IPXAF (IPXAF) Q2 2026 Earnings Report, Transcript and Summary

All right. Let's go. We're very pleased to welcome everybody to the webinar today from Impax. And the presenters are going to cover their interim results for the 6 months to the 31st of March. Just a few points of admin from me. First, the presentation is being recorded. So if you do miss anything, you will get a chance to watch it again. We are keen to try and address as many questions that will come in after the presentation. [Operator Instructions] So after the formal presentation, Ian and Karen will try and go through that. And also the presentation deck that they are talking to is in slightly different form, but is also on the Impax AM website with quite a lot of other very useful materials. So we recommend that to you. We're delighted to be joined again by CFO, Karen Cockburn, and the CEO and Founder, Ian Simm. And I shall now pass over to Ian to start proceedings.

Okay. Hello, everybody. Welcome to the interim results for Impax Asset Management Group plc for the 6 months to March -- 31st of March 2026. So if you've been to -- or attended one of these events before, you'll remember the agenda, which is basically an overview, highlights and business update, and Karen will give the financial update before I round off. There won't be any presentation appendices. So I think just in summary, it's fair to say that the world of asset management is changing and changing quite rapidly. There is definitely a move to very large firms with $1 trillion or more under management at one end, but also, if you like, a splitting or bifurcation of the market in which boutiques are increasing interest to the major asset owners of the world if they bring -- if those boutiques bring something that's different, that's specialist and that can offer products and services that are not easy to find elsewhere. And so in that context, Impax finds itself in a very strong position with a medium- to long-term outlook because we are really the global leader in this area of what we would call the transition to a more sustainable economy. We do use the word sustainability as a shorthand. But essentially, this is the idea that the world is moving inexorably towards the need for more resource efficiency for less pollution, for smart materials and those factors and similar factors are producing opportunities to make money because, frankly, they're quite complicated. They require detailed understanding of technology change and regulatory change. And it's those areas that provide us as a specialist investment group with an opportunity to uncover hidden gems, if you like, both in equities and in fixed income. In addition, what we can do with our client relationships is expand beyond just the pursuit of great risk-adjusted returns and offer them information around where policy is heading, where difficult and complex scientific debates like extreme weather projections are going and also compare and contrast for them what's going on in different parts of the world in these topics. So this is where Impax Asset Management sits in the global asset management universe, which I hope you've now understood or probably knew already is a very strong resonance or has a very strong resonance with where the whole of the asset management sector is going. The additional point on this slide is that we've very deliberately set up our business to be scalable. So we focused on areas of the market that have a very high degree of liquidity. We've positioned our products to be able to generate outperformance relative to global benchmarks over the medium to long term in those areas, and we've set up our business model to be scalable should underpin the delivery of growth over that time frame. So moving to the period that we're just reporting. Clearly, as a publicly listed company, then we have various obligations to report data and give outlook. So of course, there is a bit of a constraint around the rest of this presentation. But essentially, just summarizing what our key messages are as set out on this page. We do think that the fundamentals around this transition to a more sustainable economy are strengthening. That's illustrated quite nicely with the concerns around energy security, particularly heightened by the Iran situation, which in May 2026 is a major topic. There's also real interest and concern around where the weather patterns are going, the opportunity to cope with new types of threats and business growth in the food sector, water supply, et cetera, et cetera. Very pleased to be able to report that our investment performance is -- has turned the corner. So at the end of April this year for a calendar year-to-date perspective, 70% of our assets under management have beaten their benchmarks, which is quite a significant improvement on what's happened in the last 2 or 3 years when, frankly, the AI-dominated revolution has really skewed markets. And as I'm sure you all appreciate, active managers like ourselves have struggled to keep up with those generic benchmarks. Notwithstanding the improved investment performance, then the flows in and out of our funds and products have yet to turn positive. This is not unusual in the context of a period in which investment performance is moving from relatively poor compared to generic benchmarks to relatively good or stronger. So we can't yet forecast when the flows are going to turn around, but the lag effect, if you like, is quite common. In that context, we are focusing very much on positioning the business for the recovery, so diversifying and launching new products, building out our client partnerships, working very assiduously on cost reduction