mizrahi logo 88.
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United Mizrahi Bank and First International Bank of Israel (FIBI) joined the Bachar-inspired banking charge out of the mutual and provident funds sector on Sunday by agreeing to sell business units in the sector.
Mizrahi said it has agreed to sell all of its mutual funds operations to Excellence Investments for NIS 405m. and to sell its 25 percent stake in Excellence Investments to Phoenix Assurance based on a company value of NIS 775m. Their stake in the company would thus be worth NIS 193.75m. In addition, Mizrahi is selling its 60% stake in Netivot Management to Gaon Investment House for NIS 37m., while FIBI said it is selling its wholly-owned Dikla Mutual Funds unit to Migdal Insurance Holdings for up to NIS 220m.
Mizrahi expects to make a capital gain of NIS 340m. from all the transactions. It directly manages 20 mutual funds with assets of NIS 9.88b., and the sale of its funds operations to Excellence reflects a price of NIS 41m. for every NIS 1b. of assets. Netivot manages four mutual funds with assets worth NIS 1.8b. As part of the agreements, Mizrahi will continue to provide operating and other services to the funds.
In addition to its deal with Mizrahi, Phoenix has agreed to buy an additional 16% of Excellence from Roni Biram and Gil Deutsch for NIS 124m., based on a company value of NIS 775m. Once the transaction has been completed, Phoenix, Biram and Deutsche will be the joint owners of the company and Biram and Deutsch will remain in their positions for another five years. In addition, Phoenix has an option to buy the rest of Biram and Deutsch's 57% stake, starting in 2009.
FIBI said it only began the talks to sell Dikla on Thursday night, adding that it is still examining the effect of the transaction on its results. Should Dikla sell certain business before the transaction is completed, Migdal will pay just NIS 190m. rather than the full NIS 220m.
All the major banks have been making deals to sell their interests in mutual and provident funds recently, in compliance with the Bachar reforms. Discount Bank has agreed to sell all its shares in Ilanot Discount and the operations of Discount Management Provident Funds to Clal Enterprise Insurance Holdings for a total of NIS 1.31b. Bank Leumi has agreed to sell Leumi Pia to Harel Insurance Investments and has sold its 18.2% stake in Direct Insurance Financial Investments to Zur Shamir Holdings.
In October, Bank Hapoalim agreed to sell its mutual funds management arm Poalim Mutual Funds to Solomon Capital for NIS 955m.