Friedman Billings Gets Private Equity Lifeline

A $100 million cash infusion from a private equity firm that's led by three former Goldman Sachs(GS Quote) executives is providing badly needed luster to shares of Friedman Billings Ramsey(FBR Quote).

The stock of the Arlington, Va.-based firm is up 16% since announcing last Thursday that Crestview Partners will invest $100 million in Friedman Billings' investment banking and brokerage business. Shares of Friedman Billings most recently traded at $11.52, their highest level in four months.

The deal with Crestview is part of a corporate restructuring by Friedman Billings, which is creating a separate subsidiary for its investment banking and brokerage business. The unit, FBR Capital Markets, will operate as a separate division from Friedman Billings' ailing mortgage-related businesses.

Crestview, a two-year-old New York private equity firm with $1.5 billion in funding, will own an 8% equity stake in the new investment banking subsidiary. Friedman Billings says it plans to raise an additional $300 million for the new FBR Capital Markets group by selling equity stakes to other investors. ...