UPDATE 2-VietJet IPO set to raise $170 mln, value airline at $1.2 bln

* IPO to value VietJet at $1.2 bln

* VietJet is Vietnam’s only private airline

* Founded by country’s first female billionaire (Add pricing details, airline background, share sale context researcher comment)

HANOI, Dec 14 (Reuters) - Budget airline VietJet is set to raise about $170 million in an initial public offering (IPO) that will value Vietnam’s only private airline at $1.2 billion, people close to the deal said on Wednesday, in the latest in a string of Vietnamese share sales.

VietJet Aviation JSC, founded in 2007 by Nguyen Thi Phuong Thao - now Vietnam’s first female billionaire - will add its name to a list of coming and completed sales that includes Vietnam Airlines, brewer Sabeco and dairy Vinamilk.

VietJet will sell 44.7 million shares priced just below the middle of their 75,900 to 98,400 dong ($3.34 to $4.33) marketed range, four people said.

The price for institutional buyers will be 84,400 dong each, the people said. One of them told Reuters that the price for retail investors would be 86,500 dong.

An overallotment option would not be exercised, the people told IFR, a Thomson Reuters publication. One of the people told Reuters that the offer was oversubscribed.

BNP Paribas, Deutsche Bank, JP Morgan and VietCapital are the IPO’s joint global coordinators, IFR reported. VietJet shares will be listed on the Ho Chi Minh Stock Exchange on Feb. 23, it said.

The people declined to be identified as the information had not yet been formally announced.

VietJet declined to comment when contacted by Reuters.

Expanding, VietJet has placed the country’s biggest-ever aircraft order - for 20 Airbus Group SE A321 planes worth $2.4 billion and 100 Boeing Co 737 MAX 200 jets worth $11.3 billion at list prices.

The airline commanded around 40 percent of the domestic market, and is likely to surpass flag carrier Vietnam Airlines this year as the country’s biggest domestic airline, market analyst CAPA Centre for Aviation said in January.

For its part, the one-time government-owned Vietnam Airlines JSC on Monday said it has asked shareholders to register their ownership by late last month as it too prepares to list at the Hanoi Stock Exchange.

The government next plans to sell its nearly 90 percent stake in Saigon Beer Alcohol Beverage Corp (Sabeco) by 2017, capitalising on increasing interest in Vietnamese companies.

On Monday, Singapore-listed beverage maker Fraser and Neave Ltd said it paid about $500 million for around 5.4 percent of Vietnam Dairy Products JSC (Vinamilk).

“VietJet’s IPO and the other share sales will attract more foreign cash to Vietnam’s stock market and help raise market capital, which may help the country upgrade to emerging-market status,” said Saigon Securities’ Deputy Director of Retail Research Nguyen The Minh. “Market liquidity will be improved as well.” ($1 = 22,710 dong) (Reporting by Anuradha Subramanyan at IFR, Elzio Barreto in HONG KONG and My Pham in HANOI; Writing by My Pham; Editing by Christopher Cushing)