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Not long ago, the private equity firm, Fortress Investment Group LLC (NYSE: FIG), appeared to be in deep trouble. But things are looking better now, as the stock price has gone from $1 to $4.65 this year.
In fact, Fortress is now pulling the trigger on some deals. Just this week, the firm teamed up with Crestview Partners LP and Lightyear Capital LLC to invest $450 million in First Southern Bancorp (Lightyear is operated by Donald Marron, who was the former chief of PaineWebber Group).
Keep in mind that the operators of Fortress have lots of experience with investing in distressed banks (especially during the S&L crisis). So, they certainly understand the huge upside -- especially when the U.S. government helps out.
As for First Southern, the firm looks like a good platform for more acquisitions. Founded in 1987, the bank now has $400 million in assets and five branches. However, with the infusion of capital, First Southern will likely expand its base substantially.
Interestingly enough, this is not the only private equity deal in the banking space. In the past few weeks, WL Ross & Co., Blackstone Group LP (NYSE: BX), Centerbridge Partners, and Carlyle Group purchased the assets of Florida's BankUnited Financial. The sale, which came to $900 million, was managed with the help of the Federal Deposit Insurance Corp.
In other words, the so-called smart money sees that stabilization in the financial system is here and the time is right to get back to deal making.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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