BENGALURU,  - India's IndiGo co-founder Rakesh Gangwal is in talks to buy a "sizable" stake in troubled domestic airline SpiceJet, ET Now reported on Friday, citing sources.

The news sent SpiceJet's shares up as much as 20%, before closing 19.4% higher.

Cash-strapped SpiceJet, which is "struggling to stay afloat", has been scrambling to raise funds and restore operations for about a fourth of its fleet that has been grounded amid fierce competition in the sector.

SpiceJet, whose market share slid to 4.4% as of September-end from 7.3% at the end of January, did not immediately respond to Reuters' request for comment on the report.

Gangwal, who along with his wife Shobha Gangwal holds 16.22% in IndiGo-operator InterGlobe Aviation, could not be immediately reached for comment.

Gangwal's Chinkerpoo Family Trust holds a 13.5% stake in Indigo, according to exchange data.

IndiGo shares closed up 1% on Friday.

(Reporting by Indranil Sarkar and Chris Thomas in Bengaluru; Editing by Sonia Cheema)