Two leading industry super funds have announced they are entering early state merger discussions, having signed a non-binding memorandum of understanding to explore the benefits of potentially joining forces.
The funds, VicSuper and First State Super, cited their “shared heritage, values and strength” provided a strong basis for merging. If combined, the funds would become one of Australia’s largest super funds, managing for than $110 billion in funds for over 1.1 million members.
Unsurprisingly given the focus of both the Banking Royal Commission and the Productivity Commission on mergers and members’ interests, VicSuper chief executive, Michael Dundon, pointed to the benefits of scale to growing member returns as a key advantage of merging.
“The priority for both funds is to continue to develop leading products and services that help deliver the best outcomes for our members,” he said.
“Merging with First State Super would enable us to achieve greater benefits of scale, including access to a broader range of investment opportunities and an even greater ability to generate strong, sustainable returns over the long term.”
A recommendation to each fund’s boards was expected around the middle of this year.