India's GVK Power and Infrastructure plans to sell a minority stake in its Australian unit to raise funds to retire part of its debt and fund operations, three sources with direct knowledge of the matter told Reuters.

Shares of the Indian company, which are down 74.1 percent so far this year, jumped as much as 5.23 percent on the news before closing up 4.76 percent at 11 rupees.

The Indian firm has hired Citigroup and Macquarie to raise $300 million to $500 million, said the sources, who declined to be named as they were not authorised the speak to the media before a public announcement.

A GVK spokesman said the information was speculative and declined to comment.

A Citigroup spokesman did not immediately return a phone call seeking comment, while Macquarie declined to comment.

"(The buyer) could be one or more private equity investors or a strategic partner, or even a combination of both," said one source with direct knowledge of the sale process.

GVK said in September that it would pay $1.26 billion for a majority stake in three Australian coal mines and a port and rail project owned by Hancock Group to secure long-term coal supplies for the Indian group's power projects.

Last year, GVK raised about $226 million from 3i Group Plc , which invested in its energy unit, GVK Energy.

With Indian equity markets near two-and-half-year lows, Indian companies are finding it difficult to raise funds.

About $7 billion of public share offerings have been either called off or deferred this year, according to data from SMC Global, making India one of the toughest markets for fund raising. ($1 = 52.8 rupees)

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