UPDATE 1-India's Viom readies for $1.5 bln IPO-sources

* Aims to raise $1.5 billion in IPO- sources

* Shortlists five banks to handle offering- sources

* Macquarie-SBI fund bought 11 pct stake in firm

(Adds details, background)

By Sumeet Chatterjee

MUMBAI, Oct 19 (Reuters) - Indian telecoms infrastructure firm Viom Networks plans to file a draft prospectus during the first quarter of 2011 for an IPO to raise up to $1.5 billion, two sources with direct knowledge of the matter said on Tuesday.

The listing plan comes as record inflows from foreign investors pour into an Indian market where state-run Coal India this week launched a $3.5 billion IPO that is on track to be the country’s largest. [ID:nSGE69I0BR]

Viom Networks, a joint venture between India's Tata Teleservices [TATASL.UL] and Quippo Telecom, has shortlisted Citibank C.N, Credit Suisse CSGN.VX, Goldman Sachs GS.N, Morgan Stanley MS.N and India's IDFC Capital to handle the issue, the sources said.

The sources declined to be named as they are not allowed to speak to the media. A spokesman for Viom Networks was not immediately available for comment.

In August, SBI-Macquarie Infra Fund, a tie-up between Australian investment bank Macquarie MQG.AX and State Bank of India SBI.BO, paid $304 million for 11 percent stake of Viom.

Carriers in India’s cut-throat cellular sector, the world’s fastest-growing, have been shedding their tower businesses and renting capacity to cut debt and lower costs.

No. 2 Indian mobile operator Reliance Communications RLCM.BO said last month it was in talks to sell a stake in its tower business after a deal to spin-off its Reliance Infratel arm into a venture with GTL Infrastructure GTLI.BO fell apart earlier in September.

Overseas investors have ploughed a record $23.3 billion into Indian stocks this year.

Ultra-low interest rates in developed economies have sent investors in search of higher returns, helping to push India's benchmark share index .BSESN more than 14 percent higher this year and putting upward pressure on the rupee INR=IN.

Indian companies raised nearly $16 billion in equity issuance in the first nine months of this year, up 12 percent from the same period a year earlier, according to to Thomson Reuters data.

Numerous companies, including a state-run firms Power Grid Corp PGRD.BO, Steel Authority of India SAIL.BO and Indian Oil Corp IOC.BO plan billions more in share sales in coming months. (Reporting by Sumeet Chatterjee; Editing by Surojit Gupta and Tony Munroe)