Westpac's $37.8 billion super fund arm BT to merge with Mercer

Westpac (ASX: WBC) has struck two deals with Mercer Australia today, announcing it will transfer BT Financial Group’s superannuation funds and sell Advance Asset Management to the professional services giant.

BT Super’s funds under management – which total $37.8 billion - will be passed on via a successor fund transfer (SFT) to Mercer during the first half of next year. While the sale price of subsidiary Advance is undisclosed, it will see WBC offload a further $43.7 billion in funds.

The BT merger means Westpac will no longer manage the retirement savings of its own employees and give Mercer more than $65 billion in funds to manage on behalf of 850,000 Australians.

“This is a further step in the simplification of Westpac and supports the group’s focus on banking in Australia and New Zealand,” Westpac specialist businesses chief executive Jason Yetton said.

“It also provides significant benefits for BT Super members, new opportunities for our people and redefines the landscape of superannuation in Australia.

“Since the formation of Westpac’s specialist businesses division around two years ago we have made significant headway on our portfolio simplification agenda, having announced eight business sales, of which five have now completed.”

While the SFT will result in an $80 million loss as a result of transaction and separation costs, Westpac’s sale of Advance is expected to generate a gain. The agreement does not include superannuation held on the Panorama or Asgard platforms.

Westpac confirmed BT employees who support the funds will be “offered employment by Mercer as part of the agreement.”

The net effect of both sales during the remainder of FY22 and FY23 is expected to result in a $225 million profit.

The deal comes two decades after Westpac wholly acquired Sydney-based BT Financial Group for $900 million. At the time, the deal made WBC the fourth largest retail funds manager in Australia.

BT Super chair Gai McGrath said the trustee engaged broadly across the industry to “create a larger superannuation fund with the potential to deliver improved performance, lower fees, and broader member services.

“It also maintains continuity of knowledge and service for BT Super members,” she added.

The merger remains subject to regulatory approvals and is expected to finalise in the first half of 2023.

Shares in WBC are up 1.13 per cent to $24.12 each at 11:08am AEST.