and efficiency and of course, making sure that our clients and everyone else realize that our balance sheet remains very strong and the largest investor group is actually management owning 18% of the business. On the next slide, Karen is going to take you through the numbers. So I think it's probably good idea for me to move on from this. But if you want to refer to those later, please do so. Karen will cover them in a bit more detail. Next slide. This is -- now follows a set of slides that if you followed us for a while, you will have seen before. So we're trying to provide continuity. So the green bar in the middle is the assets under management that we reported at the start of our financial year, which is the 1st of October 2025. Everything to the right of that green bar to the blue bar is what's happened during the reporting period. And to the left of the green bar is the previous 6 months. So as you can see from comparing the heights of the bars, yellow, green and blue, we were able to grow very slightly assets under management in the previous 6 months, but they've dropped in this 6 months, flows on a net basis negative in both periods and the market movement in the period we're reporting was substantially lower than it was through September or October 1, 2025. Next slide. A couple of slides coming out, which look quite busy, but essentially, the first of those 2 slides here is listed equities. How has our performance been? The next one is going to be fixed income. So this is the listed equity slide. We're looking at showing you 4 of our largest or the 4 largest strategies or funds that we run in listed equities. So Water, Leaders, Specialists, Global Opportunities. So those are certainly in the case of 3 of them are Impax's jargon, but essentially Leaders and Specialists are thematic funds, whereas Global Opportunities is best seen as a core equity fund with a moderate thematic tilt. So each of the pairs of bars, blue and orange are -- in the case of blue, the performance in the calendar years to date of our funds or strategies and in the case of orange, the benchmark. So if you take Leaders, for example, in the top right, you can see in the highlighted box, which is calendar year-to-date, the blue bar is bigger than the orange bar. So we've been outperforming the benchmark, whereas in the previous 4 years, we were underperforming the benchmark. That's the same story for Water And Specialists. So that's illustrating the point that I was making before that we've now been able to return to investment outperformance in a significant percentage, 70% of our assets under management. By contrast, Global Opportunities hasn't quite kept up with the benchmark. So that is the one which is behind calendar year-to-date. Next slide. I feel like I'm a bit of a school teacher, but I hope you'll bear with me as I try to explain these complicated slides. So anyway, this is fixed income and same format. So our 4 largest fixed income strategies, and it's exactly the same arrangement. But if you look at the red boxes, then you can see the calendar year-to-date, moderate, but still measurable outperformance compared to benchmarks. And actually, in the previous 4 years, generally speaking, these strategies have more often than not outperformed their benchmarks, which, of course, means that the track record from a communication perspective when we talk to prospective investors is stronger. And although the funds under management are still relatively modest, there's quite a powerful story to tell. So I'll come back to that in a moment. Next slide. The breakdown of our assets under management and revenue by various criteria are shown here. So on the left, again, blue bar is what we were reporting at the end of March this year compared to the period 12 months earlier. So I think the key points without getting lost in the detail while on the left, active thematic equities, which will be that Leaders, Specialists, Water and a couple of other strategies from 2 slides ago is still nearly 3/4 of -- sorry, 2/3 of the assets under management. And noticeably or notably, then systematic equities and fixed income are larger percentages. And if you add those 2 together with private markets, I think we're -- we like to note or draw your attention to the fact that nearly 1/4 of the assets under management are outside of listed equities. The objective is to grow those. By region in the middle, not much change, but notably, we have North America is over 1/3 of our client base and the EMEA region, so outside the U.K. as the majority. Revenue by product type, probably the thing to point to there is the BNP Paribas mutual funds, which are around 1/4 of our revenue, and they've been our largest external shareholder, if you like, for nearly 20 years actually and remain our, like, our most important client from a revenue perspective. Next slide. So just focusing in on where we are in May 2026. I think it's just important to look at what's going on in energy markets, in the AI revolution or the trends for AI in wider environmental factors. And these news snippets essentially point to the -- what I was saying at the start, which is that energy security and clean energy issues are really very prominent at the moment and prospects for many of the companies in the space have improved quite considerably. Meanwhile, the AI stocks are not dominant in markets in the way that they've been in the last couple of years. And that means that areas of the market that are not in the AI space have had an opportunity to bounce back on a relative basis. And then there's plenty of evidence that the risk around extreme weather and other environmental factors