Investment Banking

With more than 475 investment banking, sales and trading and research personnel,¹ FBR Capital Markets is a top ten investment bank² operating internationally with a broad book of business across industry sectors in which we have in-depth expertise and relationships.

In 2006, our Investment Banking team raised $16.1 billion in 54 transactions, 36 of which we lead managed.  We raised $4.2 billion in 18 private initial capital-raising transactions, and we continue to lead all other investment banking firms in the 144A equity market by a substantial margin.³

We also completed 28 merger and acquisition advisory assignments, a growing part of our business.  In the first quarter of 2007, we significantly 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.

During 2006, we continued to expand our investment banking client base. Our Energy & Natural Resources Banking group broadened its franchise beyond the oil and gas sector, completing its first transactions in minerals and power generation – a $206 million private placement for Horsehead Holding Corp., a leading U.S. zinc producer, and a $777 million private placement for K-Gen Power Corp.  We also expanded our Consumer, Healthcare and Diversified Industrial groups, enabling us to complete transactions as a book-running manager across a wider range of industry segments.  The Diversified Industrials and Insurance Banking teams both had a record year in 2006.

In 2007, FBR Capital Markets' Investment Banking group was ranked as the:

• #3 book-running manager for all U.S. IPOs and 144A equity placements combined for all industries⁴
• #1 book-running manager of all common stock offerings for domestic mining, oil and gas, and utility and energy companies, with a market capitalization of $1 billion or less⁵
• #1 book-running manager of all common stock offerings for U.S. and Bermuda finance and insurance companies with a market capitalization of $1 billion or less⁶

FBR Capital Markets focuses its banking, trading and research efforts in eight broad industry sectors – consumer, diversified industrials, energy & natural resources, financial institutions, healthcare, insurance, real estate and technology, media & telecom.   We have a particular commitment to supporting the growth of – and interest in – middle market companies, a vitally important sector of the U.S. economy. We provide a high level of service to small- and mid-cap companies, and for the last five years we have been the #1 book-running manager for all U.S. common stock transactions for issuers with market capitalizations of $1 billion or less.⁷

We offer a full range of investment banking and financing services, identifying and structuring innovative opportunities for our clients:

• Initial public offerings
• Secondary and follow-on offerings
• 144A institutional equity private placements – a market leader in these and other innovative types of financing structures such as private block secondaries and public corporate formations
• Public/Private recapitalizations
• Business creation and restructuring
• Preferred equity
• Mergers, acquisitions and dispositions
• Private block trades
• Fairness opinions and other advisory assignments

1) As of 2/26/08.

2) Source: Dealogic. As measured by the aggregate value of the U.S. common equity underwritings completed between 1/1/03 and 12/31/07 with apportioned credit including over-allotment to all book-running managers. Includes only rank eligible transactions.

3) Source: Dealogic. Relates to total deal value of all pre-IPO 144A equity offered for U.S. and Bermuda issuers; priced between 1/1/03 and 12/31/07, with apportioned credit to all book-runners.  Excludes closed-end funds, bought deals and best efforts.  League table credit is apportioned amount of total capital raised including over-allotment.

4) Source: Dealogic. Relates to total deal value of all common stock of U.S. issuers offered in IPOs or transactions exempt from SEC registration pursuant to rule 144A, on a combined basis. Transactions priced between 1/1/03 and 12/31/07 with apportioned credit including over-allotment to all book-runners. Includes only rank eligible transactions.

5) Source: Dealogic. Relates to total deal value of all common stock or common equity, including private placements, offered for all U.S. mining, oil and gas, and utility and energy companies with a market capitalization of $1 billion or less. Transactions priced between 1/1/03 and 12/31/07, with apportioned credit including over-allotment to all book-runners. Includes only rank eligible transactions.

6) Source: Dealogic. Relates to total deal value of all common stock or common equity, including private placements, offered for all U.S. and Bermuda finance and insurance companies with a market capitalization of $1 billion or less. Transactions priced between 1/1/03 and 12/31/07, with apportioned credit including over-allotment to all book-runners. Includes only rank eligible transactions.

7) Source: Dealogic. Relates to total deal value of all common stock or common equity, including private placements, offered for all U.S. companies with a market capitalization of $1 billion or less. Transactions priced between 1/1/03 and 12/31/07, with apportioned credit including over-allotment to all book-runners. Includes only rank eligible transactions.