After strongly opposing the Bachar reforms, the banks seem to be competing with each other to see who can be the first to comply with the new law, which obligates them to sell their mutual and provident funds interests. Bank Leumi said on Monday that it has signed an agreement to sell the business operations of its wholly owned unit Psagot Ofek to New York-based York Capital Management for NIS 1.35 billion. Mizrahi Tefahot Bank said it has agreed to sell its EMDA mutual fund to Menorah Finance for NIS 238.7 million, a deal that marks its exit from the mutual and provident funds sectors. Leumi disclosed the Psagot Ofek transaction just a day after saying it is selling Leumi Gemel in two separate deals for a total of NIS 1.15b. York Capital ais the first foreign investment company to buy an Israeli asset management company after the Knesset passed the Bachar law in July. As part of the deal, Leumi has also acquired an option to buy half of Ofek's portfolio management business. Dan Schwartz, co-founder of York Capital, said the acquisition was the firm's biggest investment in Israel and was a testament to the strength of the economy and of Psagot Ofek's performance. "This investment reflects York Capital's high estimation of and confidence in the Israeli economy in general and in Psagot Ofek in particular. "Psagot Ofek has a long history of financial innovation and of achieving above average returns. We expect to work in cooperation with the present management, which has built Psagot Ofek for more than fifteen years and turned it into Israel's leading investment house," he added. The deal is not York Capital's first transaction in Israel. In June, it invested in Gilat Satellite Networks by buying from Bank Hapoalim a loan that is convertible into 30 percent of the company. Psagot Ofek was founded in 1963 and is Israel's largest investment company, with NIS 28b. of assets under management. York Capital, which manages assets worth more than $7b., was founded in 1991. Since then, its leading fund has achieved an annual return of 17% and its other funds have achieved a return of 21%, a track record acknowledged by Leumi chairman Eitan Raff. "The group that is buying Psagot Ofek is well known as a professional and trustworthy group, and the agreement that was struck is fair to all the sides, including the investing customers," he said. The sale of Psagot Ofek and Leumi Gemel comes after a one-day tender that closed on Monday night last week. On Sunday, Leumi said Harel Insurance Investments had agreed to buy Gemel funds that manage assets worth NIS 16.3b. for NIS 675m., while Solomon Investments and Markstone Capital Group have agreed to buy funds that manage assets worth NIS 13.9b. for NIS 473m. In the transactions announced this week, Leumi is selling funds that manage assets worth more than NIS 58b. for a combined value of NIS 2.5b. Leumi was the first bank to start implementing the Bachar reforms when it agreed in September to sell Leumi Pia to Harel for NIS 535m. In October, it sold its 18.2% stake in Direct Insurance Financial Investments to Zur Shamir Holdings for NIS 116m. York Capital beat off a bid from Lev Leviev, who made an offer via Africa-Israel Investments, which he controls, and another company he owns. Two weeks ago, Leviev lost out to New York firms Cerberus Capital Management and Gabriel Capital in the tender to buy a controlling stake in Leumi from the government. Although it was unsuccessful in these deals, Africa-Israel is involved in Menorah's acquisition of EMDA, as it has a call option to buy up to 50% of the Mizrahi fund. If it exercises this option, it would mark Africa-Israel's entry into the financial sector, thereby adding to its interests in construction, rental property, infrastructure, hotels, energy and fashion. In addition, Leviev has extensive diamond interests around the world. EMDA manages assets worth NIS 5.93b. across 41 funds, and Mizrahi expects to book a post-tax capital gain of NIS 145m. from the deal. Two weeks ago, the bank agreed to sell all of its provident funds operations to Excellence Investments for NIS 405m. and to sell its 25% stake in Excellence Investments to Phoenix Assurance at a company value of NIS 775m. This made the stake worth NIS 193.75m. In addition, Mizrahi is selling its 60% stake in Netivot Management to Gaon Investment House for NIS 37m.