Merger talks between transport industry super fund TWUSUPER and troubled EISS Super have collapsed, despite six months of due diligence following an expenses crisis and a raft of board resignations at the energy fund.
The Age and Sydney Morning Herald reported in April the two industry super funds were in high-level discussions to roll their operations into a joint $11 billion fund. Sources at the time raised fears that progress could be hampered by union conflicts.
TWUSUPER said on Thursday it called off the merger because it was not in the best interests of its members.
A merger between TWUSUPER and EISS has collapsed. Credit:
“TWUSUPER’s motivation in entering merger discussions with EISS was the potential benefit members of both funds would achieve from greater scale,” said a spokesman for the fund, which is named after the Transport Workers Union. “We also felt EISS members would benefit from TWUSUPER’s strong investment performance.”
“Following extensive due diligence TWUSUPER will not proceed with a merger with EISS at this time. Any merger must be in members’ best interest. TWUSUPER is now pursuing other growth options.”
However, EISS also said its board had decided to review the merger.
“In mid-September, the EISS Board made a decision to place the merger with TWUSUPER on hold while it reviewed EISS’ broader merger strategy,” a spokesman said.
“EISS remains committed to pursuing a merger that is in the best financial interests of our members and are actively exploring a range of merger opportunities.”
Both funds are relatively small superannuation funds managing about $5.5 billion each. The Australian Prudential Regulation Authority has ramped up pressure on smaller funds, especially underperformers, to merge. EISS was named one of the country’s 13 worst performing super funds by APRA last month.
The collapsed negotiations follow the abrupt resignation of EISS’s chief executive, chair and three directors last month amid allegations the fund excessively spent members’ money on staff parties, overseas junkets and questionable sponsorship deals.
More to come.
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