Asset Super’s decision to run a full custody tender means the $1.4 billion fund will fly solo for the foreseeable future, amid the consolidation trend in the superannuation industry.
The custody tender, which comes before a possible administration tender later this year, is the fund’s first and would end the “pass the parcel” manner in which the contract had changed hands over the years, CEO John Paul said.
In the 1990s, Asset Super was a client of Westpac’s custody business until this was bought by State Street in the 1990s, which then sold to Commonwealth Custodian Services, whose business was picked up by what has become National Asset Servicing.
Paul said that Asset Super had been in merger discussions with a number of funds throughout the past 18 months, but these fizzled when the absence of a cultural “fit” became apparent, or technical differences in the ways the funds operated made a union too complicated.
The directors of Auscoal and Maritime Super yesterday confirmed their merger talks had collapsed, as first reported by I&T News last year, although the industry funds said they would continue to co-invest and share services.
“I don’t think mergers are ever easy,” Asset’s Paul said, pointing to the three years-plus it took JUST Super and Print Super to form Media Super.
Paul said that custody fees would not be a focus of the tender, which is being run by Drew Vaughan of Dymond, Foulds & Vaughan, as well as Asset’s finance and investments manager, David Fayle. Instead, the fund would leverage off Vaughan’s knowledge and experience to determine service priorities, and focus on classic custody services such as fund accounting and reporting, and the scope to gain further efficiencies from these services.
He added the fund was also mulling a move from weekly to daily unit pricing.
In a further sign that Asset was not subject to any merger plan, Paul added that the fund would review its administration contract with AAS, which was awarded after the fund switched from CitiStreet in 2005, later this year.
“Tenders can be quite costly. [The] administration [tender] was a six-month process. We used KPMG, which cost us, and internal staff worked on it. It took a lot of resources and time,” he said.