Equip Super and Catholic Super complete A$26bn merger

The two funds are the first to merge using an extended public offer licence, allowing the combined entity to maintain two separate brands and leaving open the possibility of other superfunds joining in future.

Australian superannuation funds Equip Super and Catholic Super have completed a merger that creates an entity with more than A$26 billion ($17.8 billion; €16.0 billion) in funds under management.

The funds announced their intention to form a joint venture in May 2019 and have now received approval from the Australian Prudential Regulation Authority to combine operations.

Both brands will be maintained, with Equip Super and Catholic Super continuing to operate as separate funds. A merged board of trustees will oversee both funds with administration and back-office functions combined. Investments will also be pooled but the two funds will maintain separate investment options for some time.

The deal has been completed under an extended public offer licence. Equip Super was the first not-for-profit superfund in Australia to gain an EPO licence, allowing it to act as the trustee for more than one fund.

This structure also allows the merged entity to acquire superfunds in the same way in future, which chairman Andrew Fairley hinted at today.

“This is a new dawn and a new era for super mergers as we scale up to benefit members under an EPO licence,” he said in a statement.

“At a time when funds are being urged to merge, Equip and Catholic Super have a rare opportunity to be one of the industry’s great growth stories. 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.

Fairley was previously chairman of Equip Super and his deputy on the combined board is former Catholic Super chairman Danny Casey. The new board will comprise seven representatives from Equip Super and five from Catholic Super. One-third of the board will be independent directors, a third will be member directors, and the remaining third will be employer directors.

The two funds also appointed Scott Cameron as chief executive and Anna Shelley as chief investment officer, the first time two Australian superfunds have had the same chief executive and CIO.

Cameron was formerly chief executive of listed stock transfer company Computershare, while Shelley has been CIO of Catholic Super since April 2018. The latter appointment was made following the resignation of Troy Rieck, who left Equip to become CIO of LGIAsuper.

On the implications for infrastructure investments, Rieck told Infrastructure Investor in May: “Equip continues to seek diversifying assets available at reasonable prices and appropriate fee deals.

“We would like to increase our infrastructure exposure over time, as we hold a relatively small amount, but are only interested in quality assets and their long-duration cashflows. Equip is happy to look at infrastructure deals but they have to stack up compared to other opportunities, given they are illiquid.”

Equip Super currently invests in funds managed by AMP Capital and Macquarie Infrastructure and Real Assets, among others.

The joint venture is one of a number of superfund mergers that have either been recently completed or are under discussion. First State Super and VicSuper remain in negotiations over creating the country’s second-largest superfund with A$117 billion of AUM, while Hostplus recently completed a merger with Club Super, a far smaller fund.

Equip Super was founded in 1931 as a pension scheme for employees of the State Electricity Commission of Victoria. Catholic Super was founded in 1971 initially to benefit staff working in Roman Catholic schools.