Credit Bank suitor FEP cuts down loss to Sh905m

A local investment group seeking to buy loss-making Credit Bank narrowed losses by a third in 2015 taking its two-year hemorrage to Sh2.3 billion.

Fountain Enterprise Programme (FEP) Group posted a loss of Sh905.7 million in the financial period ended December 2015 compared to Sh1.4 billion a year earlier.

The group revenue grew 43 per cent to Sh938.7 million, FEP said in a trading update, but this was wiped out by swelling costs.

The FEP last year invested Sh107 million in return for a five per cent stake in Credit Bank and is currently holding private talks that will see the chama control 75 per cent of the lender.

“The resolve to invest heavily in the banking sector and other financial markets remains one of our core objectives,” said, co-founder and chief executive of FEP.

“Since we’re still in the crucial transitional and transactional stage, kindly allow us not to divulge details due to legal and technical implications,” said Dr Kithaka in the firm’s newly released annual report. The group is currently holding another rights issue to raise an undisclosed amount of cash.

Credit Bank, controlled by Simeon Nyachae’s family, is wooing FEP members to buy 30 million newly created shares – equivalent to 70 per cent of the lender - via a private offer priced at Sh180 apiece.

The group’s other interest in the financial sector include the yet-to-be licensed Fountain Microfinance Bank, Fountain Credit Services, Nobel Insurance Agency and mobile money platform MobiKash.

READ: Investment firm FEP buys 5 per cent stake in Nyachae’s Credit Bank

The FEP says it has a membership of 63,000 investors, with a significant stake held by Kenyans residing in the UK and US.

The chama’s shares have since January been trading at an over-the-counter platform hosted by Standard Investment Bank, with the average price being Sh21 per share.

The group also saw its asset base shrink by a fifth to Sh4.4 billion from Sh5.7 billion in the period under review, according to its annual report.

The FEP has investments in a dozen firms largely clustered into four groups: media and technology, financial services and retail, real estate and security services, hospitality and education.

Its chairman Erastus Mwongera said wholly-owned Citadelle Security was the most profitable unit, with a threefold growth in revenue to Sh133 million from Sh44 million in 2014.

Revenue from MobiKash nearly doubled to Sh96 million in 2015 from Sh53 million the previous year, with IT and infrastructure firm Fountain Technologies registering a six-fold growth in revenue to Sh230 million from Sh38 million in the period under review.

Suntec Supermarkets saw sales nearly halve to Sh198 million last year from Sh336 million in 2014, attributed to stiff competition from rivals, which forced FEP to close its retail store in Narok hence remaining with two outlets in Kapenguria and Kitui.

Fountain Schools – in Tigoni and Mwea – saw earnings from fees remain flat at Sh23 million. Fountain Media, operator of WTV, had revenue tumbling to Sh0.7 million last year from Sh3.5 million in 2014.

FEP’s rental income also dipped to Sh0.9 million from Sh2.4 million in the period under review.