MTAA Super and Tasplan in talks to create A$22bn fund

The two industry superfunds, which both have significant infrastructure commitments, hope to increase returns and lower fees for members.

Australian superannuation funds MTAA Super and Tasplan have entered discussions about a possible merger which would create a combined entity with more than A$22 billion ($15.4 billion; €13.6 billion) in assets under management.

MTAA Super, an industry fund that serves the motor trades and allied industries, manages approximately A$13 billion, while Tasplan, a multi-industry fund based in Tasmania, manages around A$9.5 billion, according to a joint statement from the funds. Both are profit-for-member superfunds.

The merged fund would immediately place among Australia’s top 25 largest superfunds by AUM, according to the latest statistics from the Australian Prudential Regulation Authority for the end of June 2018.

According to its most recent annual report, MTAA Super had an infrastructure portfolio valued at A$1.43 billion at end of June 2018. This comprised A$1.26 billion in investments through separately managed accounts, including stakes in British telecommunications company Arqiva, DCT Gdansk Port in Poland and Southern Water in the UK. In Australia, its investments include stakes in Brisbane Airport, Flinders Ports, the publicly-listed Sydney Airport, and Worsley Co-Gen in Western Australia.

The fund also said it had an A$85.1 million commitment to Macquarie Global Infrastructure Fund II and an A$84.4 million commitment to Macquarie Infrastructure Partners.

Tasplan has a strategic allocation of 7.5 percent to infrastructure at a total fund level, according to a spokesman, and is currently overweight by 1.7 per cent. The value of the portfolio is around A$886 million.

Tasplan’s infrastructure fund commitments include allocations to AMP Capital’s Diversified Infrastructure Trust, Antin Infrastructure Partners II, IFM InvestorsGlobal Infrastructure Fund and Utilities Trust of Australia, according to its most recent annual report.

The two funds signed a binding memorandum of understanding to investigate the merger last Friday, the same day three-way merger talks between Statewide Super, WA Super and Tasplan collapsed. That merger would have created a fund worth around A$24 billion.

MTAA Super has previously held tie-up discussions with as many as three other parties, according to an Australian media report.

In a joint statement, fund chairs Naomi Edwards of Tasplan and John Brumby of MTAA Super said the increased scale of a merger would create efficiencies that could be passed on to fund members as better returns and more competitive fees.

“While there is still much work to be done, we are excited at the prospect of building a fund of significant scale, enjoying widespread national membership and offering further improvements in benefits to our members over time.”

Equip Super and Catholic Super announced a merger in May that will create a A$26 million entity while maintaining the two brands as separate funds.

Merger talks between First State Super and VicSuper, which would create Australia’s second-largest superfund with A$117 billion of assets under management, are still ongoing after being announced in April this year.

First State Super infrastructure portfolio manager Mark Hector told Infrastructure Investor last year that the fund was likely to participate in mergers as the superannuation sector begins to consolidate.

“We know that there are scale benefits to underlying members from some of the larger funds,” he said. “First State Super was part of the [previous] largest merger in Australian super history with Victorian Health Super, so I would anticipate that there would be some more consolidation in the sector and more mergers in the coming years, and I would expect that First State Super, as one of the largest superfunds, would probably partake in that as well.”