BUSINESS

gacherijaymo

7YX4ShDO2

NOT

FOR

SALE

BUSINESS

QUARTERLY

1 st Edition December 2016

FEP Holdings

charts its next move

After two stormy years of elaborate restructuring

that has seen the company increase its revenues by

45 percent and cut back on cost by 43 percent, FEP

Holdings is now on the verge of its next big move that

will unlock the potential of its key business units.

Maurice Korir to

lead FEP Holdings

Maurice Korir takes the reins at FEP Holdings ahead

of the implementation of a five year strategic plan.

Sagana Hotel to tap into

conferencing market

FEP Holdings accelerate the completion of

Sagana Hotel to tap into the fast growing

tourism and hospitality industry.

FTL’s electrifying performance

For a company that has set its sight on becoming

a global brand, Morrison Muchiri, FTL’s General

Manager, says unlocking regional business is key

to achieve the desired results.

The rebirth of Kisima

Kisima Real Estate seeks to regain investors

and clients’ confidence as it accelerates the

construction of Lukenya Park infrastructure.

BUSINESS: FEP holdings to offload its stake in Credit Bank.

MANAGEMENT: Maurice Korir to lead FEP Holdings.

1 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

FROM THE CEO’S DESK

EDITORIAL

services to all our businesses. We have also steadily

rationalised expenditure on physical county

offices. In a nutshell, the restructuring process

was designed to move FEP Holdings from a chama

structure, heavy on funds mobilization model,

to a corporate and more commercial model. As

a measure of success our revenues increased 45

percent while costs dropped by 43 percent in 2015.

We also anticipate materially better results in 2016

than the previous two years.

We now have the necessary human capital

and business structure to conduct business in

a competitive market. However you will also

realise that most of the above measures are

quintessentially internal measures. We have more

ground to cover and a raft of other business plans

to implement.

These plans focus on growing our revenues

through winning new clients while engaging

existing clients through excellent client delivery

systems as well as new products and services.

While we are cognisant that FEP Holdings

engine has not fired on all cylinders as it should,

we are undeniably on the verge of a takeoff. This

ascent cannot take place without the support

FEP Holdings has set sail. We are

gradually picking pace and innovatively

capitalizing on opportunities that

spur our advancement. We are at a

phase which I can best describe as a

Bridge Moment that will inescapably link our

restructuring phase and our growth phase.

Over the past two years, we have designed and

implemented a comprehensive restructuring

programme. This challenging period of reengineering

FEP Holdings operations focused on

investment discipline and other key operational

areas (restructuring pillars).

As we steadily improve investment discipline

through implementing our investment policy, we

at the same time continuously enhance finance

and internal controls to avert instances of loss of

investor funds.

While we have implemented a world class

Enterprise Resource Planning (ERP) system and

enhanced process efficiency, we are also aware a

system is as good as the people running it. This is

why human capital capacity development and the

entrenchment of a sound organizational culture is

at the core of my agenda.

If we are to accelerate the growth of business it

can no longer be business as usual at FEP Holdings,

we are thus formulating a methodical turnaround

plan for each business unit.

To manage our costs, we have rationalized

head office expenditure and we now have a

central shared service centre which offers support

We are aware we

need to rebuild our

investor confidence

which can only come from

a foundation of integrity,

improved

financial

performance

as well as regular

communication.

of our investors or members. We are aware we

need to rebuild our investor confidence which

can only come from a foundation of integrity,

improved financial performance as well as

regular communication. I have to state that we

are committed to regular, transparent and open

communication with all our members.

This is the first edition of FEP Business Quarterly

which is designed to give a regular update to our

investors and business partners with a focus

on commercial and governance affairs in the

company.

Maurice Korir, Chief Executive Officer, FEP Holdings

3 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

CONTENTS

1 st Edition December 2016

Pg.8

COVER STORY

FEP Holdings

charts its next move

After two stormy years of elaborate restructuring

that has seen the company increase its revenues by

45 percent and cut back on cost by 43 percent, FEP

Holdings is now on the verge of its next big move that

will unlock the potential of its key business units.

FEP HOLDINGS LTD

FEP Business Quarterly is an internal

magazine published by FEP Holdings

Ltd, a diversified investment company.

The publication targets FEP Holdings’

investors, staff, clientele, FEP Society

members, suppliers and other business

partners.

Fountain Enterprises Programme (FEP)

Galana Plaza 3rd Floor, Galana Road,

Off Argwings Kodhek Road

Telephone: +254 730 601 100

Investor Help Desk: +254 730 601 000

​www.fep-group.com

E-mail: info@fep-group.com

E-mail: customerservice@fep-group.com

P O Box 72367-00200 Nairobi, Kenya

FEP Holdings partners with UAP-Old Mutual

PG 10 to offer insurance services

PG 11

PG 13

PG 16

PG 18

PG 20

FTL’s electrifying performance

For a company that has set its sight on becoming

a global brand, Morrison Muchiri, says unlocking

regional business is key to achieve the desired results

coupled with continuous innovation to stay ahead of

the curve

Maurice Korir to lead FEP Holdings

Maurice Korir takes the reins at FEP Holdings ahead

of the implementation of a five year strategic plan

Sagana Hotel to tap into conferencing market

FEP Holdings to accelerate the completion of Sagana

Hotel to tap into the fast growing tourism and hospitality

industry

The rebirth of Kisima

Kisima Real Estate seeks to regain investors and

clients confidence as it accelerates the

construction of Lukenya Park infrastructure

Lukenya Park development gathers pace

FEP Holdings has announced the acceleration of the

development of Lukenya Park project after a lull that

saw the residential project stopped last year for an

audit review.

4

FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS


FEPBUSINESS

Public Utilities

Regulatory

Commission (PURC),

Ghana:

Ksh500

million

NEWS&BRIEFS

Telecom

infrastructure,

Tanzania:

Ksh70

million

Rural Electrification

Authority (REA),

Kenya:

Ksh100

million

FEP Holdings business outlook

With the right cogs properly greased and the

structures firmly in place, FEP Holdings is now poised

for growth with the company having slashed its costs

by 43 percent and bolstered growth by 45 percent.

With the loses having reduced quarter on quarter this

year, Maurice Korir the FEP Chief Executive Officer

predicts that the company is about to be on a profit

trajectory by mid next year.

“We now have an efficient cost structure, professional

team and our businesses largely have a solid

foundation. In this phase, our investors will expect a

more outward looking FEP Holdings,” says Mr Korir.

He explained that FEP Holdings would now be more

active and visible in its marketing activities as it

seeks to meet the demands of various clientele.

“Case in point we had two major events for Kisima

Real Estate in May & September this year. This

will be a common feature going forward as well

as heightened brand thematic and tactical sales

campaigns,” reveals Mr Korir.

In a bid to scale up operations faster, we will be

actively looking for equity or business partners for

some of our projects and business units. Some of

our units have advanced up from seed/early stage

to a growth phase and offer opportunities for private

equity investors.

The Group has already trained all the staff on

customer service, marketing and client engagement

as it seeks to widen its customer base and accelerate

growth. We are hopeful that the operational changes

will result in profitability in 2017.

“Due to the level of capital we have raised and a

wide shareholder base, we want to evolve to be a

more open company and a leading and credible

investment brand, explained Mr Korir.

Fountain Credit Service Ltd

charts its return to profitability

Fountain Credit Service Ltd (FCSL) started

operations under FEP Holdings in 2010 and

is a member of the Association for Microfinance

Institutions (AMFI). Our main objective

is to avail finance solutions through loans and

trainings to our clients to assist them in wealth

creation.

