BHP super battle hots up
Some of the biggest players in the financial services industry have entered the bat-tle to claim the biggest outsourcing of a corporate superannuation fund in Austra-lia’s history.
Some of the biggest players in the financial services industry have entered the bat-tle to claim the biggest outsourcing of a corporate superannuation fund in Austra-lia’s history.
Tenders for the $650 million OneSteel superannuation fund closed earlier this month, just a week after BHP announced former Colonial chief executive Peter Smedley would chair the soon-to-be-listed BHP steel offshoot.
Money Management understands 10 groups are vying for the mandate, which in-cludes $310 million in a defined contribution fund and $340 million in a defined benefit fund.
OneSteel is seeking a group that can offer a master trust structure for the funds and has stipulated that financial planning support is an integral part of the deal.
Most companies refused to confirm or deny their involvement in the tendering pro-cess, however, several sources have confirmed that two industry funds and eight fund management groups have submitted tender documents. Plum managing di-rector Lisa Gray said: “OneSteel is one large potential opportunity we have been talking to”.
Money Management understands other fund managers include Colonial, AMP, BT, Mercers, Chifley, Salomon Smith Barney and NAFM. The two industry funds are ARF and STA.
Handling the outsourcing process is Sydney-based consultant Warren Chant who will prepare a short list of applicants in July after evaluating all 10 tenders. The shortlist will consist of about four applicants who will then make formal presenta-tions. It is not known when a final decision will be made.
The OneSteel tender is by far Australia’s biggest corporate superannuation outsourcing deal, beating the $250 million Pasminco outsourcing deal won by Mercers. It will strip $650 million from BHP’s $3.3 billion corporate superannua-tion fund and service the soon-to-be-listed company’s 7,000 employees.
The move is being seen by the funds management industry as a very significant move by a major corporate fund.
One consultant told Money Management that the move would mean that many boards will look at their superannuation arrangements to see if outsourcing is more cost-effective.
“Because of the size of the fund, and with BHP being a household name, other major funds will now look at their superannuation arrangements,” he said.
The growth of outsourcing corporate funds has been expected for some while, but outsourcing such a large fund as OneSteel had not been expected so soon.
In 1998, Sedgwick Noble Lowndes director Mario Isias predicted that by 2002 master trusts would be bigger than corporate and public sector funds combined.
With the OneSteel move, that prediction may become fact a lot quicker than any-body expected.
- by Stuart Engel and John Wilkinson
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