that the the earnings revisions up earnings upgrades from companies at heart of our portfolio should be surprising on the upside or which should certainly be be coming in at at, expectations. And that bodes very well for alpha generation over the next couple of years. I think it's important to stress that the amount of benefit that's going to republican leaning states is actually greater than the benefit going to democrat leaning states. And so if, anyone's thinking about a possibility of, republican administration coming into the White House in, in, January 2025 after the November election, then, I think the republican president would find it quite difficult to to reverse the inflation reduction act. So nicely sort of bipartisan support there, we think.

36:14 Fantastic. Thank you, Ian. The next one we've got here, we've actually had several questions, similar questions really from investors, related to James' place. So perhaps I can read out just one of them, which really encapsulates the main themes. We're seeing increasing inflows from Saint James' place in recent years. How do you see the trend going forward, particularly in the light of the negative press around their funds and fee structure? Is IMPAX taking active steps to manage its client concentration risk in The UK? Well, just to give a bit of, backgrounds, we first sat down with St James' Place in 2014 when we were designing our sustainability lens and those non thematic or non environmental markets portfolios. And as James's Place decided they would back our main sustainability lens product, which we call global opportunities, is now our our, largest fund. So they were the first client.

37:05 We were also the first manager that they appointed in their so called sustainable and responsible investment sleeve, which was marketed directly to their clients rather than put into model portfolios. And so we've enjoyed a very healthy relationship with St James's Place ever since. That healthy relationship remains. We are their principal, if not their only manager in that sustainable and responsible equity sleeve. And I think it's, fair to say that their client base is still very interested in in this area of investing. Having said that, as you say, sometimes the place is, is going through some period of difficult press. And so I think we are expecting the flows from them to drop.

37:53 But we do have a very good relationship with the top management level including with the new CIO. And we have an open door with them and an ability to sit down and discuss how we take the partnership forward if necessary. I think we also scored incredibly well relative to other St. James Place products in the consumer duty report that St. James Place produced. So I think the conclusion from the consultants who did the work was that this particular product is right at the top of the value for money or good outcomes, I think the phrase is, for clients. Off St James' place. Thank you very much. Next question here we have. With the ambition of doubling AUM, how much of the growth to date has come from an increasing allocation from existing clients versus new mandates?

38:45 Well, depends on the time period that you're looking at, but, I think it's it's fair to say that in the the twenty twenty to twenty twenty two period, then, a slight majority of the flows came from existing clients. So BNP Paribas was a strong contributor with large inflows from their private banking and wholesale channels, which to some degree have been going out in the last twelve, fifteen months or so. Having said that, the the number of new mandate wins has been considerable. So we had two European mandate wins in the first first part of the last financial year. We had the big Japanese win.

39:33 We've had some wins in Canada and in The US as well. Those accounts are a mixture. Some of them are single pension fund accounts that probably won't grow dramatically, but many of them are wholesale where we'd expect to start with a small base and increase over time. So, yeah, across 85 different client relationships, then it's obviously a very varied and sort of rich, diverse set of individual circumstances quite deliberately from our perspective because we don't want to have an undue concentration to warn clients or so. Now, I think it would be fair to say that with 28% of our revenues coming through BNP Paribas, we do have quite a big skew to them.

40:19 And so while we have a great relationship with them and would intend to carry on working with them and building the assets with them, then we are working pretty assiduously to develop other sources of revenue and sort of dilute that overall percentage on a relative basis. Thank you. Again, just touching on AUM. How do you envisage the weighting of AUM across the asset classes? Do you see the opportunity to scale the private market offering using your expertise? And, do you typically lead or co invest in that space? So today, listed equities are about 95% of the assets with fixed income being three and 3% and private markets being being 2%.

41:07 So strategically, our focus right now in the near term is to build up in fixed income, while looking selectively for opportunities in in private markets. So, in private markets then, what we're doing is running a sequence of funds investing in the development and construction of renewable energy and related projects. For example, wind farm, solar projects, battery storage, electric vehicle charging networks, etcetera. And we sell those projects once they are constructed to third parties and get a capital gain. That is a quite a scalable business, but you need to be careful not to be too greedy or ambitious because if you get up to very large fund sizes, then it's a very competitive world and it's quite hard on our view to to make attractive returns at the the very, very large scale.

42:02 So we will move beyond our final close for fund four in January to looking at the prep for fund five. And we're also looking at, one or two opportunities to do work in parallel areas, would involve bringing additional people into the firm. And as I said, five minutes ago or so, then in the context of acquisitions, then we wouldn't rule out making a small acquisition in private market space if we can find not just the right sort of scale of business, but also people running those sort of companies that have got the right kind of cultural outlook for harmonious integration with the current IMPAX team. Fantastic. That's great. Thank you very much indeed. Next one we've got here. What's happened to your cash level over the last year?

42:51 So, I didn't actually show the slide on cash, but obviously we have been generating operating cash flow as the, the profits have continued to come in. But we've maintained the dividend, but also had quite a strong buyback program over the last twelve months. We buy back shares opportunistically to defray the potential dilution from equity awards that we include as part of bonus packages. And we've had a policy of doing that for many, many years. We spent about £15,000,000 in the last twelve months buying back shares. And so that has eaten slightly into our our cash reserves, but we have an incredibly healthy surplus to regulatory capital and plenty of of cash to underpin future dividends, but also give us a small war chest for acquisitions.

43:53 Thank you very much indeed. Next question we've got here. Can you give a bit more flavor on the importance of being number one for proxy voting? I guess that's just relating to your voting record of recent years. I know you've been kind of top ranked for that, so a little bit more color on that would be great, please. Well, I think the main reason for paying close attention to governance and being a sort of engaged long term investor is to improve investment outcomes and that's always been the primary driver of our stewardship work. The sustainability center does include, three or four experts in governance who support the analysts and fund managers who are fronting the engagement work. And we are obviously close closely working with other investors and proxy advisers where appropriate on particular issues.

