Mr John Kithaka, the founder of Fountain Enterprise Programme. The firm is seeking to raise capital through a private rights issue. Photo/FILE
What you need to know:
Fountain Enterprises Programme board wants to increase the share capital to Sh3.4 billion from Sh400 million through capitalisation of reserves and asking shareholders to inject more resources.
The investment firm also intends to set aside four million shares for an Employee Share Ownership Plan and 7.7 million shares in the form of sweat equity which will be used to pay those who have given service to FEP as determined by the directors.
Fountain Enterprises Programme (LTD) Holdings plans to raise Sh3 billion from its shareholders to fund expansion plans.
A notice sent to members said that a proposal to increase the company’s share capital would be on the agenda of its fourth annual general meeting (AGM) expected to take place on June 27 in Sagana, Kirinyaga County.
FEP’s board wants to increase the share capital to Sh3.4 billion from Sh400 million through capitalisation of reserves and asking shareholders to inject more resources.
The company indicated that it would be seeking to raise more capital from shareholders through a private rights issue offer. The proposal is to capitalise Sh812 million, issue bonus shares worth Sh162 million and raise the rest — Sh2.026 billion — from shareholders.
“That the company undertakes further capital raising through a private offer of ordinary shares in the share capital of the company to members of the Fountain Enterprises Programme, a society registered in Kenya under registration No 22126,” read the notice to shareholders.
The investment firm also intends to set aside four million shares for an Employee Share Ownership Plan and 7.7 million shares in the form of sweat equity which will be used to pay those who have given service to FEP as determined by the directors.
The notice, however, said that the price and amount of shares will be determined at a later date. FEP did not mention how it plans to use the money raised from the capitalisation.
Corporate finance analysts said that FEP’s diverse portfolio, which spreads across the continent, implies that the money will go towards funding specific companies and not improving working capital.
“Working capital is financed by short term debt. Financing it with long term capital is too expensive. I suspect they are looking for funds to finance their investments,” said Johnson Nderi, corporate finance manager at ABC Capital.
FEP Group owns a series of companies in real estate, education, media, leisure and financial services all of which have been growing rapidly over the last decade.
Capital raising is expected to intensify in the second half of the year based on recent announcements by both public and private companies.
Jamii Bora Bank also plans to raise Sh1 billion either through a rights issue, private placement or through a bond. The additional funds are meant to fuel the bank’s expansion.
“With the kind of growth envisaged by the bank in the next four to five years, this additional capital will prove crucial to our ability to fuel own growth in the future,” said Jamii Bora Bank’s chairman James Gacheru at the 2014 AGM held on Tuesday.
