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NewStar Expands Asset Management Unit

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Boston, MA, May 7, 2007 – NewStar Financial, Inc. (NASDAQ: NEWS) announced today the expansion of its alternative asset management platform through the formation of an affiliated asset manager, NewStar ArcTurus, which will invest in and manage portfolios of leveraged loans for institutional and qualified high net worth investors. The business is a natural extension of NewStar's current business model, providing investors access to the company's expertise in the middle market, proprietary deal flow and credit management capabilities, as well as its proven ability as a CLO manager of its own balance sheet funding transactions. NewStar ArcTurus expects to build investment portfolios comprised of middle market loans originated directly by NewStar and through small 'club-style' syndicates combined with broadly syndicated leveraged loans, which it will offer investors through a planned series of Collateralized Loan Obligations (CLOs). According to Tim Conway, CEO of NewStar, "The managed CLO is an integral part of our strategy to grow our asset management platform and diversify our revenue base. We believe we can continue to differentiate ourselves from the competition because of our access to unique proprietary deal flow, growing reputation in the marketplace, and talented team of professionals." John Frishkopf and Scott Poirier will serve as co-heads of NewStar ArcTurus. They are both founding members of NewStar and have responsibility for the firm's asset management and sales & trading activities, respectively. Rob Hornstein will be the senior credit officer and portfolio manager for NewStar ArcTurus. Prior to joining NewStar, Mr. Hornstein was at Bank of America, FleetBoston and Citigroup. Tom Mahoney, Dave Belanger, Jim Synborski, Brian Ricker, and Hank Spring will round out the group initially. Citigroup has been selected to arrange the first CLO and provide the related warehouse facility. In 2005, NewStar established its first asset management business, the NewStar Credit Opportunities Fund, with $150.0 million in committed equity and a $400.0 million credit facility, to generate fee income while providing additional financing capacity to commit to larger transactions for selected customers. NewStar has also successfully executed two CLOs for $875 million of CLOs to date for its own balance sheet. About NewStar Financial, Inc.:

NewStar Financial is a specialized commercial finance company focused exclusively on meeting the complex financing needs of customers in the middle market through our corporate, commercial real estate, and structured products groups. Our senior banking teams call directly on customers to provide advice and finance a range of strategic transactions that may require some combination of senior secured, second lien and mezzanine financing. NewStar typically works with customers with financing needs of up to $150 million and cash flow as low as $5 million. We target 'hold' positions of up to $35 million, but may also underwrite or arrange transactions up to $100 million for syndications to other lenders. We are headquartered in Boston MA, with regional offices in Darien CT, Chicago IL, San Francisco CA, San Diego CA, and Charleston SC. In December of 2006, NewStar completed an Initial Public Offering. The Company's shares trade on the NASDAQ under the ticker symbol, NEWS. Please visit our website at for more detailed transaction and contact information.

Corporate Inquiries:

NewStar Financial

Robert K. Brown

(617) 848-2558
Press-Related Inquiries:

Gaffney Bennett Public Relations

Annie Donnelly
(860) 416-1365

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