Certain financial connections cannot be replicated. Were Randal Nardone’s Black Rock Financial connections key to his success with the Fortress Investment Group? How were these used to improve the Fortress?
Bankers are not usually in the limelight; but their decisions can be earth-shattering. Their provision of capital is essential to keeping the economy running. They are the power behind the throne.Randal Nardone is behind the scenes, providing the necessary capital. Money is the currency, just like the electricity that powers the lights in your home.Bankers have very tight knit groups. They even have entire streets dedicated to their money making enterprise: Wall Street and High Street. They need one another because that is how the money is most productive.One of Randal Nardone’s duties at the Fortress Investment Group is to raise capital to purchase assets. In the United States, the Federal Reserve System has been set up to provide some capital. Therefore, Randal Nardone’s financial connections to the Fed could be very lucrative.These connections make sure that the Fortress acquisitions are well-received. If he needs to raise more money, he can use his connections to find the right creditors. As a publicly traded company, Fortress also needs to keep its shareholders happy.
Stocks and bonds are different ways to provide the necessary capital to make businesses run. With solid financial ties, Randal Nardone can receive cheap capital.He hopes for the best Zero Interest Rate Policy (ZIRP) capital rates that the top banks, like Goldman Sachs receive. That might be why the Fortress Investment Group principals included ex-Goldman Sachs executives.Of course, with ZIRP funds, profits should be higher. The lower capital costs might have been one of the reasons why Randal Nardone is a billionaire. Cheap capital has also encouraged the Fortress Investment Group to take chances with assets that might have lower rates of returns, like railroads.Cheap capital has made many billionaires, but it has also taken the skills of Randal Nardone and other Fortress executives to find the best assets. This could also be an advantage of having the right connections. A tip on an undervalued asset from Black Rock Financial could be very lucrative.
After restructuring private companies and preparing to make them public through an IPO, connections are also needed. A large bank would need to underwrite the IPO, publicize it and list it on the stock exchange. Marketing professionals would need to explain to the institutional investors, why this was the right asset for their financial portfolio.The success of the IPO took private business aims and placed them before the public for review. With the right connections, Randal Nardone could gauge the mood of the markets. That way the Fortress Investment Group IPOs could be the most successful.Randal Nardone’s Black Rock Financial connections taught him the business. They are also very valuable in a pinch. They make it easier to make healthy profits at the Fortress.