Andrew Fairley and Danny Casey

Equip Super and Catholic Super have joined forces in a landmark $26 billion deal and signalled a willingness to link up with other superannuation funds.

Governed by a new board of 12 directors, Equip and Catholic Super’s joint venture will manage funds for 150,000 members with plans to be a much larger super fund by 2025. Andrew Fairley, chair of the merged board, said the unique tie-up sets the scene for further industry consolidation. “This is a new dawn and a new era for super mergers as we scale up to benefit members under an extended public offer (EPO) licence,” he said.

The EPO license will see the funds consolidate their trustee, administration and investment operations that would provide economies of scale and fee savings, without loss of brand identity or control of relationships with members, employers and other stakeholders.

Fairley said Equip Super and Catholic Super will become the first industry funds to combine their operations using the EPO model, paving the way for more industry funds to follow suit and growth by using this model. “It is such an innovative model and all the messages we are getting for APRA is that the regulator hopes more funds will see the wisdom of this type of approach,” he said.

Now that the deal has been signed off, Fairley is getting overtures from competitors. “We have already had two approaches in the last six weeks from funds who either want to use the same model or tie up with us,” he said. “Our biggest problem is our capability in terms of the number of funds we can do this with. Our license doesn’t prevent us from industrialising the model – being the trustee of four or five funds and we are looking for partners. The only impediment would be the timing and the technology required for growth.”

He is surprised that more funds haven’t looked to use this structure, but he expects they will start to as the prudential regulator ramps up the pressure on trustees to merge funds.

“While other funds are talking about merging, Equip and Catholic Super are getting on with it,” he said. “We’re open for business with an APRA-approved licence, attractive to funds that are keen to drive down costs while maintaining their distinctive brands and member engagement that they’ve always been known for.”

The EPO licence was issued three years ago.

Danny Casey, deputy chair of the new entity and former chair of Catholic Super, noted the new model’s member benefits.

“As trustees we have a firm obligation to act in our members best interests,” he said. With the industry being challenged to consolidate further, funds that are seeking to ensure they can deliver sustainable member outcomes are encouraged to be part of this new and innovative approach. We’ve studied this model and unlocked the potential to join forces and maintain our super fund’s heritage. Those who join can retain their distinct identity that attracted members to their fund of choice in the first place.”

Scott Cameron was appointed chief executive of both funds in August. More recently, Anna Shelley was confirmed as the inaugural chief investment officer for the two funds.

The merged trustee board will be comprised of seven members from the existing Equip board and five from Catholic Super. Members and employers will retain their existing representation of one third each of seats on the board.

 

Elizabeth Fry has been a financial journalist for more than 25 years and has written for a number of publications, including CFO, The Financial Times and The Australian Financial Review.
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