UPDATE 1-India's Axis to raise $1 bln in share sale-sources

Last Updated: Mon, Jan 28, 2013 14:40 hrs

* Raising up to $877 mln by selling shares to institutional investors

* Up to $152 mln is being raised from preferential allotment

* Shares are being sold at 1,390 rupees/share, a discount of 1.6 pct (Adds deal details, background)

By Sumeet Chatterjee

MUMBAI, Jan 28 (Reuters) - Indian private sector lender Axis Bank Ltd is selling shares to raise as much as $1 billion, two sources with direct knowledge of the matter said on Monday, in the biggest equity deal in more than a month in Asia's third-largest economy.

The bank is looking to raise up to $877 million by selling shares to institutional investors and an additional $152 million by selling shares to some existing shareholders, said the sources, declining to be named before a public announcement.

The Axis offering is set to be the biggest share sale since the Indian government raised $1.1 billion by selling some of its shares in state miner NMDC Ltd in December last year.

Bankers see a pickup in share issues as the government pares its stake in state companies to bridge its budget deficit, and private firms tap a revival in investor sentiment to raise capital.

India's share index is up 3.5 percent this year, having risen 26 percent in 2012.

Axis Bank late on Monday launched the offering of up to 34 million shares to institutional investors at 1,390 rupees a share, a discount of 1.6 percent to its closing market price of 1,412.95 rupees, the sources said.

Separately, Axis is also allotting up to 5.9 million shares on a preferential basis at 1,390 rupees a share to some existing shareholders, they said, adding the bank is looking to raise a total of about $1 billion from the two tranches.

Proceeds from the offering will be used to boost Axis Bank's balance sheet, sources had said this month, amid a possible revival in credit growth, with the central bank expected to cut interest rates for the first time in nine months.

Citigroup, which topped the Indian equity market league table last year with a 35 percent share of the market, JPMorgan and Axis Bank's investment banking unit Axis Capital are advisers on the deal, the sources said.

Indian companies raised almost $15 billion via equity market deals last year, up from $8.7 billion in 2011, according to Thomson Reuters data, with the government share sell down in state companies accounting for bulk of the issues.

Forthcoming deals include the government's plan to raise up to $2 billion by selling a stake in state power producer NTPC Ltd, likely to take place on Feb. 7, and a follow-on share offering by lender Yes Bank Ltd.

($1 = 53.9 rupees) (Additional reporting by Indulal P.M. and Abhishek Vishnoi in MUMBAI and Elzio Barreto in HONG KONG, Editing by Louise Heavens)

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