By M. Sriram

MUMBAI (Reuters) -Investment firm GQG Partners and State Bank of India Mutual Fund are considering investing up to $800 million in total in a $2.16 billion share offering of Indian telecom firm Vodafone Idea, according to two people familiar with the matter.

U.S.-based GQG, run by India-born executive Rajiv Jain, plans to invest about $500 million, while SBI Mutual Fund is considering an investment of $200 million to $300 million in the follow-on public offering, said both people, who declined to be named as the plans are confidential.

GQG and SBI declined to comment while Vodafone Idea did not respond to queries seeking comment.

After the Reuters report, Vodafone Idea shares pared the day's earlier losses of 4% to close roughly flat at 12.95 rupees.

Debt-saddled Vodafone Idea was formed in 2018 when Vodafone Group merged its India business with local company Idea Cellular in a $23 billion deal.

The company, in which Vodafone has a more than 25% stake, is India's third-biggest operator after Reliance Jio and Bharti Airtel, which have taken away its market share in recent years. India's government is the largest shareholder, owning more than 30%, after the company in 2022 converted unpaid government dues to equity.

It said earlier on Friday the sale of new shares will run from April 18 to April 22.

GQG and SBI Mutual Fund are considering investments under the institutional quota of what will be India's biggest secondary offering. A final decision on their investments has not been reached.

Investment banks Jefferies, Axis Capital and SBI Capital Markets are running the share sale.

Vodafone Idea plans to use the funds to expand its 4G network, set up 5G networks and pay taxes and dues, it said in its regulatory filing this week.

GQG's Jain has a recent track record of backing troubled companies with falling share prices and profiting from them. Last year, he bet billions on Indian conglomerate Adani Group, after the group's shares halved following a short-seller attack.

Shares of Adani Group companies have more than doubled since.

GQG manages more than $100 billion globally and $20 billion in India - most of it in recent years, with Jain striking a bullish note on the country's economic prospects in interviews.

Vodafone Idea's board in February approved a $5.4 billion fundraise via equity and debt, meant to help it expand and reduce pressure on the debt-saddled company.

Rivals Airtel and Reliance Jio have already launched 5G services in most parts of the country.

Vodafone Idea's shares have fallen 22% this year, compared with the broader SENSEX index's 3% rise.

(Reporting by M. Sriram; Editing by Aditya Kalra and Tomasz Janowski)