Indian state-run Power Finance Corporation Ltd will launch its share sale on May 10, four sources with direct knowledge of the matter said, in a deal that could raise up to $1.2 billion in the largest Indian equity issue this year.

The follow-on issue will close on May 12 for institutional investors and a day later for retail bidders, the sources said, declining to be named as the information was not public yet.

Power Finance executives were not immediately available for comment.

Shares in Power Finance, which the market values at nearly $6 billion, rose as much as 3.7 percent following the news on the timeline of the sale. The stock rose to 231.70 rupees in afternoon trade in the Mumbai market that was trading down more than 1 percent.

Power Finance, a lender to power projects, plans to sell 15 percent in fresh equity shares while the Indian government will divest 5 percent stake in the firm, the company has said in its prospectus filed with the regulators.

The company will sell about 230 million shares through the offering, and plans to use the proceeds to boost its capital adequacy.

The Power Finance issue is part of the Indian government's plan to raise $8.9 billion through share sales in public sector firms this fiscal year.

Other state-run firms that are likely to launch share sale s this year include explorer Oil & Natural Gas Corp, steelmaker Steel Authority of India Ltd and fuel retailer Indian Oil Corp.

Goldman Sachs, Bank of America Merrill Lynch, JM Financial Services and ICICI Securities, a unit of India's second-largest lender ICICI Bank, are the bookrunners for the Power Finance issue.

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