* Two fund managers say Viva IPO priced at A$2.50 a share
* Institutions had been asked to bid within A$2.50 and A$2.65
* Priced at a slight discount to rival Caltex (Adds fund manager comments, other details)
MELBOURNE, July 11 (Reuters) - The float of Viva Energy, led by global energy trader Vitol, has been priced at the bottom of an indicated range, valuing the Australian oil refiner and marketer at A$4.86 billion ($3.60 billion), two fund managers said on Wednesday.
The Viva Energy initial public offering, Australia's biggest in nearly four years, follows a strong pick up in IPOs in the first half of this year that marked the busiest period for Australian issuers since early 2007.
Viva's IPO was priced at A$2.50 a share, the sources said, on condition of anonymity as the details were not public. Institutions had been asked to bid within A$2.50 and A$2.65.
The company declined to comment. It is likely to announce on Thursday the pricing and how much stake the Vitol-led partnership will retain in Viva upon listing. The shares will debut on the Australian stock exchange on Friday.
Viva Energy was built from Royal Dutch Shell's former refinery in Geelong near Melbourne and a network of about 1,165 petrol stations in Australia that Vitol bought in a $2.6 billion deal in 2014.
Vitol and its unnamed partners have since spent over A$1 billion improving the business, including buying Shell's jet fuel operations in Australia, and are now looking to cash in.
Fund managers who took part in the Viva IPO - run by Bank of America Merrill Lynch, Deutsche Bank and UBS - said it was reasonably priced and appeared to have received good demand.
"It's a good company. The industry dynamics are favorable and it's run by a capable management team," said an analyst with a Sydney-based fund manager.
PRICED AT SLIGHT DISCOUNT TO CALTEX
Ahead of the IPO launch last month, institutional investors had committed to buy about A$1.2 billion worth of Viva shares, which at A$2.50 apiece would be half the stock on offer.
However some fund managers said while the Viva IPO was more attractive than other recent floats by private vendors, such as Spotless, they did not see much growth in the business or preferred Viva's rival Caltex Australia.
"It's kind of utility-like. For that there are better opportunities elsewhere," said John Grace, portfolio manager at Ausbil Dexia.
At A$2.50 a share, Viva would be priced at 13.1 times forecast net profit for the year to June 2019, just a slight discount to Caltex that is trading on a forward earnings multiple of 13.5, according to Thomson Reuters data.
One factor that fund managers preferred in Caltex was that it owned its petrol station sites, unlike Viva Energy.
Vitol spun off Viva's sites into a listed property trust, Viva Energy REIT, last year, reaping the benefit for itself.
Shareholders in Caltex stand to gain similar benefits if Caltex were to spin off its sites into a property trust. ($1 = 1.3490 Australian dollars) (Reporting by Sonali Paul; Editing by Himani Sarkar)