The strategy to execute these objectives

includes mobilization of members through

group formations, individuals and strategic

partnerships with ultimate goal of creating a

formidable financial institution to support the

activities of FEP Holdings.

FCSL offers different types of loans to meet

the diverse needs of its members, which

include, Boresha Biashara, Boresha Elimu,

Boresha Maisha, Boresha Kilimo, group loans

and SME loans.

The company’s products are customercentric,

with the entity continuously innovating

to tailor make products that suit market needs.

“We will be launching mobile based loans with

an intention of reaching our clients faster,

efficiently and in a cost effective manner,”

revealed Dr. Richard Ronoh, the Head of

Division, Members’ Services.

He revealed that credit outfit had for the time

being suspended the issuance of loans as it

migrates data from the old system to a new

banking system that will now be integrated

with FEP’s Enterprise Resource Planning (ERP)

system.

“It is common knowledge that the real power

of any entrepreneur is the ability to access

affordable and conveniently tailor-made credit,

thus our passion is to see lives transformed by

our very affordable and competitive products,”

Dr. Ronoh. One of the key milestones of

FCSL is the acquisition of a robust IT system

that has made it easier for clients and other

stakeholders to access data necessary for the

disbursement of loans at a click of a button.

“Banks are increasingly going digital and

linking their operations to Credit Reference

Bureaus to ascertain creditworthiness of

customers, this is very same model we are

adopting as FCSL to avert incidences of nonperforming

loans, he explained.

He revealed that FCSL was tightening controls

and merging redundant branches to cut back

on operational cost. The changes have seen

the company record profits month on month

since August 2016. “We are confident that

come close of December, we will have broken

even and even become profitable,” said Dr.

Ronoh.

Dr. Richard Ronoh, the Head of Division

Members' Services, FEP Holdings

Explosion 2020

FEP Holdings has announced the implementation

of a framework strategy dubbed Explosion 2020,

which aims at attaining year on year bottom line

growth of 30% as a minimum and sustainable

profit before tax of at least Ksh1 billion in 2020.

The company’s current focus is to develop the

existent businesses instead of venturing into

new initiatives. “This should not be interpreted

to mean that we will be static, rather, we are

avoiding spreading ourselves too thin. However,

we will consider complimentary or adjunct

businesses or innovations around our existing

portfolio,” explained Maurice Korir, the FEP

Holdings Chief Executive Officer.

He explained that FEP Holdings has consolidated

management of businesses with a paradigm shift

that moves away from managing enterprises on

legal entity basis, to one that seeks to capitalise

on synergies that can be derived from co-related

business units.

“Business that serve the same clientele have

been put under one management,” he said. The

strategic plan will see the Group focus on our

flagship businesses that will contribute 60

percent to 70 percent of the company’s profits,

such as Real Estate, Hotel, Microfinance, Retail/

Wholesale and Fountain Technologies.

He revealed that the company had embarked on a

spirited effort to get stakeholder buy in, as it seeks

to win their support and deeper understanding of

its plans. “This includes the media and investors.

The reality is that FEP Holdings does not have the

reputation and brand reflective of the progress

made recently. In 2016 we have seen positive

re-engagement with clients and suppliers, this is

noteworthy,” said Mr. Korir.

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FEP HOLDINGS BUSINESS QUARTELY


Milestones

January

18/01/16

OTC Launch at Laico Regency.The official

listing of Over the Counter Trading,

was launched on 18 th January 2016.

Announced service providers as: Image

Registrars, who have been key partners

in 6 out of the last 8 IPOs at the NSE and

Standard Investment Bank, which is a

leading investment bank in East Africa.

July

01/07/16

FT Kenya - BADEA funded REA Contract

signing of South Rift grid extension. At KSh

1Bn is the largest single commercial contract

signed by FEP.

FEP Shared Services migrates financial operations

to Sage Evolution ERP, “GO LIVE”.

January

30/01/16

February

22/2/16

FEP Board Chair formally

announces intention by FEP to

acquire 25% investment in Credit

Bank subject to Shareholder and

regulatory approval.

Board/Management Strategy

Retreat. The Explosion 2020

Stategy was completed providing

road map for the companys

growth.

FT Ghana wins US$ 240,000

(KSh24Mn equivalent) Solar ATM

project in Ghana.

July

04/07/16

FEP Rights Issue launched seeking to raise

Ksh2.6Billion. Process to run for four months until

4 th Nov 2016.

FEP upgrades Fountain Technologies into a full

Business Division.

FEP creates new Member Services Division

through consolidation of Investor Relations,

Fountain Credit Services Ltd, Fountain Safaris

and Investor Relations Department operations.

March

01/03/2016

March

22/03/2016

Credit Bank launches Private

Placement Offer (PPO) seeking

to raise up to Ksh5.4Bn through

the issue of 30Million shares to

members of FEP Society.

Notice for Extraordinary General Meeting

published. This sought :

• Approval to undertake a rights issue in

2016,

• Approval for Investment in Credit Bank

• Approval for directors to issue /allot

part or all of the unissued shares

pursuant to the rights issue or any other

issue of shares.

August

09/08/16

September

02/09/16

Diaspora Day at Galana Plaza. 25

diaspora investors from Norway, UK and

US attended and were taken on tours to

Sagana Hotel, Fountain Schools and Real

Estate projects.

Launch of initial works at Lukenya Park,

commenced for Gate House, Sample

House, borehole and access road.

Donyo Sabuk Housing Scheme client

engagement event dubbed the ‘Kisima

Experience’. Handover of plots to clients

and verification of beacons. 256 clients

attended in a mixture of both a formal and

festive event with lots of barbecue.

April

20/04/16

Extraordinary General Meeting

at Bomas of Kenya. Shareholders

approved all the items as per EGM

notice of 22 nd March 2016.

September

19/09/16

FEP appoints Maurice Korir as the

new Group CEO.

April

Last Week

of April

May

28/05/16

June

24/06/16

Kisima team carried extensive

road trip to Embu,Kirinyaga Narok,

& Meru to resolve client issues

related to Donyo Sabuk (formerly

Kamulu Housing). Met and assisted

over 150 clients.

Kisima Real Estate/Lukenya Park client

engagement meeting at Ndemi Place.

Over 100 buyers attended and were

taken through the project master plan,

infrastructure development plan and

timelines.

FEP AGM held at Bomas of Kenya.

Shareholders approved the annual report

and accounts, Directors remuneration,

appointment of one director who was due

for re-election; Mr David Tanki. Mr Chizah

Wambugu retired from the Board.

FMB AGM held at Bomas of Kenya. Shareholders

approved the annual report and accounts

appointment of directors who were due for

re-election Dr. Margaret Chemengich &

Mr. Jones Nzomo.

Under the Special Business the Shareholders

approved the change of name to Fountain Global

Investors PLC following CBK decision not to

issue a licence to the intended Microfinance

institution.

September

20/09/16

October

01/10/2016

November

Various

Dates

FT Ghana – PURC Contract signs

USD5.4Mn. Largest business contract

outside Kenya.

FEPs new CEO takes office.

FEP launches two week training on

customer service and product for

all cadres of staff.

FEP Rights Issue closure extended to 4 th

Dec 2016.

FEP Insurance Agency relaunches UAP

– Old Mutual Insurance Distribution

partnership.

FEP announces divesture from Credit Bank

after failure to obtain CBK approval to

acquire 25% shareholding.