is starting to really impact on corporate decisions and investor risk about long-term prospects for earnings in some areas. Next slide. So in that context, we do believe that with our thematic tilt or our investment thesis that we've got quite a strong position. The chart here on the left shows the breakdown of our leader strategy by subsector. So this is the definition that we've created over 20 years ago. And -- but hopefully, you can see from a qualitative perspective that broadly speaking, these areas are -- well, let me start again. So the bar charts show that this broad spread of exposure that this strategy offers to energy efficiency, digital infrastructure, resource efficiency and several other groups or sectors. And on the right, you can see the mapping of the energy security and AI infrastructure build-out to those subsectors, illustrating that the strategy does have broad exposure to these pretty prominent themes. Next slide. So a couple of slides now just showing how the net flows broke down. Remember the number from the bar chart stack from 5 or 6 slides ago. This is the breakdown of how that's changed both by distribution channel. So again, the blue bars are the period that we've just reported on and the orange bars are 12 months previously. So anything to the left of the line is negative. And unfortunately, on this chart, we don't have anything to the right of the line, which would be positive. So the outflows basically are where the bars are longest. I think the positive point from this slide is that with BNP Paribas, the outflows have been materially less negative. So not out of the woods yet, but there's a set of indicators, which we think over time will lead to better results from a flows perspective from our wholesale channels, including this one. The next slide is just rounding off the channel breakdown. So the left, the distributors from the rest of the EMEA region on the right, the Asia Pacific region. Next slide. So -- and then the next one, please. So our strategy really breaks down into 6 components. reading across the top, we are looking to organically grow our listed equities offerings and then build scale in both fixed income and private equity. And then on the bottom, we already have a nicely diversified global distribution network, but there's still some work to do to expand and deepen those. That will include in the middle on the bottom, our work with client partnerships and brand differentiation, which, as I was saying right at the start, is a big opportunity as many of our competitors drop away from this area given the relative underperformance of the whole space. And then, of course, we are committed to running an efficient, agile and scalable operating model. So a little bit more color on those 6 factors over 3 charts, first of which is this one. So going from left is listed equities, then we are further enhancing our investment process, team structure and launching some new products, including our first ETF product in the United States, which will probably be the first of several. In fixed income, we've now integrated the SKY Harbor and Absalon teams and client groups into a cohesive investment team with a strong connection to our sustainability center, which does provide for quite a differentiated offering for the market where that fixed income sustainability link is not very well provided for by competitors. And then in private markets, ongoing progress with the commitment and exit of our third and fourth funds and then a plan to raise additional capital. Next slide, please. Our client work continues to build. So this idea of a specialist manager in the transition to a more sustainable economy is increasingly differentiated and popular, supported by the work of our sustainability center around thought leadership. We are extending our work to build relationships with major institutional asset owners. We have hired a senior executive with a very strong background in that area who joined us in January. And we are working with several new potential partners on co-developing investment solutions. And meanwhile, as I just mentioned, many of the larger branded asset managers are pulling out of the space because they are unable to justify continuing to market the funds that have got weak historical, let's say, 2-, 3-year track records against generic indices, even though in many cases, they've also seen a turnaround in performance. And then the third slide in the series is this one. So our operating model really depends, of course, in part on our talent and with a brand in area, we are continuing to find that we are a very attractive target for external talent. We've also got a very high staff retention rate and a very good track record in succession planning, which has been implemented in the context of a number of senior individuals retiring in the last couple of years. And then efficiency and technology. So we have, as we've seen a reduction in the assets under management. We've had a couple of rounds of reducing the number of people who work at Impax. So you can see the footnote, we ended the period at 269 individuals, down from a peak of about 315, and there will be another 30 redundancies, most of which are already announced in the second half of our financial year. So that's underway at the moment. We've made those adjustments with a very explicit focus on not reducing our capabilities or growth potential. And as I said at the start, there is a very strong focus on efficiency and with the adoption of technology, including AI, then we do believe that we can contribute to margin preservation through that initiative as well. I'm now handing over to Karen, I think.

