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Impax Asian looks to the future after activist piles in
by Sarah Miloudi on Apr 11, 2013 at 11:37
Activist Weiss has scooped up the near 24% stake in Impax Asian Environmental Markets let go of by Invesco.
It is a move which could turn up the heat on sister trust, Impax Environmental Markets, now that like Invesco another 20% of the shareholder base has also fled for the door at Impax Asian.
Unlike its Asian counterpart, investors in Impax Environmental have remained loyal. But in-keeping with the broader environmental sector, both trusts have struggled to eek out benchmark-beating returns over the last three years, according to Citywire data.
Looking beyond the investment trust sector, environmental shares have suffered on the back of renewables budget cuts announced by the EU, double dip recession fears, and the lacklustre performance of emerging markets versus global equities.
While some of these worries can be put down to risk aversion in the face of a gloomy macro backdrop, none of these concerns will have helped Impax Asian, where a bias to smaller companies will only have amplified the pain.
Adding to these difficulties, the trust has also been the maker of its own misfortune. It unveiled a poorly timed £131 million 'C' share issue in October 2010 - virtually the peak of the market - and as returns tumbled the year after the trust was also hit by a widening discount.
Now, with the loss of shareholders representing close to 50% of the trust's share capital, the future looks 'bleak' for Impax Asian, said analysts at Numis.
'The fund currently has net assets of £212 million and given the proportion of share capital seeking an exit, it is unclear there would be sufficient assets remaining to support a viable on-going vehicle,' the brokerage said.
Impax Asian's share price has rallied since last week's announcement about the investors' exit, adding 9% to 98.7p, and ironically, given Invesco and Co's decision to sell, the fund's recent performance has been strong with its net asset value (NAV) up more than 25% over six months, versus a rise of 16.3% in the MSCI Asia (ex Japan). This contrasts starkly to its three-year NAV loss of 5.10%, looking at data to April 2013.
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