FEP announces plans to offer digital loans

through FCSL. Loans suspended for the

rest of 2016 to allow migration to new core

banking system.

7 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

FEP Holdings

charts its

next move

After two stormy years of

elaborate restructuring that has

seen the company increase its

revenues by 45 percent and cut

back on cost by 43 percent, FEP

Holdings is now on the verge

of its next big move that will

unlock the potential of its key

business units.

About two years ago, FEP

Holdings, one of the largest

investment companies in

Kenya with over 70,000

members and share capital

estimated at Ksh4.8 billion, was in limbo

with its path to greatness having been

impeded by the successive posting of

losses.

Among the factors that contributed

to the Group’s losses were sub optimal

organisation design, lack of a formal

investment policy and weak management

information system (MIS).

The Board of Directors took action to

address the weaknesses in the business

operations by appointing a consulting

firm to formulate a new organisation

design and operational excellence

framework.

It was also during this time that the

company appointed a new Group Human

Resources Manager and Chief Operating

Officer who worked with the consulting

team in the restructuring design process.

Maurice Korir, a Certified Public

Accountant and seasoned corporate

executive with extensive experience in

fast growth and change environments

in various companies including Uchumi

Supermarkets, was identified as the right

man to steer the re-engineering process .

“The assignment was to get the

company back on a profit trajectory in the

shortest time possible,” says

Turnaround Strategy

When Mr Korir joined FEP Holdings in

2014, and having familiarised himself with

the challenges gnawing at the multibillion

firm he embarked on a shakeup that

would completely revamp the way the

group conducted business.

Mr. Maurice Korir, the Chief Executive Officer of FEP Holdings.

“I was convinced that

FEP Holdings needed

restructuring

and

completely new level of

competitiveness in order

to survive. It was going

to require an emergency

surgery,” he says.

Along with the Board,

he started by recruiting a

new management team.

New managers were

recruited to head the Audit,

Finance, Investments &

Projects, Procurement and

Marketing Departments.

Division Managers were

also recruited to lead

commercial operations.

The company also

formulated setting up an

investment policy for the company to

help evaluate investments, their impacts,

risk, and returns to the company’s bottom

line. “The investment policy was to help

us eliminate sentimental investment

decisions and help the group remain

focused. We also set up investment

committees charged with evaluating the

feasibility of the company’s investments

options and drafting smart action

Currently,

there are over

200,000

members

of FEP Society of

whom 70,000 have

invested in the

company. We are

looking at roping

them in on projects

in real estate,

microfinance,

insurance.”

points,” says Mr Korir.

The new investment

policy statement aside,

enhancing financial

and internal control

audits was another

key priority. He says

weak financial controls

encouraged employees

who found loopholes in

the company’s system

to misappropriate the

company’s funds. An

audit established that it

lost about KSh67 million

through fraud. Part of

the investigations are still

ongoing. He emphasizes

that the company would

adopt sustainability

reporting which would

transparently report to shareholders the

outcome of these investigation along with

other sustainability parameters. “The firm

sourced for a new audit firm after parting

ways with the old one. We looked for a

more experienced firm that we felt could

offer better services,”

In addition, there was also need to

rationalise the company’s expenditure.

Most of the company’s expenditure went

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FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

to the maintenance of the head office.

As part of its cost cutting initiative, the

company now has a shared service centre,

which offers support to its businesses.

“The shared services centre is costsensitive

in terms of the headcount, labour

costs and location selection criteria,” says

Mr. Korir, adding that a new ERP system

was installed to manage business and

automate back office operations related to

technology, services, and human resources.

“The system also ensures that

we document key controls in each

department for transparency. This has

allowed us define business operations and

confirm alignments with management

expectations,” says the CEO.

The cost cutting measures included

closing branches, cutting back on

personnel, and expenditure associated

with running the company’s outreach

infrastructure, both in Kenya and abroad,

thus reducing the company’s total

expenditure by over 40 percent.

Minimising expenditure also included

scaling down some of the company’s

businesses such as Fountain Media and

retrenchment of up to 175 employees,

which included senior managers, a move

the CEO says was painful but necessary—

considering that some of the employees

had been with the company since its

inception.

Renewed Hope

With revenues in the 2015 having grown

by 45 percent and operation costs having

dropped by 43 percent in the last quarter

of 2016, FEP’s turnaround strategy seems

to be working faster than anticipated. He

envisages that FEP will break even by mid-

2017.

FEP Holdings, founded in 2009, is today

recognised as not only one of the largest, but

also one of the fastest growing investment

groups in East Africa. It is also among the

most diversified companies in the region.

The company’s subsidiaries include

MobiKash, Fountain Group of Schools, FEP

Insurance Agency, Suntec Supermarket,

Fountain Credit Services, Fountain

Technologies, Fountain Safaris, Kisima Real

Estate and Citadelle Security.

Some of the company’s projects that had

previously stalled have since being revived.

For instance, the development of a four-star

hotel project in Sagana is now on course,

albeit slowly, with structural development

75 percent complete. Lukenya Park, a real

estate project is set to be re-launched in

the first quarter of 2017 after the groundbreaking

for infrastructure development

in August. The revised concept of the

project includes a business park and other

pertinent facilities.

“Residential plot sales in Lukenya have

also picked up with 40 units

sold between March 2016

and October 2016 alone.

Prices have been revised

in November from KSh1.3

million to KSh1.6 million due

to increased demand,” says

Mr. Korir.

Fountain Schools are an

on-going business concern

with improvement of

learning and play facilities

being a priority over the last

one year. This has included

renovation of classroom and

dorm facilities, upgrading

of the ICT learning

facilities, construction of

play grounds and hiring

of new head teachers. The

focus was on child/learner

centred investments which has increased

enrolment in both Mwea & Tigoni schools.

“We now have an efficient cost structure,

professional team, and businesses with

solid foundations. Our main focus at the

moment is to develop existing businesses

as opposed to venturing into new areas.”

However, FEP Holdings will have special

consideration for investments in real estate,

hospitality, microfinance, wholesale,

energy, and telecom services, which the

company says will contribute 70 per cent of

profits by 2020.

Aiming Higher

Encouraged by the fact that the company’s

dark years are gone, Mr. Korir says FEP

Holdings is gearing up to embark on the

second phase of restructuring. The second

phase is captured under their Explosion

2020 strategic plan, which is aimed at

attaining a 30 percent annual profit growth

and sustainable profits of KSh1.04 billion in

four years.

At the core of the 2020 strategic plan, he

reveals, is employee empowerment. The

new strategy also aims at tapping into the

growing number of FEP Society members,

a captive market that can help boost its

profitability.

“We went a step further and looked at

businesses where our members can be

of the benefit to us. Our vision is to have

25 per cent of revenues coming from our

members,” says Mr Korir. “Currently, there

are over 200,000 members of FEP Society

of whom 70,000 have invested in the

company. We are looking at roping them in

on projects in real estate, microfinance, and

insurance.”

According to the CEO, the company’s

flagship projects are on the right path. He

identifies Kisima Real Estate, which made

only KSh15 million in revenues in 2015

as a stand out story; the business will see

Currently,

there are over

200,000

members

of FEP Society of

whom 70,000 have

invested in the

company. We are

looking at roping

them in on projects

in real estate,

microfinance,

insurance.”

revenues grow tenfold in

2016.

Fountain Technologies

is also in the process of

executing KSh1billion

project with Rural

Electrification Authority

and also won a project

contract worth $5 million

awarded by the Public

Utilities Regulatory

Commission (PURC)

which is a multi-sectoral

regulator ran by the

Government of Ghana.

