It got as far as a heads-of-agreement with the $560 million, Sydney-based Health Industry Plan last year. “We did go down the road of a merger with a smaller fund, but we concluded that if we were going to do this much work, we might as well go for a big-scale benefit to our members,” Clausen confirmed. Meanwhile, it’s been revealed that the investment team of the merged Equipsuper and Vision Super will manage about 30 per cent of the $8 billion fund’s assets internally. Equipsuper CEO, Danielle Press, expected the investment company set up to manage the assets throughout the merger process, Pooled Super Pty Ltd, to gain an APRA licence at the end of 2010 so the two funds could review their asset class and manager exposures, in addition to incumbent asset consultants Frontier Investment Consulting and JANA. Press said Equipsuper’s seven-person internal investment capability, which manages 30 per cent of its assets, was a drawcard in merger discussions.
“Provided you run the team properly, it should provide you with low costs,” she said An internal team of 12 people “should be able to run an $8 billion fund – or double that – without adding resources.” Equipsuper manages core Australian equities internally, as well as 20 per cent of fixed income, all of its cash and a few unlisted investments, such as Flinders Ports. Press said the new fund was likely to manage similar proportions of its assets internally, but “with a team of about 13,” under strict risk controls. “It’s hard to sack yourself, so you need to have triggers in place. Are they internal performance measurement? Internal holdings limits? Or an external review of the investment team? ” Both funds were yet to agree on administration arrangements. Vision Super is self-administered, and also services the SA and NT local government funds, while Equipsuper is locked into a five-year outsourcing contract with Mercer. While the funds have not agreed on a timetable to finalise the executive structure of the new entity, the board will be comprised of four trustees from each fund, plus an independent trustee from Equipsuper, because it already had one in chair Andrew Fairley, Press said.