Friedman, Billings, Ramsey Group Inc. will raise $20 million in capital for a new London-based incubator fund investing in European Internet companies, making good on the Arlington investment bank's promise to expand its venture-capital business.
The fund will be managed with London venture-capital firm Dawnay, Day Lander Ltd. The Friedman-Dawnay venture has plans to invest in three companies in the near future, Emanuel J. "Manny" Friedman, chairman and co-chief executive of FBR, said yesterday.
As part of the agreement, Arlington-based FBR bought a minority share in Dawnay, Day, which specializes in early stage technology investments. Terms were not disclosed.
"This partnership is the latest expansion in our domestic and global Internet strategy, and is a vital link in FBR's network of strategic partnerships," Friedman said. "This is a key step in a major initiative to create a number of joint ventures with strategic partners in specific Internet-focused geographic areas in the U.S. and overseas."
The Dawnay, Day fund will be modeled on FBR's FBR Technology Venture Partners, which is focused on the Washington area. To date, four of the 16 Washington area companies invested in by FBR Technology Venture have gone public. Since its founding in 1997, the fund has had a return of 7.4 times the initial investment, before management fees and expenses.
Last month, Friedman, along with partners Eric F. Billings and W. Russell Ramsey, handed over the day-to-day operations of the firm to Robert S. Smith, the new chief operating officer, to focus on expanding its private equity investments.
"We're hoping, over the next 12 months, to take our funds from the $300 million level to the $1 billion level" if the company can hire enough "great managers," Friedman said.
The firm is forming regionally focused Internet funds in the Pacific Northwest, Los Angeles and Charlotte, Friedman said.
Shares of holding company FBR closed down 43 3/4 cents yesterday at $6.87 1/2.