Indigo Airlines' ground staff stand next to an aircraft after it arrived at the Srinagar airport on Nov. 21, 2014. Reuters/Adnan Abidi

The owner of India's biggest airline, budget carrier IndiGo, is seeking to raise more than $400 million in an initial public offering to fund expansion into one of the world's fastest growing and most competitive domestic air travel markets.

The listing, planned for the local stock exchanges, would value InterGlobe Aviation at around $4 billion, bankers said, and would be the biggest IPO in India since Bharti Infratel Ltd listed in December 2012.

According to a draft prospectus filed on Tuesday, InterGlobe Aviation said it would sell new shares worth up to 12.7 billion rupees ($200 million) and another 30.15 million existing shares.

The company did not give a price for the existing shares, but bankers said they are expected to raise the total value of the deal to at least $400 million.

"IndiGo are continuing with their growth plans while others have been cutting their operations. They had to come to the market because they need money for their expansion," said Harsh Vardhan, Chairman of Delhi-based Starair Consulting.

India's aviation market is growing rapidly, but most airlines have struggled to break-even due to high costs and stiff competition that has forced carriers to offer hefty discounts on fares.

IndiGo, which operates a fleet of 96 planes, is India's biggest airline by market share and one of a few that have turned a profit for the last year at least, helped by cost cuts and aggressive pricing.

The airline specializes in placing large orders for jets and selling them on to lessors before renting them back to reduce capital costs, but it has denied that the sale-and-leaseback model is the main driver of its profits.

By comparison, its listed rival, low-cost carrier SpiceJet, has not reported an annual profit since 2011. Full-service carrier Jet Airways has posted annual losses since 2008.

Parent InterGlobe said it would use the IPO proceeds to pay off the lease of existing aircraft, which would allow it to bring in more planes. It said it had a net debt of $388 million.

Citigroup, JPMorgan, Morgan Stanley, Barclays, UBS and Kotak Mahindra are managers for the InterGlobe share sale.