Two Australian superannuation funds are set to combine, creating an A$120 billion ($84 billion) fund in their wake.
VicSuper, which manages retirement funds for the public sector and educators in Australia, published an update about its plans to merge with First State Super, which manages capital on behalf of the public sector, educators, healthcare workers, and emergency services providers on Monday. According to that update, the two plan to merge by June 30, 2020.
The funds announced earlier this year that they were in talks to explore a deal. The two entities have signed a letter of intent and are now moving forward with the due diligence process.
“Our conversations with First State Super have clearly indicated that a merger between our two funds has the potential to offer significant benefits to members, and it’s with their interests in mind that we look to this next phase in our merger discussions,” said Michael Dundon, chief executive of VicSuper, in a statement.
The combined entity will manage the A$120 billion on behalf of 1.1 million Australians, according to a merger update published online by VicSuper.
The funds will consider potential operating models and discuss how to best leverage investment scale over the coming months as they work to complete the due diligence process, according to the announcement.
First State Super’s chief executive officer Deanne Stewart will lead the merged fund, according to the announcement. Dundon will continue to work with the fund following the merger, the announcement said.
The combined entity will have a board with one independent chair and 14 directors, four of whom will come from VicSuper’s nominating bodies, according to the announcement. By June 2022, the board will be reduced to ten directors and an independent chair, with two coming from VicSuper’s nominating bodies, the announcement said.
First State’s current independent chair, Neil Cochrane, will serve as the chair of the combined entity’s board.
“We have a lot in common with VicSuper,” said Deanne Stewart, First State CEO, in a statement. “We both have a member-first culture and a heritage in the public sector, and we both believe quality financial advice can help our members make the most of their retirement savings.”