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Share Microfin’s Banks Agree to 12 Billion Rupee Restructuring

Share Microfin Ltd. today said banks including ICICI Bank Ltd. agreed to restructure about 12 billion rupees ($245 million) worth of debt and granted a year’s moratorium on repayments.

Share Microfin’s existing investors including Legatum Group, controlled by billionaire Christopher Chandler, and Indian fund Aavishkaar Goodwell are investing 48 million additional rupees in the company, Share Microfin said in a statement. The loans will be restructured over seven years, the Hyderabad-based lender said.

Investors are slowly returning to the sector after the Reserve Bank of India proposed new regulations and called for banks to resume funding for micro-lenders. Share Microfin is also in talks for a possible three-way merger with closely held Asmitha Microfin Ltd. and Spandana Sphoorty Financial Ltd., Udaia Kumar, Share Microfin managing director, said in a phone interview.

“In principal we are looking at an opportunity to take advantage of the market situation,” he said. “The merger right now is at a concept stage and everyone has to agree.”

Indian microfinance companies’ loan portfolios have halved from their peaks in October, according to an August report from Micro-Credit Ratings International Ltd. A clampdown in Andhra Pradesh, India’s largest market for small loans, last October led to capping interest rates and restrictions on debt collection methods, causing loan recoveries to drop below 20 percent.

Lending has dropped 97 percent from peak levels in the state, Kumar said. SKS Microfinance Ltd., the only publicly traded company from the sector in India, has plunged 59 percent this year compared with a 19 percent decline in the benchmark Bombay Stock Exchange Sensitive Index.

Dubai-based Legatum invested about 1 billion rupees in Share Microfin in 2007, Philip Vassiliou, managing director of the fund, said last November.

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