“Subject to working

capital, we have another

USD15 million of

potential jobs under

PURC, which can

potentially be executed

within 2017.”

FEP Holdings is also in a process of raising

additional capital through another right

issue which was due to close in December

2016. “We want to raise Ksh2.6 billion, out

of which Ksh1 billion will go to working

capital, Ksh1.1 billion for projects, and

Ksh500 million for strategic investment,”

says Mr Korir. It is to be noted though, as

approved by shareholders in March 2016,

that if there was a shortfall in the rights issue

process, the Board and management would

seek alternative options.

The Group is in the process of recovering

stolen funds through several pending court

cases of misappropriation through theft

and fraud. Already, KSh20 million of the

KSh67 million stolen has been recovered

after engaging the CID and an asset

recovery firm.

He also reveals that FEP Holdings is

reviewing its interest in the banking sector

after the Central Bank of Kenya denied

the company an approval to acquire stake

in Credit Bank citing low capital and an

unclear share register. Though the Group

will keep all its other viable investments,

it also plans to divest from Mobikash, a

mobile money transfer platform.

“We will take another two years to work

on other business priority areas before

considering this option or any other in

the banking sector. In the meantime we

will channel resources towards beefing up

Fountain Credit Services.”

This set back has seen the organisation

accelerate it share register cleaning

efforts and the initiative is now 95 percent

complete. “FEP Holdings has best in class

governance and control structures to

protect investors’ money. For those who

had issues of missing certificates, these

have been reconciled and will be issued

over the next few months,” says the CEO.

9

FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

The deal seeks

to net over Ksh70

million in revenues

from about

10,000

members

next year, and grow by

at least 50%

every year.

Mr. Maurice Korir, the FEP Holdings Chief Executive Officer (left) and Mr. James Wambugu, the Group Managing Director- General Insurance of UAP-Old Mutual

Group (far right) exchange partnership agreement documents as Dr. Richard Ronoh, the Head of Division, Members’ Services (centre) looks on.

FEP Holdings partners with UAP-Old

Mutual to offer insurance services

UAP-Old Mutual Group

and Fountain Enterprises

Programme (FEP)

Holdings, a diversified

investment group have

signed a partnership agreement that

will see the FEP Insurance Agency

tap FEP Holdings network which cuts

across 44 counties and many diaspora

destinations.

FEP Holdings has about 200,000

members of whom 70,000 have invested

in the company. The two partners

jointly developed co-branded medical

and general insurance products that

will see FEP members benefit from

discounted rates of up to 7.5% on policy

premiums. Under the partnership FEP

Members will only need to go to a UAP

Old Mutual Office, identify themselves

as FEP Members and benefit from

discounted rates.

The deal seeks to net over Ksh70

million in revenues from about 10,000

members next year, and grow by at

least 50% every year. “We see this as a

great opportunity to grow our range

of products as well a strategic entry

path to finally venture into insurance

brokerage. FEP Insurance Agency will

greatly benefit from UAP’s marketing

support” said Dr. Richard Rono,

Division Head, Members’ Services.

“The current product offering for

FEP Holdings’ clients include motor,

home, personal accident and medical

Insurance for individual clients. The

understanding is that UAP-Old Mutual

regional offices shall be able to book

businesses for FEP Holdings under

FEP Insurance Agency,” explained

James Wambugu, the Group Managing

Director- General Insurance of UAP-

Old Mutual Group.

UAP-Old Mutual Group will offer

FEP Holdings the office representation

in the counties where investors and

customer can register and present

their insurance claims, while FEP

Holdings will offer the insurer an extra

footprint in the counties. “Further, the

FEP business shall be booked on cash

and carry basis; no credit terms will be

allowed unless such is approved from

head office,” added Dr. Ronoh.

He said the partnership was part

of the investment company’s plan to

channel its energies towards beefing

up existent business lines as opposed

investing in new ventures. “This should

not be interpreted to mean that we are

risk averse, we are avoiding spreading

ourselves too thin,” he added, “FEP

insurance has disengaged fully from

running its own physical offices and is

committed to the new delivery model

as a cost saving measure,” he added

FEP Holdings revealed that it was

now looking at co-relation of its various

units and the synergies they can derive

from each other. “For instance, our

Microcredit, Safaris and Insurance

Agency are all focused on the same

clientele and are now managed under

one division,” Dr. Ronoh explained.

10 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

FTL’s electrifying performance

For a company that has set its sight on becoming a global brand, Morrison

Muchiri, FTL’s General Manager, says unlocking regional business is key

to achieving the desired results coupled with continuous innovation to

stay ahead of the curve.

From left, REA CEO Ng’ang’a Munyu, Company Secretary Dr. Rose N. Mkalama, FEP CEO Maurice Korir, REA Board Member Mr.Mutuma Nkanata, Prof. Bernard Kipsang

Rop (partly hidden) and REA Chairman of the Board Dr. Simon Gicharu

The Founders of Fountain

Technologies Ltd (FTL) never

envisioned the company that

started off selling computers

would eventually establish a

foothold in Kenya and go on to achieve

unprecedented milestones on the

regional front.

From its registration in 2010, the

wholly owned subsidiary of FEP holdings,

has grown into an industry leader in

providing a wide scope of product and

services offerings in both the ICT and

Energy sectors.

The company’s primary business

lines and service offerings are within

the telecommunications and energy

infrastructure space. The organisation

has over time perfected services that offer

reliable, innovative and sustainable, value

adding ICT and engineering turnkey

solutions.

The company has assembled a skilled

and dependable staff of 35 permanent

workers in addition to over 30 contract

workers across the 5 countries in which it

operates. Through sound leadership, FTL

has sourced a qualified team with over 50

years of combined experience in meeting

rigorous client expectations. Within two

years, the company’s project portfolio has

grown from a mere Ksh20 million to over

Ksh2 billion.

As part of the FEP Group of Companies,

Fountain Technologies benefits from

reliable support services including

Human Resource management as well

as an efficient group management and

leadership from the company’s parent

organization.

After a rough patch that saw the

company’s attempt to venture into

computer hardware unsuccessful, it was

time to go back to the drawing board

and explore the trends in ICT. There was

a discernible and untapped gap in the

telecoms and energy infrastructure space

that presented a high growth opportunity

for FTL. The undertaking of a shift in

strategic focus in both product and service

offerings is gradually but steadily growing

the company’s client project portfolio.

Some of the services now offered

by FTL include the Base Transceiver

Station installation, onsite configuration,

commissioning and integration of the

site onto the network. It has also played

a critical role in switching BTS of the

various telecommunications companies

in the region from 2G to 4G. The company

also specializes in civil works and tower

erection and all other associated civil

works such as earthing, manholes, access

roads.

“We are also involved in laying fibre

optic networks, erection of transmission

towers, power cable stringing and

substation rehabilitation,” said Morrison

Muchiri. He reveals that FTL’s next big

frontier is renewable energy having

ventured into solar installation, design

and dimension solutions for corporate

Continued on pg 12

11 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

Continued from pg 11

The BADEA project

is a funding of

Ksh6.3 billion

financed by

Arab Development Bank

(BADEA), Saudi Fund for

Development, OPEC fund

for Development and the

Government of Kenya. FTL

was allocated lot three

covering south Rift Region

and parts of Nyandarua.

By the end of the project a

stretch of over 430km will

have been done by FTL, the

total project value is

Ksh1

billion.

and personal deployment, installation of

customized solar solutions and energy

audit consultancy services.

