Ian Simm runs one of the UK’s fastest-growing asset managers. But the way he tells it, his career in the investment industry was a happy accident.
Instead of joining a graduate programme or serving time as an analyst, the chief executive and founder of Impax Asset Management’s 10-year route into asset management took several detours.
“Do you want the long or the short version?” he jokes, when asked how he found himself working in the sector.
Even the short version is anything but concise. It starts at Cambridge university, where Mr Simm ran the expedition society. Interested in nature and the environment, he read Our Common Future, a report written by former Norwegian prime minister Gro Harlem Brundtland in 1987, which set out the idea of sustainable development where the consumption of current generations does not affect the choices of those of the future.
“I read the book, drank the Kool-Aid. I was particularly interested in how money solved environmental problems.”
Ten years of a “zigzag career” later, which included an expedition to west Africa to track vegetation on the edge of the Sahara desert (where he caught malaria), a stint in environmental consultancy, a masters degree and an attempt to set up a business to sell solar lighting systems in South Africa, Mr Simm found himself at the predecessor company to Impax AM.
Ian Simm’s CV
Born 1966, West Yorkshire, UK
1988, Cambridge university; natural sciences (physics) degree
1993, Harvard university; public administration masters degree
1990-91, Consultant — Environmental Resources Management
1993-95, Engagement manager, McKinsey & Co
1996-97, Director, Impax Capital
1998-date, Founder and chief executive, Impax Asset Management
Pay £852,546 (including long-term incentives, 2017)
Impax, which celebrates its 20-year anniversary this year, has since grown to become the “world’s largest investment manager dedicated to investing in the environmental space”, Mr Simm says.
Listed on the junior stock market in London, the company now has more than $15bn in assets under management, which rose 60 per cent last year. Assets have been further boosted by the recent acquisition of Pax World, a US fund house.
The 2015 Paris Agreement, where global governments agreed to tackle climate change, has also spurred growth.
Wearing a blue and white check shirt and no tie, Mr Simm says the Paris accord strengthened the case for sustainable investing — and helped draw in new investors to Impax.
“There’s been a recognition through the Paris discussions and publicity that climate change is a serious risk,” he says. “[The agreement] demonstrates that there is a high likelihood that governments are going to be strengthening clean energy markets, and probably infrastructure and water supply markets, and generally supporting the transition to a more sustainable economy.”
Millennials are also helping to drive growth, he says. “The millennial generation are definitely putting pressure on their private wealth managers to find ways of managing money that are consistent with a more sustainable planet.”
Impax invests in listed equities, particularly small and mid-caps that it believes tap into the shift towards a greener future. It also offers fixed income and smart beta products since its acquisition of Pax, one of the world’s first socially responsible asset managers.
The fund house additionally has invested in infrastructure projects for 13 years, including wind, solar and hydro power. “There’s a whole revolution under way in the power space, as clean energy becomes cost competitive, largely without a subsidy,” he says. By last year, renewable energy accounted for almost a third of electricity generated in the UK.
Pension funds and other investors, meanwhile, have increasingly piled into infrastructure in recent years in the hunt for yield. The sector has tripled in size since 2009, according to Preqin, the data provider, with assets under management hitting a record high of $418bn last June.
But there are concerns about the risks involved in infrastructure projects generally, as well as in renewable energy, particularly after a spate of bankruptcies among developers in the solar and wind industries in recent years.
Mr Simm plays down the concerns about such risks, saying they are usually simple projects that generate steady long-term yields. But he admits that Impax has avoided infrastructure projects in the UK, where he says energy policies have been “turned upside down” in recent years.
“If you go to France or Germany or most other European countries, then there is very solid regulation around the economics of new projects, and a very well-established and diverse development community that’s looking for capital,” he says.
It is not just projects in continental Europe that have caught Impax’s eye. The company has also been looking more and more to that region for clients in recent years too.
“Our older client base is in the UK, and we are very committed to carrying on serving those clients and we are seeing growth. But the biggest growth is coming from places like Scandinavia, France, Benelux,” he says. British investors account for less than 10 per cent of the company’s total assets under management.
This poses a challenge for the fund house as the date for the UK’s exit from the EU edges closer. There are growing fears that British asset managers could in the future find themselves cut off from European investors.
Mr Simm says the company has a contingency plan, although he admits it needs to be more detailed. But he adds: “The history of EU regulations is that they wait, literally, to the night before. Then they stay up all night, and they come away with a deal. If they do that [for Brexit], then half the economy is going to disappear by the time they come out of their dark room.”
The conversation returns to the rapid changes emerging in response to climate change, such as the growth of battery-powered cars. A physicist by training, it is clear that the technology and science behind the companies he invests in excites him, but he does not own a Tesla electric car, as much as he would like to.
The father-of-two seems happy that he ended up accidentally running an asset manager.
“I have a very powerful reason for being in the space I’m in,” he says. “I do look around and wonder what it is that motivates a lot of my peers in investment management in general. Why are they doing it? Is it just to make lots of money for themselves, or do they have a vocation for what their doing?”
Impax Asset Management
Assets under management £11.2bn (at 31/01/2018)
Number of employees 130
Headquarters London, UK
Ownership Listed on AIM (24% BNP Paribas Asset Management; 33% staff interests; 43% free float)
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