IndiGo to launch up to $400 million IPO on Oct. 26 - sources

By Sumeet Chatterjee

MUMBAI (Reuters) - The operator of top Indian airline IndiGo is set to launch an initial public offering worth up to $400 million on Oct. 26, three sources directly involved in the deal said, in what would be the country's biggest stock market debut in three years.

The share offering by InterGlobe Aviation Ltd, set to be the first airline listing in nine years, will close on Oct. 28, said the sources, who declined to be named as the information is not yet public.

The low-cost airline will submit its IPO prospectus with the Indian regulators on Thursday and the indicative price band for the offering is likely to be firmed up next week, the sources told Reuters.

A spokeswoman for IndiGo said the dates for the offering had yet to be finalised.

IndiGo's share sale will be the second high-profile IPO this month, after Coffee Day Enterprises Ltd, the firm behind India's biggest coffee chain, opened a public offering on Wednesday aiming to raise up to $176 million.

India has seen fewer IPOs in the last few years because of volatile markets and slowing economic growth, and the response of investors to these two offerings will be a test of appetite for new issues in the current unsettled climate.

Indian companies have raised about $1.1 billion via IPOs so far this year, higher than $223 million for all of last year and $285 million in 2013, but much lower than $3.5 billion raised in 2010, according to Thomson Reuters data.

IndiGo's IPO is set to be the biggest airline public issue in India since low-cost carrier Deccan Aviation's market debut in 2006. A year later, Deccan Aviation was acquired by now-grounded Kingfisher Airlines Ltd.

The airline IPO comes at a time when the industry has seen a big drop in fuel prices in the past year, and robust growth in air traffic on growing middle-class income have brightened prospects for domestic carriers.

The proceeds from the IPO are likely to help IndiGo, India's biggest airline by market share, expand into one of the world's most competitive domestic air travel markets.

IndiGo, which now flies one in every three air passengers within India, is one of a few Indian carriers to remain profitable in recent years by keeping its costs lower than rivals and filling more seats on its planes.

India, Asia's third-largest economy, is one of the world's fastest-growing markets for air travel, but high operating costs and tough competition on fares have dragged most major carriers into the red.

(Additional reporting by Devidutta Tripathy; Editing by Clara Ferreira Marques and Catherine Evans)