It is this paradigm shift in business

focus that saw the company capitalize

on the Government’s efforts to add

5,000 megawatts to the grid, to provide

energy infrastructure. “Through the

Rural Electrification Authority (REA) the

Government was planning to implement

monumental projects in the energy sector.

Telecommunications giants were

almost singularly focused on optimizing

their networks by investing in new

infrastructure and replacing legacy

systems. “The providers of telecom

infrastructure such as Nokia Siemens

Networks (now Nokia) were shifting their

strategy from direct implementations to

subcontracting all their TI works. FTL

found a niche to occupy by positioning

ourselves as the contractor of choice. This

has seen the company implement several

expansion and modernization projects

within the region,” explains Mr Muchiri.

His 10-year experience at Nokia

Siemens, now Nokia Networks came in

handy in assembling the core team of

engineers and business critical staff that

were responsive to the market. “Besides

quickly assembling the core team, we

also acquired relevant certification from

bodies such as the National Construction

Authority and ERC in our areas of focus

such as electrical, water, civil, renewable

energy and building works.”

This and the unreserved financial

backing of FEP Holdings would see FTL

transform into a behemoth which has

since extended its tentacles into the

region, with presence in Rwanda, Uganda,

Tanzania and Ghana.

By the third quarter of 2015, FTL had

already been shortlisted as a contractor

by several organizations of repute in

Kenya and consequently won some

key contracts within the energy sector.

One of them was a Ksh65 million World

Bank funded project which involved the

construction of a line in one of Kenya’s

rugged terrains. The timely completion

of the assignment would eventually open

wider opportunities for FTL. Fast forward

to 2016 and the company is in the process

of implementing multibillion energy

infrastructure projects. “This year has

been great and played a pivotal role in

differentiating FTL from its competition by

winning two mega projects,” explains Mr

Muchiri.

In Ghana FTL was awarded a project

contract worth Ksh500 million by the

Public Utilities regulatory commission

(PURC) which is a multi-sectoral regulator

ran by Government of Ghana. The project

entails installation of 1000 Watts, 2000

Watts, and 5000 Watts solar solutions for

the artisans within the outskirts of Accra.

The project is within the Central region

of Ghana covering towns like Cape Coast,

Swodru, Elmina, Apam, Effutu, Winneba,

Afranse, Mangoase. The scope also extends

to Gomoa West, Gomoa Central and Effutu

Regions. Currently the works are on-going

and are expected to be finished by Feb

2017 before embarking on the second

phase. In Kenya FTL was among the five

companies awarded contracts by Rural

Electrification Authority (REA) to extend

electricity supply to 591 public facilities

and 35,460 households in 16 counties

under the BADEA project. The BADEA

project has a funding of Ksh6.3 billion

financed by Arab Development Bank

(BADEA), Saudi Fund for Development,

OPEC fund for Development and the

Government of Kenya. FTL was allocated

lot three covering South Rift Region and

parts of Nyandarua. By the end of the

project a stretch of over 430km will have

been done by FTL, the total project value

is Ksh1 billion.

By the end of the project, a stretch

of over 430km will have been executed

by FTL, a business that will be a key

differentiator on the energy business

league. It is expected to be completed by

end of 2017. The company has also secured

tower strengthening projects in Tanzania

worth Ksh70 million and a Ksh92 million

project for the construction of a substation

in Kakuma.

“Our plan is to make sure our growth

is sustainable. We are gradually pulling

out of telecoms infrastructure whose

growth is slowing down and focusing on

renewable energy; wind and solar energy,”

Mr Muchiri reveals. Last year, the company

wired about 70 schools in a Ksh81 million

project dubbed solar for schools.

With company having also build

its capacity to install solar power mini

grids and large scale plant connections,

Mr Muchiri says FTL is now building

its capacity to execute wind power

installations as Kenya plans to generate

2036 megawatts of wind power by

2030. “International investors currently

dominate this sphere, we also want a piece

of the pie,” asserts Mr Muchiri.

12 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

Maurice Korir to

lead FEP Holdings

Maurice Korir takes the reins at FEP Holdings ahead

of the implementation of a five year strategic plan

Fountain Enterprises Programme

(FEP) Holdings has

appointed Maurice Korir as

the new Chief Executive Officer

to steer the operations of

the multi-million investment company

that has interests in real estate, ICT, energy,

education, finance and hospitality

sectors.

Mr Korir, who has served as Chief

Operating Officer at FEP Holdings since

2014, takes over the reins of the company

as part of a seamless succession

plan that will see Dr. John Kithaka, the

Founder and outgoing CEO, retained on

the Board as a Director.

Speaking on behalf of the Board of

FEP Holdings, the Chairman, Engineer

Erastus Mwongera said Mr Korir had a

stellar performance management and

corporate governance track record,

as well as the requisite experience in

change management to unlock the

Group’s fortunes.

“Mr Korir has successfully headed the

first phase of our restructuring process,

through which we have realized 45 percent

revenue growth and similar reduction

in operational costs in just one year.

We are confident that he will set the sails

toward a trajectory of greater success

with the same vigour, as we embark on

the second phase of our transformation

programme,” said Eng. Mwongera.

The first phase entailed operational

restructuring and setting up of corporate

governance structures, while the

second phase of the Group’s transformation

process will be the implementation

of a five-year strategic plan that

seeks to grow revenues and attain profitability

as well the shareholder value.

Mr Korir has over 17 years of experience,

working for multinationals and

blue chip companies such as Mobil

Oil, Airtel and Ogilvy, a marketing and

communications company. He is a Certified

Public Accountant with a Master

in Business Administration and a Bachelors

of Commerce Degree in Finance

from the University of Nairobi, and has

considerable Board experience.

He takes over the mantle from the vision

bearer of FEP who marshalled the

mobilisation of over Ksh5 billion for the

Group which has investments in diverse

sectors of the economy through FEP

Holdings Ltd.

“The Board wishes to thank Dr. Kithaka

for his vision and commitment in

conceiving and managing FEP from a

conceptual idea to a unique social and

economic movement that has impacted

thousands of lives,” said Eng. Mwongera.

He said the outgoing CEO would continue

to contribute strategically as a director

and founder president to ensure

implementation of the vision and mission

of the FEP Group, as well that of the

social investment affiliates of FEP; including

FEP Foundation. He is also the

Chairman of FEP Society, the umbrella

organisation of all FEP entities.

Speaking on behalf

of the Board of FEP

Holdings, the Chairman,

Engineer Erastus

Mwongera said

Mr Korir had a

stellar

performance

management

and corporate governance

track record, as well as

the requisite experience

in change management

to unlock the Group’s

fortunes.

CEO’s

paradigm

shift

FEP Holdings is gearing up for a paradigm

shift in its investment model that will

see the Group conceptualise ideas that

generate value for its clientele and yield

higher return for its shareholders, as

opposed to capital intensive ventures.

Maurice Korir, the FEP Holdings

Chief Executive Officer said that the

organisation would no longer focus

on brick and mortar initiatives that tie

down huge chunks of capital over a

long period. In the past FEP holdings

has heavily invested in the construction

of immovable assets such as banking

halls, schools, hotels and retail outlets.

While well intended, the generation

of putting one stone after the other as

the elixir of development has ended.

“It’s time we transitioned the “Kujenga

approach” to fluid solutions business

models akin to Uber,” he added.

The CEO has since sanctioned the

core business team to spare one day

per week to conceptualise disruptive

but profitable ideas that will anchor

the company’s new strategic plan

dubbed “Explosion 2020.” Mr Korir

said organizations that will survive the

dynamic business model are those

that will rapidly adopt new business

technology that is essentially hinged

on sharing underutilized resources for

efficient operations.

