UPDATE 3-Kenya sets $3 bln Safaricom IPO price

(Adds details, stock broker comment, shilling)

By George Obulutsa and Wangui Kanina

NAIROBI, March 14 (Reuters) - Kenya will offer 25 percent of Safaricom at 5 shillings per share, valuing the mobile phone firm at about $3.06 billion, in a test of investor confidence in east Africa's biggest economy after a post-election crisis.

Officials said there will be 10 billion shares for sale, with an initial 35 percent of these reserved for foreign institutional investors. However, that amount may be reduced if the portion offered to locals is oversubscribed by 200 percent.

"What I expect out of this transaction is that we will be generating at the very least 50 billion shillings ($767 million)," Finance Minister Amos Kimunya told a news conference on Friday.

He said there would be a slightly different pricing structure for foreign investors, who will pay a premium to be decided by bookbuilding.

The amount raised is expected to fund projects to repair roads and houses that were damaged in a wave of looting, burning and killing triggered by President Mwai Kibaki's disputed re-election in December.

More than 1,000 people were killed in the post-election violence which hurt key sectors such as tea and tourism.

"We all know the unfortunate situation we had in January. We believe the Safaricom IPO will offer us an opportunity as Kenyans to come together," Kimunya said.

The government currently owns 60 percent of Safaricom, while Britain's Vodafone Plc (VOD.L) owns the rest.

The offer, which analysts expect to be the region's largest in terms of value, will open to the public on March 28 and close April 23.

THE PRICE IS RIGHT?

Investment Secretary Esther Koimett said the share price was discounted by about 14 percent, and that the flotation was planned for June 9.

Small investors from the East African Community -- Kenya, Uganda, Tanzania, Burundi and Rwanda -- will be considered "locals" and able to buy a minimum 2,000 shares each.

Safaricom is one of Kenya's most profitable companies, posting pretax profit of 17.19 billion shillings ($262.6 million) in the year ended March 2007.