QSuper and Sunsuper in merger talks to create Australia’s largest superfund

The combined entity would have more than A$180bn of AUM and be larger than the country’s current largest fund, AustralianSuper.

QSuper and Sunsuper have confirmed they are in talks over a merger that would create Australia’s largest superannuation fund.

The two Queensland-based funds said they were engaged in “preliminary, non-binding discussions over a possible partnership” and did not provide any further information.

The merger between the top-10 funds by assets under management would combine QSuper’s A$113 billion ($78 billion; €70 billion) of AUM with Sunsuper’s A$68 billion to create an entity with more than A$180 billion of AUM.

AustralianSuper, currently the country’s largest fund, had approximately A$165 billion of AUM at 30 June 2019.

QSuper chair Karl Morris and Sunsuper chair Andrew Fraser issued a joint statement on the discussions: “There is an absolute responsibility upon trustees to consider how to best serve their members’ interests. Whether a partnership between our two funds could be better for both QSuper and Sunsuper members is an appropriate enquiry.

“Whether or not that consideration proceeds beyond preliminary discussions is dependent on many factors.”

The move is the latest in a series of mergers and potential mergers in Australia’s superannuation sector.

First State Super and VicSuper remain in negotiations over creating a A$125 billion combined entity, which would be third largest in terms of total AUM after the QSuper-Sunsuper fund and AustralianSuper.

Hostplus, with approximately A$45 billion of AUM, on 1 November completed a merger with Club Super, a far smaller fund with around A$600 million of AUM. Equip Super and Catholic Super also completed a merger last month to create an entity with more than A$26 billion of AUM.

Sunsuper itself has completed two mergers in recent years. It merged with KineticSuper in 2017 before merging with rural fund AustSafe Super earlier this year.

Superannuation fund mergers are expected to continue. The Australian Prudential Regulation Authority and the Australian Securities and Investments Commission warned that underperforming funds could be closed down or forced to find partners, after criticism levelled during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in 2018.