Nairobi — Tanzania airline Precision Air will be seeking to raise Ksh2.24 billion in an initial public offering it is set to conduct by year-end.

The airline, jointly owned by Kenya Airways, will be issuing 55 million shares to Tanzanians in an exercise that formally kicks off at the end of this month.

In a teleconference with Kenyan reporters, chairman Michael Shirima said the proceeds of the offer would help expand the business.

"It is time we took the airline to the next level. We are inviting the public to buy in as we set our eyes on a bigger scope," said Mr Shirima.

National carrier Kenya Airways owns a 49 per cent stake in the business, with Mr Shirima owning the remaining 51 per cent.

The two shareholders are undertaking a share dissolution that will see their stakes in the airline reduce.

The dilution by both Kenya Airways and Mr Shirima will see their stake decline to 34.2 per cent and 34.6 per cent respectively.

Initial reports had indicated that Kenya Airways was going to reduce its holdings through the sale of 15 per cent stake.

"Kenya Airways is not selling its stake in Precision Air. We are simply diluting both our shares and listing part of the currently authorised but unissued stock," said Mr Shirima in Nairobi.

He is also the chairman of the airline.

The airline is to list at the Dar es Salaam Securities Exchange at a later date in an initial public offering (IPO).

Already, the board of directors, at a meeting last week, gave the management the go ahead to enlist the services of a transactional advisor.

"We shortlisted three firms and gave the management the green light to proceed in setting up a formal start for the IPO," said Titus Naikuni, managing director Kenya Airways.

The three firms include Stanbic, NIC Capital and Ernst and Young, which are to be engaged in evaluation, beginning July 19.

The successful firm will then engage the regulatory authorities in carrying out the offer.

"We have done a share split so as to make the price affordable," Mr Shirima said.

The proceeds of the offer will see the airline expand its fleet to meet it growth plan targeting new additional routes.

These would mainly be in the EAC and the Southern Africa Development Community, which Tanzania is a member.