First State Super and VicSuper are partnering with the Victorian Government to set up a $250 million fund which will invest in small and medium businesses in the state.
Victorian Treasurer Tim Pallas announced $50 million towards the $250 million Victorian Business Growth Fund, which will be developed in partnership with the two superannuation funds.
First State Super chief executive Deanne Stewart told Financial Standard it is investing between $100 million and $150 million in the fund but the details have not been finalised yet.
An independent fund manager will be chosen to run the fund through a competitive process, the Victorian government said.
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"This is the culmination of more than six months of research and discussion the Victorian Government, following a similar investment with the New South Wales Government. We are a national fund and we invest widely but we thought it would be good to support investment in Victoria as many of our members sit within the state," Stewart said.
She said the Victorian Business Growth Fund will take stakes in small and medium sized enterprises that are already established and help them scale up, instead of investing in startups. By extension of business investment, the fund will add jobs to the Victorian economy.
At First State Super, the investment in the fund will sit in its private equity allocations which are a part of the total private markets portfolio of roughly $18 billion. The super fund will also classify internally the investment as impact investing.
VicSuper chief executive Michael Dundon said: "We're committed to investing responsibly to generate long-term value for our members and the communities that we live in. The Victorian Business Growth Fund is an exciting example of how Government and super funds can think differently and work together to drive great outcomes."
"It's terrific to be involved with an initiative that helps create a stronger Victorian economy by providing capital for Victorian businesses to create new jobs in Victoria."
First State Super has about $90 billion in funds under management. VicSuper had about $21 billion at end of last financial year.