Hostplus Super and Statewide Super began merger talks that could create a A$77 billion ($58.4 billion) fund serving 1.4 million participants.
A joint news release Tuesday said Hostplus, a Melbourne-based fund managing A$66 billion in retirement assets for more than 1.25 million participants, and Statewide Super, an Adelaide-based fund managing A$10.8 billion for 142,000 participants, have "commenced formal discussions" on a potential merger.
The two funds will sign an agreement to begin due diligence to determine if a merger would be in the interests of their respective members, the release said.
A spokesman for Hostplus and a spokeswoman for Statewide Super said separately that it's too early to predict when a deal could be finalized or what name a merged entity would do business under. They declined to speculate with regard to how the funds' two high profile chief investment officers — Hostplus's Sam Sicilia and Statewide Super's Con Michalakis — might work together.
Tony D'Alessandro, Statewide Super's CEO, in the news release said Tuesday's announcement followed a period of "extensive consideration" by Statewide Super regarding the benefits a merger could bring its participants.
"After undertaking an extensive and robust process we identified Hostplus as our preferred merger partner," he said.
Mr. D'Alessandro said Statewide Super would retain "its unwavering commitment to South Australia and the Northern Territory, where we will continue to provide our excellent local member services, including the Statewide Super Hub in Victoria Square and the office in Darwin, and preserve local jobs."
David Elia, Hostplus' CEO, in the same news release, talked about a "strong, positive and collegiate union of our funds."
Those comments by both funds' leaders seem to leave open the possibility — pursued in a handful of other recent combinations, including Hostplus' February agreement with Sydney-based Maritime Super — that their investment portfolios could be merged while their participant-facing operations remain separate.
The Hostplus spokesman and the State Super spokeswoman declined comment.
Tuesday's announcement is the latest in a flurry of recent merger activity reflecting, in part, pressure from regulators that contend that scale is increasingly key to providing adequate returns to participants at a reasonable cost.
Hostplus has been an active player in that industry consolidation. Just four days earlier, on June 25, the fund confirmed it will merge with Intrust Super, a Brisbane-based super fund with A$3 billion in assets and over 90,000 participants, by Nov. 26.