Even with the huge federal government buyout, cash is still in short supply that the Federal Reserve recently loosened the restrictions on private equity firms in terms of investment stakes in banks.In light of this, one of the top private equity operators, Fortress Investment Group LLC (NYSE: FIG), is eliminating its Q3 dividend payment of $0.225 per share. Basically, the firm wants as much capital as possible to capitalize on the opportunities. Fortress has about $300 million in cash. The CEO, Wesley Edens, said he wants to put money into banks, insurance companies and asset management operations.
In other words, this may be an attempt to reformulate the structure of Fortress's private equity structure, making it look more like a traditional financial services firm. It certainly helps that Fortress has a lot of capital to put to work.
However, such investments can be volatile and take several years to come to fruition. Then again, the purpose of private equity is to seek out long-term returns, right?
Tom Taulli is the author of various books, including The Complete M&A Handbook
