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FEP Group’s energy subsidiary seeks Chinese suitor to sell 40pc stake

Fountain Enterprise Programme Group chief executive Maurice Korir. PHOTO | FILE
Fountain Enterprise Programme Group chief executive Maurice Korir. PHOTO | FILE 

Investment group Fountain Enterprise Programme (FEP) Group is shopping for a deep-pocketed Chinese investor to acquire a minority stake in its energy-focused subsidiary that recently landed big-ticket deals in Africa.

The investment group, partly backed by the Kenyan diaspora, is seeking to offload a 40 per cent stake in Fountain Technologies, a wholly-owned unit that focuses on energy, IT and infrastructure works.

FEP chief executive Maurice Korir said a strategic investor will help the unit acquire a war chest to bid for multi-billion shilling tenders such as power plants, telecoms, and electricity projects.

“We would prefer businesses already in this space such as Chinese firms with technical and financial capacity. We want to grow our balance sheet so that we can tender for big ticket jobs,” Mr Korir told Business Daily.

“Valuation of the business is ongoing. We hope to close this deal by mid next year,” he said. Chinese firms dominate Kenya’s energy and telecoms deals. They include Sinotec, PowerChina, China Jiangxi Corporation, China Machinery Engineering Corp, Huawei, and ZTE
Fountain Technologies registered a six fold growth in revenue to Sh230 million in the period to December 2015 from Sh38 million a year earlier.

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Mr Korir said big energy and infrastructure projects offer higher margins but are capital intensive, hence the need to seek additional equity.

The chama is particularity keen to cash on Kenya’s plans to achieve universal electricity access and grow generation capacity by 5,000 megawatts – where local firms have preferential treatment in winning tenders. 

The unit has a pipeline of ongoing projects in Kenya and across the region valued at more than Sh2 billion. Fountain Technologies is currently executing a Sh1 billion Rural Electrification Authority project to light up off grid areas, funded by the Arab Bank for Economic Development in Africa, Saudi Fund for Development, and OPEC fund for Development.

The unit was allocated the South Rift region and parts of Nyandarua where it is installing 430 kilometres of power lines meant to connect households, schools and other public facilities.

This infrastructure-focused unit is also implementing a $5 million (Sh500 million) solar farm project in Accra, Ghana, awarded by the Public Utilities Regulatory Commission, said Mr Korir.

The project will see Fountain Technologies install solar for informal artisans on the outskirts of Accra.

“Subject to availability of working capital, we have another $15 million (Sh1.5 billion) of potential jobs under the Ghanaian utilities regulator, which will be rolled out this year,” the FEP boss said.

Mr Korir also disclosed that the unit has recently secured tower strengthening projects worth Sh70 million for telcos in Tanzania and a Sh92 million project for the construction of a sub-station in Kakuma, Kenya.

Previous works undertaken by Fountain Technologies include upgrading telcos’ base transceiver station from 2G to 4G, and installed solar power to more than 50 schools in northern Kenya areas namely Samburu, Pokot and Turkana.

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