For NewStar Financial (Nasdaq: NEWS), 2015 was an unprecedented year of growth. The lender increased its assets under management, remained a leader in the middle market league tables throughout the entire year, solidified its relationship with GSO Capital Partners and purchased a smaller competitor, making it Mergers & Acquisitions’ 2015 Lender of the Year.
“We accomplished a lot, including scaling our business to be a better partner with more capabilities for our clients,” says Tim Conway, NewStar’s CEO.
NewStar’s deal volume reached more than $3 billion in 2015, up about 70 percent from $1.8 billion in 2014. The lender was No. 4 in the league tables as Institutional Bookrunner in the large middle market segment, with $1.1 billion in volume in 2015, and No. 4 in U.S. middle market sponsored lending on an agent-only basis, with deal volume at $5.9 billion in 2015, according to Thomson Reuters LPC.
NewStar’s new partnership with GSO is partly responsible for the Boston-based firm’s blockbuster year. At the end of 2014, NewStar entered into a partnership with GSO, Blackstone Group’s (NYSE: BX) credit arm. GSO invested $300 million in long-term capital in NewStar; GSO got access to the lower middle market, and helped NewStar find more cross-referral and co-lending deals.
Since NewStar formed its partnership with GSO, it has been able to offer its middle-market clients a more complete set of financing options, including unitranche as well as asset-based loans and lease financing. In fact, NewStar completed its first lease backed asset-based securities deal in 2015 — issuing about $100 million of notes backed by equipment loans and leases. All told, NewStar put out more than $575 million of new commitments with GSO Capital’s help in 2015.
In 2015, NewStar also provided leverage on deals for private equity firms including Genstar Capital, The Pritzker Group, Irving Place Capital, Sentinel Capital and New Mountain Capital. “We have developed a collaborative partnership with GSO. They have great ideas that they share with us and in many ways we act as their lower middle market lending platform,” says Conway.
“With our larger asset management platform and strategic relationships we can take down bigger pieces of deals now.” NewStar’s assets under management grew to $6.9 billion in 2015 from $3.6 billion in 2014.
The firm’s October acquisition of Feingold O’Keeffe Capital, a boutique credit manager, was in part responsible for the growth. The target had $2.3 billion of assets under management at the time of the acquisition, which NewStar completed for just under $19 million. The purchase allowed NewStar to grow in liquid loan, distressed debt offerings that are managed through collateralized loan obligation funds and hedge funds.