Challenger betting on biotech for super boom

Perched at the top of the ABN Amro Building in the heart of Sydney's 'big end' of town, Sean Mordaunt, business development manager with Challenger International's Corporate Superannuation Fund, thrives on the manic energy pulsing through the busy business hub and the harbour below.

While many of the country's business elite are haunted by the fragile state of key equities markets or anxiously ponder the source of the next corporate governance fiasco, the business of planning for the long-term future is looking up.

Just a minnow in the local superannuation game, Challenger International is carving a valuable niche for itself fitting out some of Australia's leading biotech entities with corporate super packages and services.

Almost two years ago, and following the success of its dedicated biotech VC fund, Biotech Capital (now the largest biotech fund in Australia), Challenger Superannuation decided to form the Biotech Industry Superannuation Fund (BISF) to support its drive for Australian biotech business.

Its charter is to woo the growing number of technology oriented organisations in Australia with a simple superannuation story which is simple to use, transparent and, above all, rewarding.

The Challenger product is based on a simple online model which allows members and organisations to access online absolutely every skerrick of information pertaining to a fund via a simple proprietary Windows-based front end called SuperLink.

Ensuring peace of mind at the back end, Challenger uses SM6, a tried and true super management platform, a key plank of the group's IT and administration arm.

"Our objective was to provide the biotech industry with something it could touch; something it could own," Mordaunt said. "The outcome is a fund and management service specifically addressing the needs of the industry."

It is no understatement to say that Australia's superannuation industry has been in a state of continual change for a long time.

Constant legislative amendment, shifting of tax laws and the legacy of 'old world' financial institutions are just some of the factors that had helped to create a market characterised by opportunism on one side and apathy on the other. But the times, Mordaunt believes, are changing.

Something which is expected to have a major impact on the domestic super industry over the next few years is the anticipated boom throughout the so-called knowledge-based sector which primarily encompasses the biotech and IT and T industries.

"Here we have a pool of highly educated professionals who are clearly interested in managing their super as best as possible," Mordaunt said. "Access, transparency education and quality advice are the key drivers for members going forward.

"This is becoming especially clear amongst the new breed of highly educated professionals."

KPMG recently undertook a member survey of online super funds and services and asked respondents to rate a range of factors including security, accessibility, information and overall ease of use.

Challenger's Corporate Super Plan achieved a score of 60 out of a maximum possible score of 69, streets ahead of the 22 other funds covered.

Mordaunt suggests that the group's success is due in part to some of the heavy rationalisation with the superannuation industry which has seen companies re-evaluate their existing programs.

In recent years the banks -- often criticised for their patchy customer service record -- have been aggressive in their acquisition of superannuation industry participants.

MLC is now owned by the National Australia Bank while Westpac owns Banker's Trust and Rothschild. And the Commonwealth Bank owns Colonial which had earlier absorbed Legal and General and Prudential.

"What this means for many millions of Australians is that their superannuation savings are now controlled by the banks," Mordaunt said

This, he said, wais a major point of differentiation between Challenger and its competitors: "The difference between us and most other providers in terms of, say, real-time access, are chalk and cheese."

Challenger recently won major superannuation tenders at Ambri and Cochlear. One of the largest biotech industry corporate super funds in Australia, Cochlear went looking for a management package after many years of managing its own super in-house.

Mordaunt said he expected this trend to gather steam as more and more biotech companies -- of all shapes and sizes -- and professionals took a greater interest in the value of their super. Big players, he added, were by no means the most important part of the long-term equation.

"We are of course very interested in smaller players given that some may one day form the foundations of this very promising sector," Mordaunt said.

Challenger Corporate Super now has close to $1 billion under administration across all sectors. Biotech industry participants represent around 10 per cent of Challenger's customer base.

The future, as Mordaunt sees it, is bright notwithstanding the prevailing sense of global economic uncertainty.

"Weak equities markets are seeing savvy super investors topping up their holdings as the underlying assets are considered relatively cheap," he said. "This is particularly relevant considering one should have a long-term view to retirement."