44:43 Because our bias is towards quality companies, then we are generally not investing in in companies where governance is weak or there are other sort of major problems in the anticipation of a turnaround. That's just not our style. But invariably, there's always something to consider and we think that at any one time we're working on probably 20 to 30 specific projects with management teams and boards generally as a in a position as intending to be a long term investor and within certain parameters and provided there is progress, then we are generally willing to work with teams and see those situations improve or turn around rather than run for the hills.

45:30 That is quite a different approach, if you like, to an investment manager who may be trying to to sort of nudge companies into particular non financial objectives. For example, getting carbon footprints down or, other kind of non, financial or non risk based objectives. We don't think that's our job, so we're taking a pretty careful and conservative view of fiduciary duty. Fantastic. What have we got here? What is the say share of the AUMs over performing the benchmark over one, three, and five years? And how's that evolved over time? So the bearing in mind that 95% is of the AUM is in listed equities.

46:22 Let me start with that. So generally, we are investing in products or investment strategies that have got a very high active share of at least 90% and in the thematic case up to 99%. And for those of you who understand that analysis and that language, then that's that means very differentiated portfolios in terms of investment performance relative to the index. For example, the MSCI All Country World Index would be a generic benchmark against which we will be quoting active share. So up until February, March time, then the outperformance was pretty strong over one, three, and five years. But what we have seen in the last seven or eight months is a fairly sharp d rating, which is consistent with that high active share and tracking error if you like.

47:16 And so if you take the data to the end of September, which is in the slide deck. I'm not sure if it's in the appendices for this deck, but certainly on our main website, looking at annual results, you can see that for the main environmental market strategies, leader specialists in particular, which represents just over around 60 of us in the management, then the one year performance is generally behind indices. I'm just thinking actually the water strategy which is a big component of that is still ahead of indices. Those one year numbers have dragged down the three year numbers, but not the five year numbers which still remain quite comfortably ahead. So it's quite interesting position. If we'd had this conversation, say, in April time, we would have been able to to point to, the vast majority of funds having, outperformed over one, three, and five years. Now that they are maybe majority's not performed over not outperformed over one or three years, that might be a negative signal to certain retail investors, but actually could well be a buying signal to institutional investors who can see that the strategies are maybe out of out of favor, off cycle, and that typically we look at historical patterns over at least twenty years as being a good time to buy. So that might be a reason for specific clients to actually increase their allocations.

48:41 Thank you very much, Ian. And just a reiteration really from from Bill H. Thank you very much, Bill. Just asking about the the cash position. Last year, IMPAX had the cash reserves of 107,000,000. What what is that level now? Yes. Because you have brought my other deck with me. Cash. So so now it's 87,700,000, down as you say from a 107,000,000. So cash increase from operations was 36,700,000. Dividends pay 36.4. So that's almost exactly the opposite. And then as I said, 15,000,000 in acquisition of own shares and 5,000,000 to increase the seeding of our own investments.

49:33 There is a that the slide with those numbers is certainly in our annual results presentation on deck if you'd like to examine it more carefully. Fantastic. Ian, thank you very much indeed for asking, answering all those questions from investors. Of course, the company can review any further questions that come in, and we'll publish as where appropriate to do so on the investor me company platform. Ian, just before redirecting investors to provide you with their feedback, which I know is particularly important to you and the team, could I just ask you for a few closing comments, please? Sure. Yeah. Well, thank you for listening. It was great to have strong interest in company. This is a business which I think is really well placed for medium term growth. Our business idea is really carefully thought out in the context of market opportunity. We've spent more than two decades building client interest and our brand all over the world where there are major pockets of capital.

50:24 And in this area of the transition to a more sustainable economy, we are seen as one of the most authentic and experienced voices. And therefore, the eyes of the gatekeepers, the consultants who advise pension fund and similar industries, as well as the, wholesale clients, big brand names, private banks around the world, then we're always a conversation partner they'd like to talk to. So we don't win every mandate, but, we do think that with over a 100 people prospecting for new business and supporting current business and, one of the world's largest investment teams, 80 people doing the investment work that, were well placed to deliver value for clients over the medium term. We have plenty of capacity which should allow us to get to that 80 to $100,000,000,000, 75 or so billion pounds over the medium term. I can't give you the exact date when that's gonna happen. And hopefully, I've been able to explain carefully in the last fifty or so minutes that the business, the management team, if you like, are focused on turning the revenue costs from delivering on those opportunities into a nicely rising profit stream and dividend stream. Now of course, what we're doing is not without risk, so we do need to remind everybody that the equity investing world is quite significantly exposed to markets going down and flows going out as investor confidence is fragile.

51:51 But we've had best part of eighteen months of that, which in our long history is pretty much unprecedented in duration. And so one would hope that we do some mean reversion and the secular tailwind should help us in that context. So I'm gonna stop there, but just the final comment is that we do endeavor to be detailed and transparent in our communication with investors, putting materials on our websites. Obviously, regulatory news service, the RNS is a place for news as well. And very happy to have bilateral conversations if anyone would like to contact us offline. Thank you again. Fantastic, Ian. Thank you very much indeed for updating investors today. Can I please ask investors not to close the session? It should be automatically redirected to provide your feedback in order the management can better understand your views and expectations. This will only take a few minutes to complete, and that is greatly valued by the company.

52:50 On behalf of the management team of IMPAX ASSET MANAGEMENT GROUP PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all.