He observed that new technologies

have the potential to disrupt established

business systems and potentially render

redundant a myriad of traditional jobs.

Mr Korir noted that the world is rapidly

transitioning to fragmented division of

labour that will assign highly specialized

tasks to people at the point of need.

Income will be defined by dynamic

measurement of supply and demand,

with economic rewards being inescapably

linked to customer satisfaction.

13 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

COMMUNICATON PLEDGE

Dear Investors and Clients,

We have heard you.

You have asked us to talk to you, to explain our strategy to

you, to clarify all media reports to you and to report on the

status of your investments.

That is a call we will endeavour to answer.

Over the last few weeks we have strived to enhance

our communication and uphold transparency in our

dissemination of information pertinent to the operations

of FEP Holdings. Other than this newsletter, which we

will continuously improve, we have also carried out the

following:

Staff Product & Customer Service Training

This was a two week comprehensive programme in October

2016 designed to help our staff serve your needs better and

improve the client experience. We are also continuously

working on developing a client centric culture throughout

the Group.

Client Engagement Events

We have interacted with over 500 real estate clients—

Lukenya Park and Kilimambogo—at various roadshows

and client events in April, May and September this year.

This has given us an opportunity to listen to their needs,

complaints and attend to them appropriately. We also

had clients at FEP Holdings offices, Galana Plaza. We have

scheduled other similar engagements with our esteemed

clientele in 2017.

Revamped Web Sites

We have revamped our business units’ websites. In the next

few weeks we will also redesign the FEP Holdings website

to make it more informative, improve visuals and include

more detailed investor information such as Strategy and

Group Business presentations.

i) FCSL – http://fcsl.co.ke/

ii) FTL – http://www.fountain-technologies.com/

iii) FEP Insurance – http://fep-insurance.com/

iv) Fountain Group of Schools – http://

fountainschools.ac.ke/

v) Fountain Safaris – http://www.fountainsafaris.com/

vi) Kisima – http://kisimarealestate.com/

vii) Citadelle – http://www.citadelle.co.ke/

Investor Self Service

We have updated our database and will soon include

investor self-service portal to be accessed through the

website. Investors will be able to access share register

information from our group website and raise queries

online for prompt resolution.

Regular CEO Media Interviews

We will openly engage with media and other stakeholders.

FEP Holdings and the wider FEP movement has a lot of

public following locally and in the diaspora. We have had

extensive coverage in the mainstream and social media in

the recent past highlighting key milestones at FEP Holdings.

Business Partner Engagements

We will have Supplier Appreciation Day in QI 2017 and

follow up engagement sessions with other Business

Partners.

Investor Briefings

We shall have regular briefings to investors on our

performance, strategy and other business matters. This

schedule will be included in subsequent editions of the

newsletter.

Maurice Korir,

Chief Executive Officer of FEP Holdings.

14 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

Q1 PBT 2016

31 Million

Q2 PBT 2016

83 Million

Q3 PBT 2016

123 Million

FEP holdings to offload

its stake in Credit Bank

FEP Holdings has announced

its plan to offload its five

percent stake in Credit Bank

after CBK declined to approve

the direct acquisition of a

25 percent stake of the bank by the

investment company.

He explained that CBK expressed

reservations about the company’s share

register and financial capability to

adequately capitalize Credit Bank. “We

will therefore take another two years to

work on other business priority areas

before considering this option or any

other in the banking sector.” said Mr

Maurice Korir.

He expressed confidence in the

fortunes of the bank saying that FEP

Holdings members were allowed to

invest in the bank directly and have to

date subscribed for shares worth over

KSh1 billion in the capital raising drive

which closes on 15th November 2016.

“Credit Bank is a profitable bank with

sound management and ratios. The

bank made a return to profitability in

2016 with a pretax profit of Kshs 123.7m

for the nine months ending September

2016, this is an impressive turnaround

by any yardstick,” he added.

He said the investment company

would instead channel its resources

towards beefing up Fountain Credit

Services, a microcredit outfit owned

by the Group. “Our current focus is to

develop the existent businesses instead

of venturing into new initiatives. This

should not be interpreted to mean that

we will be static, rather, we are avoiding

spreading ourselves too thin,” said Mr

Korir.

The investment company however

still has interests in the financial

services sector with entities such as

FEP Insurance Agency, Fountain Credit

Services and mobile money transfer

operator Mobikash.

FEP Holdings has now embarked

on beefing up the operations of

Fountain Credit Services and installed

a core banking system that will help the

organization disburse digital loans.

“Whereas the perception is that this

financial services entity needs capital,

my thinking is that Fountain Credit

Services needs to grow its customer

base and we have a ready pool of

200,000 FEP member which we can

tap,” said Mr Korir.

He revealed that the microcredit

institution was cutting back on

operational costs by reducing physical

presence which comes with a burden

of a burgeoning wage bill, and instead

focus on small and quality loans which

will be disbursed electronically.

Which way for Fountain

Global Investors?

Following Central Bank of Kenya (CBK)

declining to issue a license to run a

deposit taking microfinance bank to

Fountain Microfinance, the organisation

has since complied with the directions

of the banking sector regulator and

changed its name to Fountain Global

Investors (FGI). This was reported to

shareholders at the AGM on 30th June

2016 who approved the change of name.

The new entity will now transition to an

investment vehicle for its shareholders.

The organisation has since scaled down

its operations including release of all

staff except two senior managers who

are overseeing the company’s assets.

FGI is now an investment company and

all the funds of over KSh200 million are

invested in bank fixed deposits. FEP

Holdings currently owns only 25 percent

of FGI. The Board of FGI remains in

place and is independent from that of

FEP Holdings.

FEP Holding moves

to allay fears over

its credit Bank exit

Following its planned announcement

to exit from

Credit Bank, FEP Holdings

has moved to allay fears by

individual shareholders who

have pumped in about KSh1 billion

into Credit Bank. Maurice Korir, the

FEP Holding Chief Executive Officer

said the company is convinced that

the bank is a value opportunity, citing

approval granted by shareholders to

invest in the bank in a past Extraordinary

General Meeting.

“As at Dec 2015 valuation, a 25

percent investment holding would

only cost KSh535 million. At this

stage we acquired 5 percent. When

we modelled the acquisition value

against the net assets, it compared

favourably with the weighted price to

net assets ratio (average) of the listed

bank stocks,” explained Mr Korir.

He noted that whereas the Bank

had made losses for two years, FEP

Holdings had assessed the strategy

and forecast return to profitability

within a year. He added that it is worth

noting the bank made a return to profits

in 2016 with pretax profit of Ksh31

million in the first quarter, and half

year profits of Ksh83 million; a fete

which Mr Korir terms “an impressive

turnaround.”

Mr Korir said the Bank has a sound

management and strategy and that

the shareholders of Credit Bank were

not receiving any dividends as the

funds raised are being deployed by

the bank to fund the loan book and

its strategy including VISA card migration,

branch expansion and ICT

development.

“Credit Bank is a classic growth

company. Total assets grew from

Ksh4.3 billion in 2010 to Ksh10.16

billion in 2015, interest income from

Ksh465 million to Ksh1.2 billion in

the same period. These fundamentals

pointed to potential bottom line turnaround.

