Our History
FBR Group, Inc. (NYSE:FBR) was founded in 1989 when Emanuel J. Friedman, Eric F. Billings, and W. Russell Ramsey borrowed $1 million to launch a research and securities trading firm specializing in the finance and real estate sectors. Hundreds of miles from Wall Street, these three entrepreneurs and 15 other employees set up shop as Friedman Billings Ramsey, a firm that has become one of the most successful startups in the securities industry in the last half century.
Today, FBR Group is a real estate investment trust (REIT) that invests in mortgage-related assets and merchant banking opportunities. It is also the majority owner of FBR Capital Markets Corporation (FBR Capital Markets; NASDAQ:FBCM), a top ten investment bank1 with an international franchise, a major institutional securities trading and research group, and a growing investment management business. In its brief history, FBR Capital Markets has grown from a boutique investment bank with primary expertise in financial institutions into a top-ranked full-service investment bank with broad industry coverage in eight sectors: consumer, diversified industrials, energy & natural resources, financial institutions, healthcare, insurance, real estate and technology, media & telecom.
From the beginning, FBR has been research-driven. We opened our doors at a time when equity values were beginning to climb steeply in a rapidly changing economic environment, and there was strong demand for top quality, focused research. Early on, we developed a disciplined intrinsic value approach to company analysis, one that critically examines the capital structure of companies, as well as the competitive and growth opportunities within their industries. This discipline remains a core element of our corporate culture and is applied in our published research, investing and underwriting decisions.
Using this approach, FBR was able to identify for clients the dynamics driving rapidly changing industries, particularly those that were poorly understood and inappropriately valued by the market. While the initial focus was on financial institutions and real estate, over time we expanded our research to include coverage of energy & natural resources, diversified industrials, healthcare, insurance, consumer products, and technology, media & telecom.
In the early 1990s, FBR introduced proprietary hedge funds, venture capital funds, private equity investments and mutual funds.*
In 1992, we took our first steps in the investment banking business, focusing on transactions in our primary areas of specialization – financial institutions, real estate and technology. From the mid-1990s onward, FBR, headquartered in the Washington, D.C. area, began to expand its geographic footprint, establishing offices across the United States and in London. By the time of its $220 million initial public offering in late 1997, the firm had established a solid foothold in the U.S. investment banking community.
In 1997, FBR formed FBR Asset Investment Company, a real estate investment trust (REIT) investing in mortgage-backed securities. An American Stock Exchange company initially, FBR Asset was listed on the New York Stock Exchange in 2002. FBR managed FBR Asset's operations, and that relationship enabled FBR to act as a merchant bank, providing financing to clients and potential clients – an important extension of the firm’s service offerings.
In 2003, three critical steps were taken to strengthen the company’s financial footings. At close of the first quarter of 2003, Friedman, Billings, Ramsey Group, Inc. and FBR Asset Investment were merged. That merger was followed in October by a $450 million secondary public offering of FBR Group’s shares. In August 2003, we further strengthened our liquidity position through the creation of Georgetown Funding, today a proprietary $12 billion commercial paper program. This new entity gives FBR Group an important additional liquidity resource and increased flexibility in how we finance the mortgage-backed securities in our portfolio.
For tax purposes, FBR Group is structured as a REIT, with taxable subsidiaries that conduct the firm’s investment banking, brokerage, investment management and mortgage origination businesses. FBR Group invests in mortgage-related assets and merchant banking opportunities.
In 2004, we became a PGA TOUR title sponsor, entering into a five-year sponsorship agreement for the FBR Open (formerly the Phoenix Open) – one of the oldest and most popular stops on the PGA TOUR. Each year we host more than 1,000 clients and guests and provide noteworthy business forums during tournament week.
In July 2006, FBR Group privately sold to institutional investors about 28% of its ownership in FBR Capital Markets Corporation, a fully consolidated subsidiary formed in June 2006 that houses FBR Group’s investment banking, institutional brokerage, research and asset management businesses. FBR Capital Markets became a publicly traded company in June 2007, and FBR Group reduced its ownership of FBR Capital Markets to just above 50% at that time.
In the first quarter of 2007, we greatly expanded our mergers and acquisitions capability, adding a 26-person banking team with substantial experience serving middle market companies in consumer products, energy, healthcare, business services and diversified industrials. This acquisition offers clients a more complete array of banking services, enhances our resources and advisory expertise and strengthens our middle market investment banking presence.
We are in the process of expanding our cross-border capital markets capabilities. FBR International, Ltd., based in London, specializes in institutional brokerage and corporate finance and covers the United Kingdom and continental Europe. Our London office now includes a growing investment banking presence along with the sales and trading unit established nearly a decade ago. We currently are adding dedicated trading, research and investment banking professionals for European equities and debt issues.
