First State Super, a Sydney-based superannuation giant with A$100 billion ($69.2 billion) in retirement assets, and VicSuper, a Melbourne-based fund with A$24 billion, signed an agreement to merge effective July 1.
The decision to consummate the merger — first broached in April — will create a combined entity overseeing roughly A$125 billion ($86.5 billion) in retirement assets on behalf of 1.1 million members, trailing only industry leader AustralianSuper’s A$170 billion in assets.
A joint news release Friday emphasized the benefits of scale that members of both funds will enjoy from the merger.
The news release said over the coming months “the funds will develop a strategy to bring their investments together” in pursuit of those scale benefits. Of First State Super’s more than 80 managers and VicSuper’s roughly 50 managers, only a handful overlap.
Deanne Steward, First State Super’s CEO, will become CEO of the merged fund while Michael Dundon, chief executive of VicSuper, will be deputy CEO.
Friday’s news release said the VicSuper and First State Super brands will both continue after the merger.
But the structure of the merged entity will be different from the “extended public offer” model employed for the first time earlier this year for the union of Melbourne-based funds Equip Super, with A$16 billion, and Catholic Super, with A$9.7 billion, which likewise paved the way for both brands to survive the merger.
A First State Super spokesman said the Equip-Catholic merger created one trustee overseeing more than one fund, but the First State Super-VicSuper merger will result in one trustee overseeing one merged fund.