15 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

Sagana Hotel to tap into

conferencing market

FEP Holdings accelerate the completion of Sagana Hotel to

tap into the fast growing tourism and hospitality industry

Kenya is increasingly positioning

itself as a key meetings and

conferencing destination

in the region. Some of

the notable meetings and

conferences held in Kenya includes the

Global Entrepreneurship Summit, the

WTO 10th Ministerial Conference and the

United Nations Conference on Trade and

Development just mention a few.

The crowning moment came when the

City of Nairobi was voted Africa’s Leading

Meetings and Conference Destination at the

2016 World Travel Awards. Susan Ngalawa,

the Group Investment and Projects Manager

says FEP Holdings through Sagana Hotel is

positioning itself to tap into Kenya’s rapidly

growing tourism and hospitality sector.

“This is not generally a tourist destination,

we want to unlock the areas potential by

having the first mover advantage of opening

a full service conference facility that will

give Naivasha a run for its money,” said Ms.

Ngalawa. The 4-star hotel is located on 23

acres of land off the Kenol Sagana highway

and is on the banks of Sagana River in

Sagana, Kirinyaga County. The strategically

positioned exotic hotel located about 100

kilometers from Nairobi will have 146

hotel rooms, an amphitheater, restaurants,

a swimming pool, gym facilities and

conference facilities for up 600 persons.

Ms. Ngalawa reckons that the speed at

which the tourism industry is growing calls

for opening up on new tourism destinations

to meet a burgeoning demand. Indeed, in

2014, international conferencing arrivals

into Kenya stood at 103,891 delegates,

representing 12 percent of the total

international tourist arrivals.

Last year, the arrivals from this market

grew by 13 percent to 117,630 delegates,

representing 15.6 percent of the total

international tourist arrivals for that year.

“The magnitude of the conferences held in

2016 is an indicator that those numbers will

16 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

grow significantly,” Ms. Ngalawa predicts.

The high-end hotel now valued at Ksh1

billion will offer luxury and comfort to

individuals and families alike looking for a

destination to recharge and bond. “With its

unbeaten reputation of a fulfilled escapades,

Sagana has over and over again been voted as

a haven for extremely fun sports and activities

such as camping, white water rafting and other

water sports at the iconic River Tana, she adds.

With the structural works about 75 percent

complete, FEP Holdings is now gearing to

raise Ksh900 million to complete other aspects

of the hotel. “Structural and external works

which include swimming pool, parking area,

drainage, amphitheater, gate house, water

elements and other outdoor facilities are 75%

complete.

The interior finishing phase has

commenced, the conclusion of which will

involve the installation of furniture and fittings,

laundry and kitchen equipments as well as ICT

infrastructure. Soft landscaping, which is now

almost complete, is rapidly changing the entire

outlook of the hotel.

Up to Ksh440 million part proceeds from

2014 rights issue were utilized towards the

construction of the hotel to achieve the

current construction progress. FEP Holdings

is now in search of an investment partner for

the completion of the final phase which will

include the development of auxiliary services

and the installation of a security system.

17 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

Shelmith Mugoh, Head of Division, Real Estate, Security, Hospitality and Education at FEP Holdings

The rebirth of Kisima

Kisima Real Estate seeks to regain investors

and clients’ confidence as it accelerates the

construction of Lukenya Park infrastructure

Lukenya Park is undoubtedly Kisima Real Estate’s

signature project, it epitomises the real estate

division’s renewed hope that has buoyed the sales of

the first phase of the project with 60% sold to date.

Located approximately 18 kilometres from Jomo

Kenyatta International Airport with panoramic views of

the Nairobi National Park from the hill top plots, Lukenya

Park neighbours Daystar University, proposed Strathmore

University, Moke Gardens and Konza City and is near the

proposed Greater Eastern Bypass.

The project will be a mixed development

comprising about 2,000 homes, commercial

center, schools, club house, a recreational park

and a hotel.

Kisima’s main objective is to create investment

opportunities for FEP members and the wider

public in the Real Estate sector. The reactivation

of Lukenya Park in August 2016 and increased

engagement of clients and investors has

significantly contributed to the revitalization of

the brand and uptake of more products.

Kisima Real Estate main objective is to create

investment opportunities in the real estate sector.

It is involved in the purchase of prime land, subdivisions,

value addition and the subsequent sale

after the setting of elaborate infrastructure and

social amenities.

Lukenya Park has one eighth and quarter plots

and features a perimeter fence, roads, water,

electricity, nature parks, walking, cycling and

jogging tracks. Construction of homes in phase

one of Lukenya Park is set to start in the first half

of 2017 with buyers choosing from approved

house types.

“There will be a home owners association to

enforce neighbourhood values, regulations and

maintain community standard in conjunction

with Mavoko Municipal Council,” she explains.

Kisima Real Estate’s journey has not always

been smooth. “We have negotiated some sharp

bends over the years, our return to a steady path

involved a lot of stakeholder engagement to sort

out lingering legacy issues,” says Ms Mugoh.

The rapid sale of Lukenya Park and

Kilimambogo View parcels of land was followed

by a lull which saw buyers get anxious over the

delay in the subdivision of land and the eventual

issuance of offer letters.

“This led some buyers to believe they had been

duped. When we started reaching to the buyers

in Nairobi, Narok, Nanyuki, Meru, Embu and

Kirinyaga to issue offer letters, most of the buyers

were in doubt and had already given up on the

land” explains Ms Mugoh.

Kisima Real Estate initiated a rigorous process

to reach out to the over 300 buyers of Kilimambogo

View through establishing temporary offices in

various regions to address issues such as, signing

of transfer forms and sale agreements.

The same scenario would be replicated in

Lukenya Park where the company had generated

about Ksh200 million from over 200 buyers. “We

organized a client engagement meeting where we

meet the buyers to address their concerns,”

The company has since kicked off the first

phase of construction of requisite infrastructure

which will cost an estimated Ksh280 million.

“Our journey for the last two years has been

that of recovery and rebuilding investors’ and

clients’ confidence in Kisima Real Estate. Projects

18 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

such as Mweiga in Nyeri and Kiwegu in Lamu have

discontinued pending commercial feasibility studies.

We refunded the money to the buyers because the

concepts were not well thought out,” she explains.

Having successfully built up trade inventory worth

Ksh246 million and investment property worth Ksh1.2

billion, Ms Mugoh says the current focus for Kisima

Real Estate is the diversification of revenue streams

in 2017, as the company ventures into property

development, leasing of land and management of

residential and commercial buildings.

Kisima Real Estate is currently pursuing strategic

partnerships for the development of the remaining

two phases.

Kisima Park Lukenya

Kisima Park is divided into 3 phases: 1A, 1B and 2. Each

phase is subdivided into clusters which are in turn

sub-divided into courts. Each court has 12 to 24 homes

to encourage a community and neighborhood spirit.

Each court is designed with an open green space.

Phase 1A of the Kisima Park project was officially

launched in 2013 and is composed of 515 parcels of

between 1/8th of an acre and 0.3 acres distributed over

98.5 acres of scenic, gently undulating land.

Kisima Real Estate and contracted suppliers go through the map to mark the commissioning for

the construction of the gate house, borehole and access road for Lukenya Park.

Phase 1A:

With over eight and a half acres of public and green

space within Phase 1A, the Kisima Lukenya Park

development has been designed with serenity and

tranquility in mind. Phase 1A additionally incorporates

a community clubhouse and nursery school within the

overall project design.

Phase 1A progress update:

A total of 515 residential plots for sale and so far 60%

has been sold.

Key Amenities in Phase 1A

• Kindergarten

• Environment office

• Recreational water feature (dam)

• Clubhouse

An excavator expands the Lukenya Park access road.

