Yesterday AustralianSuper successfully completed the acquisition of Club Plus Super, which will feed the largest superannuation scheme in the country with 60,000 new members and US$ 2.25 billion in assets. This acquisition does not come as a surprise though, as a total of nine transactions have been announced or completed in the past 18 months Down Under.
Triggered by the declining returns and pressure on costs caused by Covid-19, the Australian regulator is calling on schemes to consider Mergers & Acquisitions (M&A) that would increase their scale and allow them to provide attractive investment options at competitive fees. In fact, the consolidation had been going on for a while: from 2013 to 2019, the number of funds regulated by APRA decreased from 279 to 185. Only in the past two years, this has affected the pensions of 8.6 million people (in a country of 25 million).
These transactions take very different shapes and forms. AustralianSuper’s was a pure acquisition or absorption of a smaller fish, but some others are mergers of equals with a new name adopted by the NewCo, such as the one happening between QSuper and SunSuper in Queensland. Others are more akin to a change in name (e.g., LGS becoming Active Super) or to a pooling mechanism without legal changes (e.g., MaritimeSuper and HostPlus).
In any case, the creation of such large pools of capital is a game-changer for the global investment landscape. AustralianSuper, QSuper+SunSuper and Aware Super are now US$ 100+ billion funds that compete and co-invest with other State-Owned Investors both at home and abroad. And to a certain degree, it is something we have also seen happening in the Middle East (both SWFs and PPFs) and in the UK (PPFs).
Global SWF estimates that resulting superannuation industry in Australia will be led by 15 vehicles that manage over US$ 800 billion, and together with the country’s SWFs, go well over a trillion US dollars in AuM. This fact, along with the increasing interest of foreign State-Owned Investors in the Land Down Under, especially in its real assets, makes it a worthy nominee of the “Region of the Year”, and will be covered in detail in our Annual Report to be released on January 1, 2022.
