Consolidation Continues in Australia’s Retirement Industry with HESTA-Mercy Super Merger

By Nick Hedley

HESTA Super Fund, which manages investments on behalf of employees in Australia’s health and community services industries, plans to absorb Mercy Super to create a fund with nearly A$70 billion (US$49 billion) under management.

Consolidation across the Australian retirement fund industry continues to advance as managers aim to build scale. Among other deals, QSuper and Sunsuper recently merged to create the Australian Retirement Trust.

HESTA and Mercy Super have already signed a letter of intent to merge, they said in a joint statement. If the transaction goes ahead before the end of the year, as planned, then Mercy Super’s 13,000 members will be transferred to HESTA. The fund has A$1.7 billion under management and is targeted at employees in the health, elderly care, education, and community welfare sectors.

HESTA CEO Debby Blakey said the merger would “continue to position HESTA as the fund of choice for those wanting their super to have impact.”

Mercy Super CEO Wendy Tancred said the transaction would ensure the firm’s client investment portfolios remained strong and sustainable.

After conducting an analysis of peers, the Mercy Super board decided to enter into exclusive discussions with HESTA.

“In HESTA we have chosen a top-performing fund that shares our same commitment to the health sector and those working in it,” Tancred said.

“We’re confident our members will continue to enjoy even better retirement outcomes through a winning combination of strong performance and low fees in a like-minded fund where the cultural fit is strong.”