Phase 1B:

Phase 1B is composed of 515 residential parcels of

between 1/8 th of acre and 0.3 acres as well as the

following public amenities:

Key amenities:

• Shopping mall

• Primary school

• Recreational park

Phase 2:

Phase 2 of the Kisima Park Lukenya development is

composed of 980 residential parcels of between 1/8th

of an acre to 0.3 acres as well as the following public

amenities.

Key amenities:

• A Hotel – set on 6.9 acres

• 1.5 acres of commercial space

• School

Kisima Real Estate staff help their clientele familiarise themselves with the Lukenya Park map.

19 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

Lukenya Park

development

gathers pace

FEP Holdings has announced the

acceleration of the development of

Lukenya Park project after a lull that

saw the residential project stopped

last year for an audit review. The

revised concepts are now finalised

and the project will be formally

relaunched in first quarter of 2017.

However works commenced in

August 2016. Water provision

(borehole), access roads, gate

house, sample houses, boundary

walls are in progress. The company

has advertised a tender for the

construction of internal roads.

The revised concept will include

a Business Park which will be

separately launched at date to be

announced with 40 acres having

been allocated for the project.

Residential plot sales have picked

up with 20 units sold in October

alone. Prices have been revised from

Ksh1.3 million to Ksh1.6 million in

November due to increased demand

and quality of infrastructure. A major

marketing campaign commenced

last month to drive uptake. “The

project was excellently designed

i.e. modular and can be developed

in phases. Rights issue to fund

infrastructure development only

targeted Ksh100 million which

can be substituted by bank debt,”

explained Maurice Korir.

Ongoing construction of Lukenya Park gate house

Workers drill a borehole at Lukenya Park that will supply water to phase one of Lukenya Park

Residential plot

sales have picked

up with 20 units sold

in October alone.

Prices have been

revised from

Ksh1.3 million

to Ksh1.6

million in

November due to

increased demand

and quality of

infrastructure.

20 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

SHARE REGISTRY UPDATE

FEP Holdings Ltd has over 70,000 shareholders who have

been drawn from the membership of FEP Society which stood

at 179,651 as at 31st of March 2016. The current register as of

20th June 2016 has 70,273 shareholders from all over the world

with 11% of our shareholders in the Diaspora accounting for 42

million shares. The total issued and paid up ordinary shares is

387,216,008.

NO OF INVESTORS

ISSUED SHARE SHARES

70,273.00 387,216,008

TIER I, II & III (SHARES ISSUED BETWEEN 2009 & 2013):

From 1st January 2016, there were over 2,600 share register

related cases that were pending from investors in the various

rounds of equity funding. The cases involve missing investors

from the register, under allocation of shares, over allocation of

shares, bio data corrections on certificates and replacement of

lost/damaged share certificates. This is illustrated below.

DESCRIPTION

DATA FACTS

REPORTED TIER I, II & III SHARE REGISTER

CASES AS OF 1ST JAN. 2016. 2,602

FINALIZED CASES AS OF 16TH NOV. 2016 997

CASES IN PROCESS OF CORRECTION AS OF

16TH NOV. 2016 847

PENDING CASES UNDER PROCESSING

16.11.2016 758

PPO (2014)

FEP Holdings Ltd held its first Private Placement Offer in

November 2014. Since then, a number of missing certificate

cases have been handled and some still in process.

DESCRIPTION

P.P.O REPORTED SHARE REGISTER CASES AS

OF 1ST JAN. 2016 CASES

DATA FACTS

1,223

FINALIZED CASES AS OF 16TH NOV. 2016 1,042

CASES IN PROCESS OF CORRECTION AS OF

16TH NOV. 2016

171

PENDING CASES UNDER PROCESSING 10

UNCOLLECTED CERTIFICATES

Notices have been issued to all FEP Holdings investors through

various media options to collect their Tier I, II & III and 2014 PPO

certificates respectively, from their respective collection centers

or liaise with the Head Office whichever was easier as they

would be returned to share registry after a month from when the

notices were issued. Share registry has since posted over 10,000

certificates to the given postal addresses and we request all

FEP Holdings investors to check their Postal addresses for their

certificates. Should any shareholder not find their certificate,

kindly contact the FEP Holdings head office for assistance.

We are in the process of communicating to the shareholders

whose certificates are currently with share registry to come

and collect their certificates from the FEP Holdings head

office located in Galana Plaza, Kilimani as soon as possible

or authorize someone to collect the certificate on their behalf

should they not be available to do so in person.

DESCRIPTION

TIER I, II & III (2009-2013)

DATA FACTS

ISSUED CERTIFICATES 29,086

CERTIFICATES COLLECTED OR DISPATCHED

TO INVESTORS

24,212

CERTIFICATES NOT COLLECTED 5,315

PPO (2014)

TOTAL ISSUED PPO CERTIFICATES 37,365

CERTIFICATES COLLECTED OR

DISPATCHED TO INVESTORS

7,103.00

CERTIFICATES NOT COLLECTED 4,736.00

TOTAL SHARES NOT COLLECTED 10,051

*Total no. of Shares is more than total number of shareholders

since some investors have multiple certificates.

MINORITY INVESTMENTS:

Minority investments are with respect to HOTELS, SCHOOLS

and IMPEX. We have managed to audit the receipts and created

the registers for this investments that will be used to print the

share certificates for the investments.

TYPE OF INVESTEMENT

HOTELS 732

SCHOOLS 386

IMPEX 239

TOTAL NO. OF INVESTORS 1,357

NO. OF INVESTORS

We will be sending out an alert to the investors under this

investments to confirm their balances and payments before the

final registers are compiled for allotment. We humbly request

that all investors under this investments participate fully to

allow a smooth and quick realization of the physical certificates

being in their hands as soon as possible.

The share registry department recommends that any investor

who may have a query regarding their shares to send an

email to ian.thuo@fep-group.com or james.masila@fepgroup.com

other emails that could be used for any query are

customerservice@fep-group.com and diasporadesk@fepgroup.com

.

22 FEP HOLDINGS BUSINESS QUARTELY


FEPBUSINESS

FEP OVER THE COUNTER (OTC) MARKET, DAILY PRICE CARD

FRIDAY DECEMBER 2, 2016

SUMMARY

Current price: KES 20.00 Volumes Trade:- 145,173 Execution price: Ave KES 19.50 Previous price: Ave KES 18.00

Outstanding Asks

Volumes Price(KES) Volumes Price(KES)

991,808 991,808 Mkt

66,000 1 15.00

30,000 16.00

57,300 18.00

135,749 19.00

145,450 20.00

194,210 21.00

223,631 22.00

222,500 25.00

5,900 27.00

13,200 30.00

6,600 5 50.00

600 60.00

10,000 100.00

Magazine Ad.pdf 1 06/12/2016 16:49

Executed Orders

12/02/2016 44,237 15.00

30/03/2016 2,000 20.00

05/04/2016 1,800 17.00

05/04/2016 20,825 21.00

12/04/2016 49,000 25.00

15/04/2016 3,661 15.50

18/04/2016 1,650 20.00

05/04/2016 22,000 23.00

DISCLAIMER: Every care and effort has been

taken in preparation of this price card. However,

Image Registrars and Standard Investment

Bank do not warrant accuracy, adequacy or

completeness of this information. As a result,

Image Registrars and Standard Investment Bank

disclaim any liability for errors or omissions in this

information.

The above is a summary of all OTC transactions from January 2016 to 2nd December 2016

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CMY

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