Spirit Super is looking for a $50 billion sweet spot

Spirit Super is looking to double its assets to become a $50 billion fund, according to chairman Naomi Edwards.

In an interview with Investment magazineEdwards said the fund, which is celebrating the first anniversary of its inception following the merger between former fund MTAA Super and Tasplan in April 2021, now has around $26 billion in assets with 324,000 members. .

But it said it needed to hit a “sweet spot” of around $50 billion in size which it said could also allow it to leverage its operating rigs.

“We believe there’s a sweet spot where you can really optimize both ROI and administration costs, which is around 500,000 members and around $50 billion in assets,” she said. declared.

“It’s a good starting point in terms of economies of scale.”

Consolidation to continue

Edwards predicted that the consolidation of Australia’s superfund industry would continue with the emergence of a dozen megafunds with assets of over $100 billion.

“There will also be quite a bit of $50 billion fund,” she said.

She maintained that Spirit Super had already seen the benefits of her merger which allowed her to combine her two systems and reduce costs for members from day one.

Hobart-based Edwards chaired Tasplan from 2011 until it merged to become Spirit Super in April 2021.

Still talking but nothing imminent

She said Spirit Super was “having coffees with people right now” about the mergers, but no announcements were forthcoming.

“We are very actively looking to optimize the platform we have. We think it’s a great platform,” she said.

She believed there was still a place in the Australian superannuation market for smaller, niche funds, but said for Spirit it was important to have a minimum size so that it could optimize its experience. customer.

While the MTAA fund was based in Canberra and Tasplan in Hobart, Spirit Super’s new managing director, Jason Murray, is based in Brisbane.

A former head of member experience at QSuper, Murray took over as managing director in February this year.

Geographically agnostic

Edwards said his appointment was in line with Spirit Super’s view that he was “geographically agnostic” when it came to his staff.

“When Jason Murray broke free and wanted to stay in Brisbane where he has a young family, we thought, ‘It’s okay, we can make it work.

“Whenever we’re in the same town, we get together for dinner and we have a phone conversation every week. This is one of those arrangements that would never have been possible or imagined before Covid,” she said.

“But it’s a very hot job market right now…it’s a whole new world. We couldn’t be further apart physically, but we feel incredibly close.

Regional presence

Edwards said Spirit planned to market itself as a fund with a strong commitment to regional Australia with offices in cities including Launceston and Newcastle.

“With regional towns, there’s always a significant portion of the population that really wants to have a physical presence, that wants to walk into a local office and talk to someone,” she said.

“We’ve been very successful in having people on the ground in cities like Newcastle.”

Impact Investing

Edwards said Spirit has allocated 15% of its funds to impact investing. The objective of this impact investment portfolio was to create 100,000 new skilled jobs in Australia, 50% of which in regional Australia.

“We have a strong focus on investments that grow the regions of Australia,” she said. The plan was to invest $1.5 billion in small business investments in regional Australia by 2030.

In January, the fund announced plans to take a 51% stake in the Port of Geelong, Victoria’s second-largest port, in a $1.2 billion deal alongside the fund manager Sydney-based Palisade Investment Partners.

She said Spirit’s chief investment officer, Ross Barry, who lives in an area three hours north of Sydney, was strongly committed to investing in the Australian region.

She said the fund also had an investment in the Victorian Business Growth Fund of $250 million.

This had seen an investment in Flavorite, a family business which is the largest hydroponic grower of tomatoes in Victoria, based in the regional town of Warragul.

Spirit Super also benefited from the sale of its stake in Canberra-based open-source data company Instaclustr, which was recently acquired by US firm NetApp for $500 million. The company was founded in 2013 within the Australian National University with capital from ANUConnect Ventures, a partnership between ANU and former MTAA Super.

ANU Connect invests in early stage businesses in the Canberra area.

Focus on customer service

Edwards said Spirit prides itself on having high levels of customer service, keeping all its customer service operations in-house to control quality.

“Our contact center just won another award for having the most consistent member service,” she said.

She said Spirit was seeing a high level of engagement from a new wave of young super fund members who were happy to engage with the fund through phone apps.

“We have very young Australians starting to engage in the capital markets,” she said. “We’re seeing people under the age of 25 using our apps, checking their balance, and becoming quite aware of their super.”

“But we find that it’s people aged 25 to 45 who aren’t engaged with their super.”

Bedding change down

An actuary by training who worked at Trowbridge Consulting and then at Deloitte, Edwards is senior vice-president of the Actuaries Institute of Australia. She said the superannuation sector hoped there would be no major changes in the industry after the next election.

“There have been so many changes,” she said.

“Let’s put that aside and let the industry go on with its life, including adapting to all the regulatory changes that have happened over the last few years.”

She said there were still reforms needed to improve the superannuation, including its expansion into the “gig” economy workforce and improving superannuation coverage for the women.

But she said Australians were now “sick and tired” of all the changes to superannuation laws and regulations which she said were confusing and also reduced confidence in the system.

“It looks like the pension issue will be very quiet in the election this time around, which is a good thing,” she said.

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