After six months of auditioning potential merger partners, Media Super has settled on Cbus in a model that is expected to be similar to that of Equipsuper and Catholic Super joint venture.
The two funds haven't yet signed a memorandum of agreement or completed any due diligence, but are understood to be exclusively committed.
The merger, which would result in a $62 billion fund, could be executed early next year.
Media Super has spoken to more than five funds in the past six months, and wanted to retain its brand.
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"Cbus Super is actively exploring merger opportunities with a range of potential super fund partners. We do not comment on merger discussions," the fund said.
Cbus's outgoing chief executive David Atkins has previously served as chief executive of Media Super's predecessor, Just Super.
Both funds are good performers, but the merger will be a significant addition in scale for Media Super.
On a three-year basis to April end, Cbus's default option is the 11th best performer with 5% p.a. in returns while Media Super is the seventh best with 5.2% p.a, according to data from Rainmaker Information. By assets, Cbus's $56 billion at December end made it the eight-biggest while Media Super's $6 billion made it the 65th largest by size.
For comparison, the median default option returned 4% over the period.
In the last year, Media Super closed two investment options and saw executive changes including a new chief investment officer and the departure of its general manager, engagement.
In May last year, Equipsuper and Catholic Super signed a memorandum of understanding to create a $26 billion entity, with the view of combining their investment pools, administration and even offices - but while keeping individual branding.