A $3 billion state-based super fund will roll into AustralianSuper, taking it up to the $40 billion mark in a move seen by some as a precedent for other state-based funds to follow.
Westscheme will roll into AustralianSuper from July 1 this year, I&T News understands, with a report from PricewaterhouseCoopers to the WA fund’s board understood to be the catalyst.
That report is understood to have said members’ best interests would be served as part of a larger fund. A rollover provides the speedy execution necessary to make the June 30 deadline for tax relief on successor fund transfers – Westscheme will be able to carry its deferred tax assets on capital losses into the AustralianSuper investment platform, no small matter given the significant writedowns it suffered on parts of its extensive unlisted asset portfolio during the global financial crisis.
Well-known superannuation rater Warren Chant said the move was not surprising, given the sponsoring organisations behind Westscheme – several of which are in common with AustralianSuper – would “have to have been disappointed” by the investment performance delivered under the ‘two portfolio’ strategy, implemented for the fund by Access Capital Advisers.
He added that AustralianSuper already had the internal team and service providers in place to be able to handle Westscheme’s complex private equity and infrastructure portfolios.
Chant said this rollover could pave the way for other state-based multi-industry funds – ASSET in NSW, Statewide in SA, Tasplan in Tasmania and Sunsuper in Queensland – to also rollover into, or merge with, AustralianSuper.
“Why wouldn’t they get together? The Cooper review has thrown the spotlight on scale, and AustralianSuper is really just the national version of what all these other funds are doing on a state level,” he said.
It’s understood that Westscheme’s board considered a rollover or merger into SunSuper before taking this alternative course of action.
Calls to AustralianSuper’s chair and CEO had not been returned at presstime, while Westscheme would not comment.