Impax Environmental Markets plc Ends Investment Manager Contract and Initiates Strategic Review with RFP Process

Board-Driven Review Results in Investment Manager Agreement Termination

The Board of Impax Environmental Markets plc has announced the termination of its longstanding investment management agreement with Impax Asset Management (AIFM) Limited following an extensive review of the Company's investment management arrangements. The termination notice was formally served on 20 July 2026, marking a pivotal shift in the Company's governance and strategic direction. The Board's decision aims to align the Company's investment management structure more closely with shareholder interests and the evolving environmental markets landscape.

The termination adheres to the existing agreement's 12-month notice period, set to conclude on 31 July 2027, allowing for a transition period. However, the Board has proactively requested that Impax Asset Management (AIFM) Limited consider waiving all or part of this notice period, in line with the Investment Manager's obligations under the Financial Conduct Authority's Consumer Duty rules. This reflects the Board's commitment to prioritizing investor interests while respecting contractual and regulatory frameworks.

Initiation of Formal RFP Process to Select Successor or Strategic Alternatives

Impax Environmental Markets plc has commenced a formal Request for Proposal (RFP) process to identify a successor investment manager or explore strategic alternatives that best serve investors. Managed by the Company's Management Engagement Committee, the RFP process is designed to be fair and transparent. This structured approach underscores the Board's commitment to thoroughly evaluating all options rather than making a hasty appointment.

The Board will consider feedback from all stakeholders, including shareholders, and carefully assess the Company’s future investment strategy. Recognizing that the choice of investment manager significantly impacts portfolio management and strategic positioning within the environmental and sustainable investment sector, the Board plans to appoint external advisers to ensure the RFP process is conducted with the highest professional standards and expertise.

Impax Environmental Markets plc’s Focus on Environmental Investment Opportunities

Impax Environmental Markets plc operates as an investment company focused on environmental markets within the sustainable and responsible investment sector. Its mandate is to identify and invest in opportunities addressing environmental challenges and sustainability imperatives. As an investment trust, it offers shareholders exposure to a diversified portfolio of environmental market opportunities managed professionally.

The Company typically invests in businesses involved in environmental solutions, clean technology, renewable energy, resource efficiency, and other related sectors. The investment manager's role is crucial to executing the Company's strategy and delivering shareholder returns. The current review highlights the Board’s recognition of the critical importance of the investment manager relationship and the need for ongoing governance and stewardship.

Consumer Duty and Regulatory Framework Influencing the Process

The Board’s request for Impax Asset Management (AIFM) Limited to consider waiving or reducing the 12-month notice period is framed within the Investment Manager’s obligations under the Financial Conduct Authority's Consumer Duty rules. This regulatory development mandates firms to act in consumers’ best interests and ensure actions deliver good outcomes. By seeking an early waiver, the Board encourages evaluation of whether maintaining the full notice period aligns with fair treatment and client interest principles.

This regulatory context signals that the Board is applying current FCA principles to the termination process. Accelerating the transition may better serve shareholder interests and comply with Consumer Duty expectations. This framework strengthens the Board’s position and may influence discussions on the notice period waiver.

Board’s Dedication to Shareholder Alignment and Long-Term Success

The Board has reaffirmed its commitment to the Company’s success and shareholder alignment through this announcement. The termination and RFP process aim to enhance shareholder value by ensuring the investment management structure remains fit for purpose. Given the direct impact of manager selection on portfolio performance, fees, and strategy, this focus is pivotal.

The Board emphasizes a fair and transparent RFP process, supported by external advisers, to ensure the successor appointment is based on merit and suitability. This approach is designed to instill shareholder confidence in the rigorous evaluation of investment management arrangements.

Management Engagement Committee’s Role in Oversight

The Management Engagement Committee is tasked with overseeing the RFP process, reflecting best practice governance for investment trusts. This committee ensures thorough evaluation of investment manager performance and suitability, providing board-level scrutiny and expertise.

Its responsibilities include assessing proposals, engaging with external advisers and candidates, gathering stakeholder input, and recommending a preferred option to the full Board. This governance structure supports a well-informed and comprehensive decision-making process.

Timeline and Upcoming Company Updates

The notice period ends on 31 July 2027, defining the transition timeline. However, the Board’s request for an early waiver indicates a potential acceleration. The Company plans to provide further updates as the RFP progresses, keeping shareholders informed about key milestones such as adviser appointments, RFP stages, interim management arrangements if needed, and the final investment manager appointment.

This phased communication strategy aims to manage uncertainty and maintain confidence throughout the transition.

Exploration of Strategic Alternatives Alongside Manager Replacement

The announcement highlights that the Board is considering not only appointing a successor investment manager but also exploring "strategic alternatives" that may better serve investors. Such alternatives could include management buyouts, mergers, internalisation of management, or other structural changes affecting the Company’s management arrangements.

This broad review approach indicates openness to solutions beyond simply replacing the existing manager, demonstrating the Board’s commitment to identifying the optimal arrangement for shareholders.

Inside Information Status and Regulatory Compliance

The announcement is classified as inside information under Article 7 of the Market Abuse Regulation (UK MAR), reflecting its material impact on the Company and investor decisions. By releasing this information via a Regulatory Information Service, it is now publicly available to the market.

This regulatory classification underscores the significance of the investment manager termination and strategic review. Compliance with MAR ensures all market participants receive this material information simultaneously, fulfilling the Company’s disclosure obligations.