Thank you, Ian, and good afternoon all. So I would like to take you through the financials in some more detail, but to start with sort of saying that for those that are following sort of guidance closely, there's no surprises relative to the recent market that we've had. But as Ian has articulated that challenging environment for net flows has continued. And with that backdrop, the results [indiscernible] summarized in revenue headwinds continued by -- countered by our continued cost discipline, but supported by a strong balance sheet. So just running through the numbers very quickly. Underlying operating profit for the first 6 months of GBP 11.3 million, corresponding [indiscernible]. The reduced AUM revenue decline to GBP 58.8 million from half 1 in '25. And with costs continuing to reduce to GBP 47.5 million, which is more than GBP 8 million below where we were at this time last year. And that's as our efficiency programs continue to deliver and as Ian has pointed out, without compromising our capability for growth. And finally, reflecting confidence in our cash position, the Board has announced an interim dividend of 2p per share. So unpacking that in a little more detail on the next slide, we talk about revenue. So really looking at the group revenue in half 1 that GBP 58.8 million compared to GBP 65.4 million in previous 6 months. Given on Page 6 on the bar chart that Ian had walked across, there was GBP 3.8 million of net outflow, and that has resulted in the largest impact really -- negative impact on that profit or the revenue have there. The improving performance that we have articulated, that's helping uplifting the revenue line by that [indiscernible] and then it's pegged back just slightly by just some timing on our private equity which come in, in the second half. To the right-hand side, you can see the average fee margin, a very key measure for the business has held up well over the 12-month period, slightly below where we were at half 2 and that's really just because there was [indiscernible] benefit in that period. Now normally in these charts, we do show sort of run rate, but we haven't done that this year really for 2 reasons. And the first really was that March points actually...

