Hostplus snaps up Maritime Super assets as sector under pressure to merge

Leading industry superannuation fund Hostplus will take over $6 billion in retirement savings from Maritime Super as underperforming funds come under increasing pressure to consolidate or exit the industry.

The Age and Sydney Morning Herald revealed the two funds were in advanced talks on Wednesday to finalise a deal that would include transferring 100 per cent of Maritime Super’s investment funds to Hostplus for management.

Hostplus CEO David Elia has announced the industry-first deal with Maritime Super. Credit: Jesse Marlow

The two funds made a joint statement on Thursday morning announcing the deal would swell Hostplus’ assets under management to $61 billion, with the partnership designed to maximise the benefits of scale.

“This innovative scheme is expected to afford Maritime Super and its members immediate as well as long-term investment opportunities typically not available to smaller funds, including in unlisted, ‘tier 1’ assets, such as infrastructure, property, private equity and venture capital,” the joint statement said.

Maritime Super chief executive Peter Robinson described the deal as a “win-win” for its more than 26,000 members.

“It will afford our fund the opportunity to access some of the best investment opportunities and returns available while retaining our ability to focus on the exceptional and tailored services our members expect and deserve from a niche fund such as ours,” he said.

Maritime Super will continue to negotiate the fund’s insurance cover, that is tailored specifically for people employed in the maritime industry, as well as a range of other industry-specific initiatives.

Hostplus set up a pooled superannuation trust in 2014 to enable the fund to manage investments on behalf of other trustees. The scheme was initially established to enable self-managed super fund trustees to access’ Hostplus investment managers but the Maritime deal could open the door for more smaller funds to follow suit.

Hostplus chief executive David Elia said the fund’s structure provided a “clear and distinctly viable alternative” to traditional mergers that can be costly for smaller funds to execute.

A source close to the negotiations, who could not be identified because dealings were confidential, said Maritime Super had been tapped by the Australian Prudential Regulation Authority to find a merger partner after it failed to achieve scale.

APRA deputy chair Helen Rowell said in December funds with total assets of about $5 billion should consider merging with larger funds, after intensifying pressure on under-performing funds to shape up or ship out.

Maritime Super’s annual report shows it performed poorly across all of its fund options, returning negative 2.71 per cent in its growth fund, negative 2.41 per cent in its balanced fund and negative 5.12 per cent in its moderate fund.

According to December figures from research house Super Ratings, the average balanced fund returned 4.9 per cent in November and 2.4 per cent over the calendar year.