Australia’s Betashares set to expand in Japan after Temasek takes stake

A rising Australian financial services company is planning a potential takeover or alliance in Japan after Singapore’s state-owned fund Temasek agreed to buy a stake in its business for up to A$300mn ($198mn).

Alex Vynokur, founder and chief executive of Betashares, said the funds and pensions manager was looking to expand into Japan either by a partnership, a strategic investment or an acquisition. “Japan is a market of great interest to us,” he told the Financial Times. “We are assessing a number of options.” 

The 15-year-old Sydney-based company said on Monday that Temasek Holdings, one of the world’s largest and most active investors, had agreed to acquire a minority stake. The business was well-placed to take advantage of structural changes in the international financial services sector, it added. 

Temasek invested in online payments platform Stripe last year and has targeted Australia with investments ranging from venture capital funds to tech companies, energy and childcare. 

Betashares has about 1mn customers in Australia — representing about one in eight investors — and more than A$38bn under management. It has grown rapidly in the market for exchange traded funds, and has entered the superannuation market — Australia’s near-A$4tn retirement savings pool — through the acquisition of Bendigo Bank’s superannuation arm last year. 

Vynokur said there was room to grow in Australia, where ETF investment was below levels seen in the US and Europe, but he added that its expansion could be continued internationally. “A lot of the lessons learned could be applied to other markets, particularly in Asia,” he said. 

The Temasek investment represented backing for Betashares’ plan, Vynokur said. “There was a lot of alignment with Temasek about where we have been as a business and where we are going as a business.”

There has been disruption on the domestic pensions front, with asset manager Vanguard’s Australian arm entering the market in 2022 with a low-cost product, and Betashares following with the Bendigo superannuation arm purchase.

Vynokur said it was important that alternative providers offered competition to established industry funds, such as AustralianSuper, Aware Super and Australian Retirement Trust. “A lot of new ideas are coming into this space. It is critical for the industry to evolve,” he said.

TA Associates, the US private equity firm, is an existing shareholder in Betashares. The Australian company declined to say what value the Temasek investment put on the business.