Karen, it's Andy here. Your microphone or your audio has gone a little bit in and out in the last minute or so.

I maybe get -- no, hang on. Is that -- can you hear me now?

That sounds better. That sounds better.

Okay. Well, maybe sorry, I just nudged it slightly.

Yes, that sounds good.

Will I pick up again there just from the fee margins? Yes. So I was just saying that the fee margins had held up well at that 47 -- above 47 basis points that was pegged back slightly from the September year-end position, which had benefited from just favorable mix. And I check, you can still hear me?

Yes.

Okay. Thank you. Okay. So now what I was saying was that we normally do talk about the run rate at the end of this period, but we have not included them just now for really 2 reasons in that there was sort of a bit of distortion perhaps in the run rates for the end of March. Two reasons for that. One was really that the 31st of March, that last week of March, markets just really dipped and then recovered very quickly when we went into April. So it will be somewhat missing. But most importantly for me is that the run rate would have included the impact of the IEM plc, which we know that we've had that tender. It has been announced in the market that just about GBP 740 million has tendered. Now we are working very hard in the background to redirect as much of that as we possibly can into the existing -- the same strategy that we have for that fund. So the run rates in themselves would just be a bit misleading. But in terms of where we think the revenue will outturn for the year, taking account of IEM, that is still factored into the range that we quoted to the market back in April of revenue outturn for the full year of -- between GBP 109 million and GBP 113 million. So we remain committed to that. And across the course of the year, [indiscernible] operating fee margin, excuse me, to remain in the region of 47 to 48 basis points. And in terms of 2027, we normally try and give some guidance. So whilst we see the performance improving, whilst we do see a bit of stabilization in the level of net outflow, we're in net outflow all the same, and we are being incredibly cautious about calling when we see that net outflow turn into positive flow. So we're going to just update on that as the year progresses when we see market. Then looking in -- if I can move on to the next slide in terms of looking at an area of costs where we continue to make meaningful progress with the cost completing period GBP 47.5 million. And looking back across that bridge that we have there. So we're active across all areas of the cost base. We were able to remove about just over GBP 1 million from really being very disciplined looking at fund expenses, fund subsidies, et cetera. But the largest part of the cost saving, both in fixed and variable come from staff costs. And that correlates from the numbers Ian mentioned earlier of the headcount reducing 9%, a further 9% from 296 to the end of the period at 269. That helps to run -- that sort of drives a very favorable improvement in the run rate on the cost. And we will see further savings in half 2. As Ian has mentioned, we had -- there's a 30 headcount that we will reduce, as Ian says, has already been announced and will leave the business across the second half of the year. Combined with the changes we made last year, it's over [indiscernible] have been removed from the business. So that is quite significant, and we have been very disciplined in our approach to costs. We will see that full program complete over the course of the 12 months. And we [indiscernible] guidance for 2026, we're saying in the region of about GBP 95 million, just below GBP 95 million where we think that will outturn. In terms of bringing that together in the operating margin of 19.2%, just slightly down. But given the impact of -- excuse me, given the impact of the IEM plc, we will see a squeeze on that operating margin in the second half and for the full year, it will be in the [indiscernible] but a key message that I do have to give because we have been so disciplined in the cost base and our ability to grow but that cost base is so well positioned for margin recovery when revenue stabilizes. If I could then move on to the -- just talk very quickly about the balance sheet. So the cash finished at a low point at the half year because looking back over the last 6 months in terms of the cash decrease from operations, that's when we paid the 12-month bonus from the prior year. The dividends, we paid [indiscernible] in March. And then, of course, we finished our first ever share buyback in December with a -- of GBP 10 million, with the bulk of that -- majority of that taking place in the first half of our financial year. Whilst that is our lowest point for the year, we do expect that to grow over the course of the next 6 months back closer towards that opening position. So with that strong cash position and forecast, and just to remind that this time last year, we signaled that the [indiscernible] to a more sustainable level. And with that in mind, we have and taking into account the lower earnings, we are announcing 2p interim dividend for the period. Now that remains in line with our policy of 55% of adjusted profit after tax. And really, what that has done is really put the dividend on a footing that it's fully covered, that it's a through-cycle position and of course, with room to increase as earnings recover. And then on the last page that we continue to manage a very strong debt-free balance sheet with shareholder equity of GBP 106 million, sitting alongside that unchanged capital requirement, maintaining that healthy surplus. In terms of seed currently sat at GBP 16.8 million, that's sort of a big part of our balance sheet and how we invest for the future. But as part of our cost efficiency program, we have been able to identify just some low potential funds that we had seeded in the past. So we expect to see those merged, closed over the coming months, that seed returning, so just improving the quality of the capital. In terms of our capital allocation priorities, they really haven't changed. And in short, the key message for me really is we have a strong debt-free balance sheet that really [indiscernible] and to keep managing that to continue to invest in the strategy, the growth and diversification of the business. But I think most importantly, enables us to act from a position of strength in challenging times. With that, I'll hand back to Ian.

So just one slide to close. So I think just recapping on what I said at the start, there's a massive opportunity for Impax in this bifurcated asset management market. There's very little on the way of institutional quality, sustainability-focused asset management service. And therefore, we've got a real calling card with current clients and prospects all over the globe. The business is still skewed in terms of assets under management and revenue to listed equities. And we have been trying to diversify that over the last 5 years with the fixed income acquisitions and further investments in private markets. So still some work to be done to diversify the business. Meanwhile, the switch from a very narrow equity market to a much broader market has been very helpful for us, hence, the strongly improved performance calendar year-to-date. That, however, in terms of 4 months is not enough to persuade clients that the areas that we're investing in have recovered strongly. And so a lot of prospective clients still sitting on the sidelines, and therefore, we still have a net outflows position. The exit tender from IEM plc, as Karen has mentioned, will have kicked in, in the last few days. So that will be an initial exit of about GBP 740 million to be offset over the next few months with hopefully a material switch of that money coming back into our UCITS vehicle. In the medium term, we are really doubling down on our marketing and outreach, more client partnership type structures and new products. And then, of course, as we've been saying, we've got a very ruthless focus with the Board on both cost management but also talent retention and are very pleased to continue to report a strong balance sheet and financial health. So I'm going to pause there, and Karen and I are very happy to take any questions.

Great. Thank you very much. And if you just keep an eye on that microphone, Karen, it's moving a little bit in and out. Lots of questions submitted, so let's go straight in. Ian, you mentioned the launch of your first ETF. How exciting do you see the growth potential for ETFs in the American market?

Well, the first objective with this ETF project is defense actually or defense as Americans would say, which is that the mutual fund market in the U.S. has some quite specific tax disadvantages. I won't go into the details. And therefore, there is an opportunity to ensure that our mutual fund clients stay with us by offering them a more tax-efficient ETF. So the first ETF we've launched is actually a conversion of one of the subfunds within the mutual fund range into an ETF, and there's another 9 or 10 of those that could potentially be switched. So that's the focus at the moment. Once we've done that, in fact, we're starting to see that some small degree already, then the package of those funds will be much more appealing to new investors. So that's the project at the moment that will keep us busy for the next 2 to 3 years or so in that area.

