The Australian Government Employees Superannuation Trust (AGEST) expects to come up with a short list of merger partners by the end of the year.

The industry superannuation fund has closed its tender process and will now focus on selecting potential partners.

"We have invited a select group of funds with whom we thought we have a good fit to put together a proposal as to how they might see a merger with AGEST working," AGEST chief executive Cath Bowtell told Investor Weekly.

"We are evaluating the proposals now and we hope to finalise the first phase of the evaluation this year, and then we have to do a more rigorous cost-benefit analysis next year.

"It is not something we want to drag out."

Bowtell said she expected the assessment to take until mid-2012 when a decision would be made on whether to proceed with the merger.

The planned union is the result of the merger between ARIA and Military Super in June.

"The merger of ARIA and Military Super also gave the government the capacity to expand the eligibility to join the PSSap (Public Sector Superannuation accumulation plan) and that obviously introduces a new competitor in areas where AGEST traditionally has attracted strong cash flow. So it is definitely in response to that," Bowtell said.

"We see that in the current environment the avenue for growth is limited and a merger is another way of looking for growth. It is to ensure our members are in a fund that continues to grow and attracts positive cash flow."

AGEST is not fixed on maintaining its brand, but Bowtell said the merger partner should have a similar profile to the fund.

"We are looking for funds that have a similar approach to managing money as AGEST," she said.

"We are looking for funds that are pretty simple and have a profit-to-members orientation."

AGEST was established in July 1990 as the industry superannuation fund for the Australian public sector.

The fund has more than $4.3 billion in assets under management and over 130,000 members, predominantly from the federal, Northern Territory and Australian Capital Teritory governments.