Consolidation looks set to continue in Australia's superannuation sector after two funds announced a merger might be in the works.
Construction industry fund Cbus Super and Media Super have signed a Memorandum of Understanding (MoU) with plans to start due diligence on a conditional joint arrangement to be in operation in 2021.
Media Super is just over a tenth of the size of Cbus, a $54 billion fund with more than 766,000 members.
If the two super funds are combined they will likely surpass the $60 billion mark with more than 80,000 members.
"The partnership will see a merging of the funds' investment and administration operations with both the Cbus Super and Media Super branding maintained," Media Super said yesterday.
"The joint arrangement would let Media Super members access the benefits of scale.
"By increasing our size, we can provide access to a greater range of investment opportunities and provide a better deal through cost savings, potentially reducing the investment fees."
The due diligence is expected to lead to an independent assessment proving confirmation that the joint arrangement is in the best interests of members for both parties.
"Both funds will not be making further public comments until the due diligence process has come to a conclusion," Media Super said.
The move comes four months after QSuper and Sunsuper signed an MoU for their potential merger, which if completed would lead to the country's largest player with $195 billion in assets under management (AUM).
That MoU was announced prior to the economic disruptions caused by COVID-19 in Australia, but in an April fund Q&A QSuper Charles Woodhouse reiterated the due diligence process would "take some time".
"Superannuation is a long-term investment and we think there is long-term value in exploring what benefits can be gained for our members from this merger," Woodhouse said.
"We've always been focussed on investing our members' money carefully, to improve their financial security in retirement.
"We're carefully monitoring the impact of COVID-19 across all our operations, including our discussions with Sunsuper."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support