A lot of talk about the success you've had in using technology and automation to cut costs. Can you give the audience some specific examples of how you've been able to save money there?

Karen, do you want to...

Yes. Okay. So I think, look, we're not -- at this stage, AI hasn't -- we've not had the AI revolution in the business yet. That's removing costs, but we're very active in our AI program. Really, it has been a function really of over small technology packages, new payroll systems, a new reporting system for our client group. So it really has been that. But the business has a very -- from somebody fairly new to the business, a very neat operating model. It has looked after its data incredibly well. And I'm actually quite excited about the opportunity that we will have from AI yet to be explored.

And just to add to that, we do have across the investment teams in listed securities, a number of technology platforms that are not only making the research and trading processes smoother, but also reducing operational risk. And then in the sales and marketing area, there's a new package around the sales lead monitoring, which is proving to be very, very helpful.

And a follow-on question. How can you be so confident that the headcount reductions past and ongoing will not impact the core of your operation?

Well, I think in 2 senses, the first of those is just around the number of clients that we've got. So as we've dropped down to that GBP 22 billion or so, then we've lost a number of clients. So therefore, there's a need for fewer people who are doing client-facing work. And then in the other area, we've actually reduced the number of investment strategies and made some adjustments in our teams to make the whole process more efficient. So that is -- it's taken us about 15 months to both plan for that and execute. So we've definitely been very thoughtful about each individual step. And yes, I mean, time will tell how quickly we'll be adding back as the recovery kicks in. But with close oversight by the Board, then we're very happy with the efficiency and effectiveness of that adjustment.

Okay. And then perhaps a related question, what level of AUM capacity do you see Impax currently positioned for?

Well, if you look mathematically at the liquidity of the underlying equity strategies that we are running, then it's well north of GBP 50 billion compared to just shy of GBP 20 billion today. In the fixed income strategies, at the moment, we have a relatively small investment-grade offering, but that, of course, has enormous capacity. In high yield, it's probably more like GBP 10 billion to GBP 15 billion. And then in private markets, we're in the sort of GBP 1 billion to GBP 5 billion. So if you add all that together, then comfortably north of, say, GBP 70 billion, GBP 80 billion and potentially over GBP 100 billion in theory.

Yes. It sounds consistent. A question of drivers on sustainability reporting. Sustainability has been driven by voluntary commitments and actions in the past. In the last few years, there's been a flurry of legislation on sustainability reporting. And consequently, compliance is now one of the main drivers of progress. And it is leveling up reporting and performance on sustainability. It's quite a long question. Could you please comment on how you see this new trend, a focus on compliance and less interesting voluntary commitments impacting active asset management and indeed your business model?

Okay. Well, look, I think it's really important to stress that we are an organization that's trying to generate attractive risk-adjusted returns, financial returns for clients rather than fulfill any sort of ethical or political objectives around saving the planet or anything along those lines. So in that context, because with our thematic tilt towards the sort of sectors that I was referring to earlier, then our efforts are really looking at growth of new markets, the risk around how companies will behave and thrive or otherwise in those markets. And that's the core of the service. Now I think the question implies that there's a broader pressure on corporates in all sorts of sectors to provide or has been a pressure to provide reporting across a range of environmental and social and some degree, governance elements, for example, the CSRD directive from the European Union. That reporting requirement remains in place. However, it's quite likely that with the rise of populist governments, there will be a watering down of those requirements over time or continue watering down of those requirements. So as you can imagine, many of Impax's clients are very keen to see high-quality reporting in those areas, and we have a sustainability center of 17 people, which is really focused in part on making sure that we're fulfilling those expectations. Over time, I think the growth of the firm is going to come from being able to successfully demonstrate that we've got a great investment idea rather than in our strength or competitor advantage in reporting.

Yes. I'll do that. Back to AI, Karen, you said that a lot of the benefits are still to come on the administrative cost side. We have a question, how widespread is your team using AI as part of the investment process and investment selection?

Maybe that's one for me, actually.

