* Local investors to get 51 pct of floated shares * IPO will offer discount to book value-broker * Airline to spend $11 mln on aircraft By Fumbuka Ng'wanakilala DAR ES SALAAM, Sept 21 (Reuters) - Tanzania's Precision Air will allow foreign investors to buy up to 49 percent of its initial public offering (IPO) next month, according to a prospectus for the airline's planned share sale. Local investors in east Africa's second-largest economy have been allocated a minimum of 51 percent of the IPO. "The remaining 49 percent can be allotted to Tanzanian persons and non-Tanzanian persons. Tanzanian persons are, however, not permitted to buy these additional shares on behalf of non-Tanzanian persons," the prospectus said. The sponsoring broker for the IPO, Orbit Securities, said in a letter to investors the pricing of the offer at 475 shillings per share represented a discount of 11.6 percent to the airline's fair value. "The strategic partnership with Kenya Airways entered in 2003 has transformed Precision Air Services into a professionally run modern regional airline," said Orbit Chief Executive Laurean Malauri. Kenya Airways owns 49 percent of Tanzania's biggest airline, the remaining majority stake is owned by Michael Shirima, chairman and founder of the airline. The shareholders will see their stakes diluted after the IPO. Subscriptions to the issue of 58,841,750 shares run from Oct. 7-28, with the airline scheduled to be listed on the Dar es Salaam Stock Exchange (DSE) on December 8. The prospectus said Precision Air has registered an annual growth of 27 percent since 2003, with total passenger traffic rising to nearly 700,000 in 2010/11. "The projection in the airline's current financial year is to uplift 965,214 passengers, equivalent to a 44 percent increase until the end of the season in March 2012," the prospectus said. FLEET MODERNISATION The airline plans to raise close to 28 billion shillings ($17 million) from the IPO, with the funds to be largely used to finance the modernisation and expansion of its fleet.