* Bharti looking at mix of dlr and rupee loans-sources

* Majority of the funding would be in offshore loans-sources

* Still early to talk about loan structure, pricing-sources

HONG KONG/MUMBAI, Feb 23 - Bharti Airtel (BRTI.BO) may finalise by Friday what could be the largest acquisition loan for an Indian borrower, as it readies a $9 billion purchase of the African assets of Kuwaiti telecoms firm Zain (ZAIN.KW), people familiar with the deal said.

The majority of the deal's funding is expected to be in the form of an offshore loan of at least $5 billion, one source close to the financing said.

India's largest telecoms firm is looking at a mix of dollar and rupee funding to finance the deal, several sources said.

Standard Chartered (STAN.L) and Barclays (BARC.L) are advising Bharti and arranging its financing.

Every bank in town is chasing this. It's hunting season for everyone, a loans banker from an international bank eyeing the deal told Reuters Basis Point.

Bharti's exclusive talks with Zain run until March 25, and follow two failed attempts by the Indian firm to tie-up with South Africa's MTN (MTNJ.J), Africa's biggest telecoms firm.

For Reuters stories on the Zain deal, see [ID:nSGE61G05R]

There have been so many incarnations of this deal, it's a feast of moving parts at the moment, said the loans banker.

Last year, Bharti lined up debt financing totalling $5 billion to merge with MTN, of which at least $1 billion was in rupees and the rest in dollars.

At that time, eight banks -- ANZ, Barclays Capital, Bank of Tokyo-Mitsubishi UFJ, Citigroup, DBS Bank, BNP Paribas, State Bank of India and Standard Chartered Bank -- had lined up to underwrite a minimum of $500 million each for the dollar loan.

But others are also now taking a look at the international portion of the new deal, sources said, including Credit Agricole CIB, HSBC, Kotak Mahindra Bank, Natixis, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp.

Last year's unused five year loan was priced at 315 basis points over libor for an average life of 3.75 years, significantly down from early price talk of 400 basis points all-in.

Bharti is a very savvy borrower and will obviously play the banks along, including their advisors, to get the best deal and terms, said the loans banker.

A Bharti official could not immediately be reached for comment.

Reliance Industries' (RELI.BO) bid for Lyondell Basell, valuing the target at $14.5 billion, might take away some funding capacity, but sources said Bharti would enjoy first mover advantage as Reliance's deal would still take some time and is not certain to be concluded.

An energy-based conglomerate, Reliance is India's biggest listed company.

Banks are hungry for good deals, and they will look at what's on the table rather than wait for what's cooking in the kitchen, the head of loans at a bank in Hong Kong said.

Appetite for risk in Asia, and for M&A deals, has improved markedly in the months since Bharti targeted MTN, on the back of improved market sentiment, increased capacity for underwriting, and declining pricing on regular corporate loans, bankers said.

Indian offshore loan financings for M&A hit a high of $9.17 billion in 2007, but the country saw no offshore acquisition loans at all in 2009. (Additional reporting by Devidutta Tripathy and Pratish Narayanan; Editing by Tony Munroe and Elaine Hardcastle)

FINANCIALSTELECOMMUNCATIONS SERVICES

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