I think so [indiscernible] on the investment side.

So I think the answer is at the moment, it's bottom-up and very much dependent on individual initiatives and enthusiasm, which is strongly encouraged as opposed to being coordinated centrally top-down. We have had about 12 months of experimentation around bottom-up initiatives, and we're now putting in place for the next phase, more of a top-down structure. But I'm sure as everybody appreciates, this is -- it's a fast-changing landscape, and we're trying not to be too prescriptive. So work in progress, I would say, but some quite interesting efficiency progress already achieved, particularly, for example, around researching new sectors or even to some degree, new stocks more rapidly than we were previously able to do.

Question on M&A. Your acquisitions in recent years have not been too large in scale, but seem to have worked out very well. Do you think the current geopolitical turbulence and market headwinds might enable Impax to accelerate the nonorganic elements of its diversification away from listed equities?

Yes. I think we are very pleased with the success of the 3 acquisitions so far, and that's given us confidence to think about doing more of that in the future. However, there's -- I think from our experience and how the rest of the market sees M&A, one needs to be measured and incredibly selective about the targets and the pace of M&A growth. So I think the objective remains to look for attractive acquisition targets, probably not too big because we don't want indigestion or threat to our culture. We're not in a hurry, but the market does have quite a lot of distressed players out there who have been suffering from the same sort of MAG 7-dominated investment issues that we've just reported.

Okay. And a general question on fixed interest. As a narrow-minded equity investor, that is a question that's come in, it's not me. Can you summarize for me which fixed income segments you focus on and whether they are largely immune to the quite severe headwinds currently faced by sovereign debt products at the moment?

So if we were to go back to the slide with the fixed income products, you would see there we have high yield in particular, and then small exposure to emerging market corporate debt and to investment-grade debt. So at the moment, we're just in those 3 areas. We don't have a plan to expand. And I would have to agree that at the moment with very tight spreads, the opportunity for alpha generation is quite limited. That does appear to be a particular point in the market. So we're being patient and trying to make sure that we've got outreach to prospective clients so they know what we do, such that when spreads start to improve that we're well placed to bring in some more clients, more money.

Good to hear. A couple of questions about IEM. What we got here, it would be unrealistic at this stage to ask you how much of the IEM AUM you think that you can retain using the equivalent UCITS product. But first of all, can you give us a feel for early IEM shareholder appetite to possibly make that switch? Has there been much interest, little interest or something like that?

Well, I think the best way of looking at this is that the tender has produced GBP 740 million of exits, leaving just over GBP 200 million remaining in the trust for us to carry on managing until further notice. That GBP 740 million is particularly held by U.K.-based private wealth managers with whom we've got relationships. I think the sort of the core point is that in that pool of capital, we've got a very good connection for decision-makers. What we're offering essentially is an attractive -- financially attractive switch or reinvestment of those monies into our Irish UCITS vehicle, which has got the same underlying portfolio to all intents and purposes. We were not able for a variety of reasons to have a sort of tick the box switch. So the money has come out first and therefore, needs to be reinvested. And therefore, it's almost certainly going to take 1 or 2 months to know how much money moves across. At the moment, I'm afraid I can't give a [indiscernible] frankly don't know how much is likely to move across. But what I can say is that this trust has been around for nearly 25 years. It had and still does actually have a pretty liquid share base. And therefore, anyone who wants to get out has had an opportunity to get out. There's been strong buybacks in recent years. And therefore, I think it's reasonable to assume that a high percentage of that money would like to remain in the underlying strategy, which crucially is not available for anyone else. So this is a unique investment product, and we're offering an attractive route to give the clients of that trust access to that investment idea through the UCITS fund.

Yes. And the follow-on question, presumably from an IEM shareholder thinking about the switches is do you happen to know the communication strategy for the manager of the environmental UCITS? Are they likely to meet with private investors on an annual basis and indulge in regular communications?

Well, that's very much our intention. I mean we, Impax Asset Management are the manager of the [indiscernible] fund, just to clarify if that needs to be clarified. And so we are expecting that fund to grow with the switch and therefore, are very much committed to high-quality investor relations. So I will double check after this meeting that we've got a detailed plan to do that. And if anybody is dissatisfied with the client service that they see going forward, please drop me a line, and I'll be very happy to address any concerns anyone has.

