Don Luke, QSuper

QSuper and Sunsuper are inching closer towards a merger that will create Australia’s largest superannuation fund with more than $195 billion in assets as regulatory pressure drives consolidation across the industry.

The two Queensland-based super funds have signed a Memorandum of Understanding to enter into a period of exclusive due diligence to explore a merger that was first flagged to the market in November. The agreement follows a period of high-level discussions and an assessment of both businesses which found there were sufficient potential benefits to members to proceed to the next stage, according to the statement.

“We entered into merger discussions because high level analysis showed a real possibility of major benefits for members,” said QSuper ‘s chair Don Luke.  “Now that the MoU is signed we will embark on detailed analysis and due diligence over the coming months to see if major benefits do emerge. The merger will only proceed if it is clearly in the best interest of QSuper members.”

The union of QSuper and Sunsuper, which manage more than $120 billion and $75 billion in retirement savings respectively, would put the giant super fund streets ahead of AustralianSuper, which currently oversees more than $180 billion in assets. Any potential combination is subject to the trustees of each fund determining the agreed structure and appropriate regulatory approvals and passage of enabling legislation.

“Any merger will only proceed on the basis it will benefit the membership of Sunsuper, and this work is now being undertaken in detail,” said Sunsuper chair Andrew Fraser. “The potential capability of a merged fund to deliver scale benefits to all members into the future means we are obliged to test the possibilities and then act in the interests of our members.”

Other mergers in the works across Australia’s $2.9 trillion superannuation industry includes First State Super’s tie up with VicSuper which will create Australia’s third largest profit-to-member super fund, managing at least $120 billion in retirement savings. The $54 billion Hostplus and Club Super have finalised their merger plans and Tasplan is completing a combination with MTAA Super to create a $22 billion fund. Equip Super and Catholic Super have also joined forces in a landmark $26 billion deal but have said they are looking for more partners.

Elizabeth Fry is the editor of Investment Magazine's digital platform. 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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