Aware Super will hit $200 billion in assets under management in the next two to three years, according to chief investment officer Damian Graham – and that growth will come as a combination of more mergers and the so-called “rivers of gold” that flow from Australia’s retirement savings.
“My guess is that it should be both (mergers and organic growth). Mergers will continue to be a part of the market in the next few years at least. Our last 18 months or so, we merged with StatePlus, portfolio wise we obviously merged with Vic Super and at the end of last year we merged with WA Super…organically obviously we want to keep growing as well,” Mr Graham told a Bloomberg webinar.
The fund will likely need to double its headcount across a number of capabilities, Mr Graham said, and with increased size will also come a larger presence overseas. Mr Graham predicted the fund would soon establish offices in the US and EU, COVID-19 withstanding, but that a London office was less likely.
Aware Super also likely won’t establish a physical office in China, despite the successful A-shares strategy it has run there for a number of years. While there’s “a strong growth opportunity” in China and its economy has recovered faster than many others following the initial COVID-19 shock, the dynamics of the Chinese market have given the fund pause.
“I felt that, three or four years ago, China was likely to become a little more westernised in its way of thinking about capital markets and I feel that may not be the journey they’re on. The government has been fairly overt about that to say ‘We’ve got our way of doing things’ and that’s their right, but it means as a minority investor you need to pause a little bit at the moment,” Mr Graham said.
Mr Graham also shared the reasoning behind Aware Super’s decision to pull out of a bidding war for telecom OptiComm in late 2020, saying “no asset is too good to walk away from”.
“You need to remain disciplined and if something becomes too highly priced we won’t pursue it…in typical terms we’re very comfortable to lose because it’s gone above where we think the asset’s valued at. You have to maintain discipline,” Mr Graham said.