Australian Ethical has signed a memorandum of understanding (MoU) with Christian Super to explore a potential merger.
The Australian Prudential Regulation Authority (APRA) imposed additional licence conditions on Christian Super in December, requiring the fund to implement a strategy to merge with a larger, better performing fund, following its failed MySuper performance test.
The funds would now begin a non-binding period of due diligence and transition planning to be completed by May 2022.
If successful, Christian Super members would join Australian Ethical Super via a successor fund transfer (SFT) in late 2022 or early 2023.
Announcing the MoU to the Australian Securities Exchange (ASX), Australian Ethical said: “Both parties are confident the opportunity aligns with members’ best financial interests. Offering compelling member benefits through increased scale, while also significantly amplifying their combined impact as proven pioneers of ethical and responsible investing in Australia.”
If successful, the merger could see Australian Ethical managing more than $9 billion on behalf of 100,000 Australians across its range of superannuation, managed fund, and exchange traded fund (ETF) products.
Australian Ethical chair, Steve Gibbs said: “We’re delighted to be exploring this opportunity with Christian Super. It is a meaningful endorsement of our purpose and investment philosophy, which remain unchanged and only strengthened by this opportunity.”
Christian Super chair, Neville Cox, said: “There are many synergies and areas of close alignment in our approach, and we look forward to working together to chape a shared future for combined member benefit.”