Australian exchange-traded fund (ETF) specialist and recent entrant to the NZ market, Betashares, has bought into the superannuation game across the Tasman with the purchase of a bank-owned scheme last week.
Pending regulatory approval, Betashares will take possession of the A$1.4 billion Bendigo Superannuation fund next year, marking a strategic move out of pure product-manufacturing.
In a release, Betashares chief, Alex Vynokur, said the Bendigo buy was a “natural next step in our expansion strategy, a move we have been actively exploring for some time”.
“We have a long-term plan to build our investment in superannuation,” he said.
The Australian superannuation sector has experienced a surge of merger and acquisition activity over the last couple of years, partly under pressure from regulators looking to cut under-performers and squeeze efficiencies out of the system.
Currently owned by the regional Bendigo and Adelaide Bank, the Bendigo super fund services only about 19,000 members, offering few scale benefits but heightened risks for the financial institution. Other Australian banks have also exited the super business, notably the Westpac-owned BT, which handed its A$60 billion plus fund to Mercer in a deal completed this April.
Vanguard Australia also entered the superannuation business in its own right last year after ditching over A$100 billion of institutional mandates (including over NZ$10 billion in NZ) ahead of the launch.
Betashares will likely shake-up the underlying Bendigo investment portfolio in time but Vynokur said “our immediate focus for this acquisition is a smooth transfer of ownership”.
“… we intend to invest further to extend the existing investment offering, as well as adding further financial education and member tools in order to position the Fund for sustainable growth,” he said.
The Bendigo scheme invests via a panel of underlying managers selected by Sandhurst Trustees including a substantial index-style range managed by Vanguard.
Betashares, which counts US private equity firm TA Associates as a large minority shareholder, recently surpassed A$30 billion in assets under management across a suite of more than 60 ETFs and more than 1 million investors.
In June this year, the Australian manager also launched five low-cost unlisted passive funds in the NZ market structured as portfolio investment entities (PIEs). The Betashares PIEs, which feed into underlying ASX-listed ETFs, are yet to report on first quarter flows.