Statewide Super is in advanced merger talks with two superannuation funds, confirming a Memorandum of Understanding has been signed.
A spokesperson for Statewide Super told Financial Standard the fund is exploring a potential merger with WA Super and Tasplan.
The spokesperson confirmed the three funds have signed a MOU to "conduct conversations about the possibility of a merger."
A spokesperson for Tasplan also confirmed the signing of a MOU.
Statewide's spokesperson said a merger will only occur if it is found to be in the best interests of Statewide, WA Super and Tasplan members.
"A Memorandum of Understanding exists to explore the possibility of a merger and is not a Heads of Agreement to merge," the spokesperson said.
According to Rainmaker data, a merger would create a $24 billion super fund serving more than 380,000 members. By assets, it would become the 15th largest super fund.
Rainmaker executive director of research and compliance Alex Dunnin said a possible merger is very compelling.
"Creating a $24 billion fund with 380,000 members spanning the smaller states is a tremendous opportunity to build a financial hub that has these smaller states at its heart. Usually these states have to fight hard for attention," he said.
"This is why this merger, should it come to pass, is exciting. But what's also compelling is the investment credentials of the combined fund mean its members will have a powerful investment engine supporting them. There is a lot to like about this proposal. But being a three-way merger it will be a complex one, arguably one of the most complex Australia has seen for a long while."
Based on three-year performance to January 2019, among all industry and retail MySuper offerings, Statewide ranks ninth while WA Super ranks 62nd. Tasplan isn't ranked as its MySuper product is less than three years old.
Last month, APRA chair Wayne Byres said the regulator has "upped the ante" over the past year in identifying underperforming funds and assessing their suitability for merger.
At the time, Byres said 28 funds had been reviewed. Of those, 13 chose to merge or are planning to merge; seven changed their pricing structures; and five were found to be performing better than first thought.
However, he flagged three funds that were yet to determine a course of action but were "expected to do so shortly."
Separately, last week Tasplan's chief investment officer Ian Lundy announced his resignation.
He had been with the Retirement Benefits Fund since 2011 and played a key role in the merger of RBF and Tasplan in 2016.
"It is with some sadness that I announce my departure from the organisation, but with the fund now stabilised after the merger of RBF with Tasplan it is time for me to move onto new challenges," Lundy said.