State-run Indian Oil Corp aims to raise $4.4 billion in January through a follow-on share sale, its chairman said on Wednesday, sending its shares up as much as 14 percent.

The government is selling a 10 percent stake, while the company will offer an equal number of new shares to raise 20 billion rupees, making the sale the biggest-ever share offering in the Indian market.

"Our expectations are that it should be around 450 rupees," Chairman B.M. Bansal said, when asked by reporters about the per share price of the sale by the fuel retailer.

The expected sale price represents a premium of 30 percent over the company's Tuesday close.

Shares in Indian Oil were trading 11 percent higher at 384.25 rupees at 2:06 p.m, after having risen as much as 14.3 percent soon following the chairman's comments, while the main Mumbai market was up 1.5 percent.

Bansal said the share sale was likely to be launched in the third or fourth week of January.

Indian Oil has hired six banks including Bank of America Merrill Lynch, Citigroup and ICICI Securities to handle the share sale, IFR reported last month.

Indian Oil will join a spate of share sales in state-run Indian firms that have seen a recent run of success.

In October, Coal India's record $3.4 billion initial public offering was about 15 times subscribed, while Power Grid Corp's $1.7 billion share sale was nearly 15 times covered.

The government plans to raise $8.6 billion through stake sales in the fiscal year that ends in March 2011.

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