Fountain Enterprise Programme (FEP) Holdings has received temporary approval from Central Bank of Kenya to open a microfinance bank after cleaning up its shareholding list.
FEP, a lender with a capital base of Sh120 million, intends to raise an additional Sh480 million in the next two months to boost its competitive strength having raised the required minimum capital of Sh60 million.
“We got a letter of intent from Central Bank founding microfinance bank and we are preparing to do so in two months,” said FEP chairman John Kithaka. FEP had been asked to clean up its shareholding list which had included names of chamaas (business clubs) which are not recognised as legal persons.
“The licence of Fountain Deposit Taking Microfinance, which is our long awaited microfinance bank will be out soon after a long process impeded by tedious exercise to clean-up the non-compliant groups that invested,” the chairman had said in the investment group’s annual report released earlier this year.
Management of FEP Holdings said the investment group will hold 25 per cent ownership in the microfinance bank ensuring compliance with Central Bank requirements. FEP maintains it will continue to operate its credit only microfinance, Fountain Credit Services, which has 16 branches across the country.
Regulatory requirement capping the shareholding of an individual or non-financial institution at 25 per cent has been a major headache for institutions planning to convert to deposit taking. Microfinance banks are allowed to contract agents to do some of their businesses which could see it use the offices of Fountain Credit Services.
FEP appointed board of directors for the micro financier during a general meeting held on Saturday.
The company is also currently seeking to raise additional capital from shareholders through a private rights issue offer for its general business. The proposal is to capitalise Sh812 million, issue bonus shares worth Sh162 million and raise the rest — Sh2.026 billion — from shareholders which will be used to support its business ventures.
FEP Group owns a number of companies in real estate, education, media, leisure and financial services. It plans to build 2,039 houses on its 400-acre piece of land in Lukenya’s Kisima Park.