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Nov 30, 2015

NewStar Financial to Participate in the Bank of America Merrill Lynch 2015 Leveraged Finance Conference

BOSTON, Nov. 30, 2015 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (NASDAQ:NEWS) announced today that it is scheduled to participate in the Bank of America Merrill Lynch 2015 Leveraged Finance Conference in Boca Raton, Florida on Thursday, December 3, 2015.  Interested parties can access presentation materials on the Investor Relations section of NewStar's website at: www.newstarfin.com

About NewStar Financial, Inc.:

NewStar Financial, Inc. (Nasdaq:NEWS) is an internally-managed commercial finance company with specialized direct lending platforms that provide flexible debt financing options to companies and private equity firms in the middle market with proceeds typically used to fund acquisitions, working capital, growth strategies, and recapitalizations, as well as, equipment purchases.  The company originates credit investments directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments.  It also offers investment opportunities for qualified institutions to invest in managed credit funds that co-invest in middle market loans that it originates.  NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Darien CT, Chicago IL, Dallas TX, Los Angeles CA, San Francisco CA and Portland OR.

Corporate Inquiries: NewStar Financial Robert K. Brown 617.529.0875 rbrown@newstarfin.com
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Nov 09, 2015

NewStar Announces Pricing of Senior Note Offering and Increases Size to $80 Million

BOSTON, Nov. 09, 2015 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) ("NewStar") announced today that it priced its previously announced offering of senior notes, consisting of $80 million in aggregate principal amount of its 7.25% Senior Notes due 2020 (the "Notes").  The Notes will be issued as additional notes under the same indenture as the Company's $300 million of 7.25% Senior Notes due 2020 that were originally issued on April 22, 2015 (the "Existing Notes"), all of which remain outstanding.  The Notes will be treated as a single class with the Existing Notes, and will have the same terms as and be fungible with the Existing Notes.

The Notes will be issued and sold at a price of 99.01% of face value (plus accrued interest from November 1, 2015). The proceeds, after the payment of fees and expenses, to NewStar of this offering are expected to be approximately $78.0 million (not including pre-issuance accrued interest). Subject to customary closing conditions, the closing of this offering is expected on or about November 13, 2015. NewStar intends to use the proceeds of this offering, after the payment of fees and expenses, for general corporate purposes.

J.P. Morgan Securities LLC is acting as sole book-runner for the offering.

The Notes are being offered pursuant to a shelf registration statement filed with the Securities and Exchange Commission ("SEC") and declared effective on November 2, 2015. A prospectus supplement and the accompanying base prospectus relating to the notes will be filed with the SEC.  You may obtain these documents, when available, for free by visiting EDGAR on the SEC website at www.sec.gov.   Alternatively, copies may also be obtained from J.P. Morgan Securities LLC at the following address: 383 Madison Avenue, New York, New York, 10179, or by calling 1-866-803-9204.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements:

This press release includes "forward-looking statements", including statements regarding the completion of NewStar's offering of senior notes, which are statements other than statements of historical fact. These forward-looking statements involve a number of risks and uncertainties. There can be no assurance as to the completion or timing of the offering.  Among the important factors that could cause actual results to differ materially from those results indicated in the forward-looking statements include uncertainties relating to market conditions for corporate debt securities generally and for the securities of companies in our industry and for NewStar in particular.

Additional information about these and other risk factors can be found in NewStar's filings with the Securities and Exchange Commission, including Item 1A ("Risk Factors") of our 2014 Annual Report on Form 10-K , as amended.

Corporate Inquiries: NewStar Financial Robert K. Brown (617) 848-2558
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Nov 09, 2015

NewStar Announces Proposed $50 Million Offering of Senior Notes

BOSTON, Nov. 09, 2015 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (Nasdaq:NEWS) ("NewStar" or the "Company") announced today the offering of $50 million aggregate principal amount of its senior notes due 2020 (the "Notes"). The Notes will be issued as additional notes under the same indenture as the Company's $300 million of 7.25% Senior Notes due 2020 that were originally issued on April 22, 2015 (the "Existing Notes"), all of which remain outstanding.  The Notes will be treated as a single class with the Existing Notes, and will have the same terms as and be fungible with the Existing Notes.

NewStar intends to use the proceeds of this offering, after the payment of fees and expenses, for general corporate purposes.

J.P. Morgan Securities LLC is acting as sole book-runner for the offering.

The Notes are being offered pursuant to a shelf registration statement filed with the Securities and Exchange Commission ("SEC") and declared effective on November 2, 2015. A preliminary prospectus supplement and the accompanying base prospectus relating to the notes have been filed with the SEC.  You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov.  Alternatively, copies may also be obtained from J.P. Morgan Securities LLC at the following address: 383 Madison Avenue, New York, New York, 10179, or by calling 1-866-803-9204.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.                                                                                                          Forward-Looking Statements:This press release includes "forward-looking statements", including statements regarding NewStar's proposed offering of senior notes, which are statements other than statements of historical fact. These forward-looking statements involve a number of risks and uncertainties. There can be no assurance as to the completion, timing or size of the proposed offering.  Among the important factors that could cause actual results to differ materially from those results indicated in the forward-looking statements include uncertainties relating to market conditions for corporate debt securities generally and for the securities of companies in our industry and for NewStar in particular.

