Fountain Enterprise Programme (FEP) Holdings plans to build 2,039 houses on its 400-acre piece of land in Lukenya. The investment company intends to construct 600 units in the first phase, which is expected to be completed in two years.
“The development will involve construction of 2,039 residential maisonettes and bungalows; establish a community water supply borehole, a school, a shopping mall, hotel and a hospital,” reads a statement from the National Environment Management Authority (Nema).
Houses in the first phase are expected to retail at between Sh5.8 million and Sh12.6 million. FEP is sourcing funds for the project, which is estimated to cost Sh25 billion. It is already in the process of raising an additional capital of Sh3 billion from its 30,000 members through various options.
In a notice to its members, 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.
FEP management, however, said it would not use funds from shareholders on the real estate project dubbed Kisima Park.
“It would be difficult for some of our businesses to raise capital on their own, but for housing it is easy to get financiers so long as you give them a plan,” said FEP’s director Chizah Wambugu.
FEP Group owns a number of companies in real estate, education, media, leisure and financial services. All have been growing rapidly over the last decade.
The firm bought the land in Lukenya in 2012 for over Sh1 billion and has been selling plots, advertised on their website, at Sh1.3 million for an eighth of an acre. FEP was formed in 2002 and recorded its first profit of Sh17 million after tax in 2012. Some of its ventures include Fountain Credit Services, which is undertaking the capital intensive process of converting into a microfinance bank.
It recently deepened its presence in the hospitality industry with the completion of Suntec Hotel in Sagana, which follows the 2012 opening of Kisima Hotel in Karen.
Real estate has proven to be a good bet in Kenya’s investment market following a more than decade long rally driven by low supply. The sector has attracted insurance firms such as Britam, Pan Africa and CIC, investment firms and pension fund managers.