Equip offers alternative to merger

Major super fund Equip is promoting alternatives to merger for small to medium-sized funds, working on deploying an extended public offer model now that its merger with the Rio Tinto staff fund was behind it.

The model would allow funds to outsource trusteeship, administration, custody and investment operations, while retaining control of strategy, brand development and member and employer relations as a service company with its own board, executive and staff.

Equip executive officer, growth and corporate development, John Farrington, said that participating funds would get equal status within the extended public offer structure.

“We think this model is a really viable option for funds concerned about their ability to meet [Australian Prudential Regulation Authority’s] APRA’s member outcomes test, while overcoming the most common hurdles to merger.

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“Critically, it allows participating funds to maintain control of their special, deep relationships with members and employers and to protect their already substantial investment in their brand and its connection with their community.”

The model could provide small to medium-scale funds with a means of delivering the benefits of scale that come with mergers with the preservation of their identity and value proposition.

Equip chief executive, Nicholas Vamvakas, said that there was demand in the industry for such a solution.

“We have a body of evidence that suggests the reality for sub-scale funds that believe in their brand and value proposition, is that they need to seek a robust solution that can deliver both scale and control of their offering and relationships.”

Farrington warned that the public offer model was not a ‘trustee for hire’ concept, and that Equip was only looking to partner with “a limited number of funds that have a fundamental and demonstrated commitment to delivering the best possible retirement outcomes for members.”