Thank you very much for that. Other investments. So you have helpfully reminded us of your existing exposure to the genuinely massive spending on AI infrastructure. Have you been actively increasing your funds exposure to areas like power generation, storage or digital solutions in the course of this year?

Well, I think we -- it's fair to say that we have been encouraged by the trend of earnings expectations in both the energy security-related areas and in the like derivative parts of the AI space, for example, generation or water supply. So I think it's fair to say that across the fund management team that we have been increasing in those areas, but it's very much on a stock-by-stock basis because business models, of course, vary considerably, and there's a lot of hype and overvaluation in our view in many parts of the AI space, in particular.

And a very specific question on energy generation. If you happen to know, has Fusion Energy been something that your fund managers have been looking at or indeed might have invested in?

Well, I think Fusion sadly is pre-earnings and almost certainly pre-revenue to any significant degree. So because we don't invest in really early-stage businesses. And also, if you look at a company like Rolls-Royce, which is pioneering the small modular reactor market with a number of international players, then SMR is a tiny part of their business. So the SMR, small modular reactor trend, which is likely to produce some real assets in the ground in 10 to 20 years from now is not really a driver of stock prices. So very interested in Fusion from a sort of theoretical perspective, but it's not really a feature of our investment work at the moment.

A couple back on ETFs. First one, would you consider launching them in partnership with other bodies? And do you have any plans to launch ETFs in Europe?

So we're definitely open to commercially attractive ideas to launch more ETFs and that would definitely be part of our consideration as we expand the ETF thinking outside that U.S. mutual fund range that I referred to before. Nothing concrete to signal at the moment. In terms of Europe, then we certainly wouldn't rule it out. And I do know that notice, I'm sure you've all appreciated that a number of other managers are launching European ETFs. At the moment, there's no material tax advantage that I'm aware of for European ETFs in the way that there is a tax advantage for U.S. ETFs or investors in U.S. ETFs. So given our relatively modest resources for this particular type of work, then we're at the moment just focused on the U.S. for this part of business development.

Understood. And perhaps a good general question to finish on. As CEO and CFO of a business in transition, which KPIs do you personally look at most closely to think about the underlying health of Impax?

Well, let me start. I'm sure Karen will add her own. But I think the reason for emphasizing this turnaround in investment performance is that what we found over many, many years as our peers and fellow travelers in the space also find is that if the investment performance is good, then the flows follow. And so the investment performance and risk the fund managers taking is for me the absolute crucial starting point. And then the second derivative or the second area, which is a derivative of that, of course, is the pipeline and the health of the client relationships is the second areas to look at.

And look, I would just add then is the data for the equity business, the day-to-day flows, particularly for BNP, that's where we can see a turnaround. Can you hear me?

Fading a little bit in and out there. Come again.

I'm sorry about this technology normally. This is incredibly reliable. Can you hear now?

That's better.

Okay. Sorry. it's just the microphones just let me down badly today. So I just want to say is that I follow very closely then those for the equity business, particularly for BNP. So when we see a turnaround in flow, that's where we expect it to come from in the first instance. And then as Ian says, following the pipeline, but specifically for fixed income, now that we've had the global high-yield business for 2 years, we expect to see that pipeline now begin to monetize.

Great. Well, thank you both very much. We'll just get a final summary from Ian in a minute just to thank our audience for the questions. And you will receive a questionnaire at the end of this broadcast that then switch off. It won't take you more than a minute to complete, which the company would be very interested in. But perhaps, Ian, you can just summarize what you're looking forward to in coming months.

Yes. Look, I think it's -- for those of you that have known us for a long time, it's important to point out that we were about GBP 7 billion under management in early 2018, and we're now 3x the size of that having been obviously much, much bigger. So the firm has had a very interesting journey over that 8-year period. We do find ourselves as a global leader in a particularly appealing area of the market. And because of that area of the market lagged generic indices, as we've said, then we are definitely -- or we have been out of favor. Asset management in the active equity space has been under a lot of pressure. We're not been immune, but I think there are signs of recovery. And with our strategy focused on a compelling market niche, then I do think we're really well placed for growth over the medium to long term.

Great. And best of luck as well, always a useful commodity. Thank you very much.