LGIA Super will look to collapse three trustees into one and redistribute reserves to members over time following the acquisition of Suncorp’s local wealth business Suncorp Portfolio Services on Wednesday morning, LGIA CEO Kate Farrar said in an interview with Investment Magazine.
“It’s a unique approach,” Farrar said, describing the fund’s plans which will involve consolidating and mutualising a single trustee following the announcement of the Suncorp business for $45 million, which included a $26.6 million fixed amount plus regulatory capital.
The latest deal with Suncorp closely followed LGIA’s merger with Energy Super announced via a heads of agreement in April.
The deal with Suncorp was funded out of general reserves, Farrar confirmed. The fund had accumulated $100 million in general reserves over the last 10 years, mostly a result of capital it had set aside over the years resulting from conservative crediting rate estimates, she explained.
The plan to mutualise the Suncorp super trustee and consolidate three into one will enable the reserves to be returned to members following a successor fund transfer into LGIA, Farrar noted. She added the redistribution timeline is to ensure member contribution caps aren’t disrupted.
The Energy Super heads of agreement will be formalised into a merger in July. The Suncorp Portfolio Services deal was the result of a strategic review undertaken by Suncorp Group in February, according to an ASX announcement.
Energy Super and Suncorp Portfolio Services were the two funds at the top of LGIA’s list of preferred merger partners, Farrar said.
“In 2019 we sat down and made a list of funds we believed would be the best merger partners based on geographic reach, size of member accounts among other factors and Energy and Suncorp [Portfolio Services] were number one and two on that list,” Farrar described.
Defining factors of LGIA and the recently acquired funds include large average member balances and geographical Queensland centricity, Farrar noted.
“We wanted to be a sustainable boutique mid-sized fund. We want to be broad eventually, but we want to continue to deliver personalised boutique services to members with balance sizes larger than the industry average,” she said.
“All of our work with Energy Super and Suncorp has been designed to deliver a fund with a boutique service offering to members while promoting the benefit of scale,” she said.