Hospitality industry fund merger to create ‘super’ powerhouse
Hostplus, the industry super fund for the hospitality sector, has signed a deal to merge with the $2.6BN Queensland-based Intrust Super leading to 96,000 hospitality, retail and tourism workers being added to its membership base.
This is the latest in a series of mergers where larger funds are swallowing up smaller players, following APRA’s statement that super funds with less than $30BN in funds under management are “uncompetitive”.
The $50BN Hostplus will be a huge beneficiary from the merger as it looks to expand its Queensland footprint.
Hostplus is also in merger talks with several other smaller funds to strengthen its member base further.
Not only has APRA encouraged smaller funds to merge with bigger funds, it has warned against ‘bus stopping’, which is when two smaller funds join together.
“The emerging industry view seems to be that any fund with less than around $30BN in assets under management is increasingly going to be uncompetitive against the so-called ‘mega-funds’. While there will inevitably be debate about the threshold level of assets needed, we agree with the sentiment,” APRA deputy chair Helen Rowell said.
Rowell went on to say, “APRA doesn’t intend to let perfection be the enemy of the good. But we expect trustees to consider whether a small fund to small fund (or bus-stop) merger is going to tackle underlying issues or just be a temporary stop on the way to the ultimate destination of sustainability.”
The merger between Hostplus and Intrust Super comes just as the government’s Your Future, Your Super legislation kicks in, which includes a new rule that ties workers to a single fund for life.
Hostplus CEO David Elia belies the merger is a “significant and positive milestone” for all stakeholders including the funds, their members and contributing employers.
For Hostplus, this is a bonus as a large number of the 96,000 members being added to their membership base are still young and not very engaged with super, therefore would be happy to be tied to the same fund for years to come. It has been likened to a tax file number of bank account details, which you can take with you from job to job.
Hostplus is one of the best performed funds. Its ‘Shares Plus’ growth option returned 23 per cent over the 11 months through May, 20 per cent above the median growth fund’s return.
This merger follows the potential merger between AustralianSuper and the $2.7BN Club Plus, whose chief executive Stefan Strano said was in the best interests of the fund’s members.
“Our declared purpose is to ‘support and enhance the journey of our members to retire on their own terms.’ While most of our members join us at the start of their working lives, we recognise they need support across all stages of life, through careers that may span multiple industries,” Mr Strano said.
Irit Jackson, 28th June 2021