Additional information about these and other risk factors can be found in NewStar's filings with the Securities and Exchange Commission, including Item 1A ("Risk Factors") of our 2014 Annual Report on Form 10-K , as amended.

Corporate Inquiries:                NewStar Financial                 Robert K. Brown         (617) 848-2558 
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Nov 04, 2015

NewStar Reports Net Income of $5.1 Million, or $0.11 Per Diluted Share for the Third Quarter

  • Investment Activity — New funded credit investments exceeded $720 million in the seasonally slower third quarter, up 76% from the same quarter last year and down 29% from last quarter.
  • Asset Growth — Managed loans and credit investments increased by $447 million to $4.6 billion, or 11%, from the prior quarter and $2.0 billion, or 80%, from the same period last year. 
  • Funding — Asset growth was supported by a combination of long term capital from the issuance of subordinated notes under an existing commitment and the issuance of new asset-backed securities. 
  • Net Interest Margin — The margin widened to 2.57% for the third quarter from 1.99% in the second quarter, as expected, due primarily to the negative impact of interest expense recognized in connection with debt prepayment in the second quarter which did not recur in the third quarter. 
  • Revenue — Total revenue1 increased by $3.5 million to $26.7 million, or 15% from the prior quarter as a $7.4 million increase in net interest income generated from higher loan balances was partly offset by a $4 million decrease in non-interest income due primarily to unrealized losses on a total return swap.
  • Credit — Credit costs remained within expected ranges, increasing by $1.3 million from the prior quarter to $4.5 million due primarily to higher general provision expense related to loan growth, as specific provisions decreased to $1.6 million from $2.5 million in the prior quarter.
  • Stockholders Equity — Pre-tax ROAE increased to 5.3% in the third quarter from 5.2% last quarter. 
  • Strategic Initiatives — Increased pro forma assets under management by approximately $2.3 billion to $6.9 billion through the acquisition of Boston-based FOC Partners, a credit-oriented investment manager on October 7, 2015.

BOSTON, Nov. 04, 2015 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. (NASDAQ:NEWS) ("NewStar" or the "Company"), an internally-managed, commercial finance company, today announced financial results for its third quarter of 2015, reporting net income of $5.1 million, or $0.11 per diluted share. These results compare to net income of $5.0 million, or $0.10 per diluted share in the second quarter of 2015 and $5.0 million, or $0.10 per diluted share in the third quarter of 2014. Operating income before income taxes was $8.8 million for the third quarter of 2015 compared to $8.6 million for the second quarter and $8.5 million in the third quarter of 2014.

Tim Conway, NewStar's Chairman and Chief Executive Officer commented on the Company's quarterly performance: "We continued to make significant progress on our strategic priorities and remain on track to reach our targets.  Our ability to increase earnings through a period of heightened volatility in the credit markets reflects the growth in our core earnings power driven by our increased scale and fee revenue engines.  We remain on pace to reach our volume target for the full year based on new investment activity despite a seasonal slowdown in the third quarter.  Investment activity over the last twelve months exceeded $3.1 billion.  Importantly, the yield profile on new investments has also improved overall and the outlook for the pricing environment in our target markets remains favorable.  We are well positioned to capitalize on these trends through our strategic relationships and have the flexibility to allocate capital across our multiple origination platforms."  

Managed and Owned Investment Portfolios

  • Total new funded credit investments exceeded $720 million in the third quarter of 2015 compared to $1 billion in the prior quarter and $409 million in the same quarter last year.  Investment activity was driven by demand for acquisition financing derived from new middle market LBO activity and co-lending activity through our strategic relationships, combined with our emphasis on providing larger credit commitments and increasing the number of lead managed transactions. 
  • Balance sheet runoff from scheduled amortization, prepayments and sales totaled approximately $234 million, down from $419 million in the prior quarter.
  • Average yields on new loans and other credit investments in the third quarter were 6.7%, up from 6.6% in the prior quarter due primarily to an improved pricing environment during the third quarter. 
  • Loans and other investments outstanding, excluding managed assets, increased approximately 13% from the prior quarter and 67% from the third quarter of 2014. Growth in the third quarter was driven primarily by lending activity generated through our Leveraged Finance group. 
  • The Leveraged Finance loan portfolio increased by $328 million during the third quarter to almost $3.1 billion, while asset-based loan balances in our Business Credit portfolio increased 15% to $275 million, and loans and leases in our Equipment Finance portfolio increased 25% to $175 million.   
  • New equipment loan and lease volume was $31 million in the third quarter, down slightly from $35 million last quarter and up from $10 million in the third quarter of 2014, while asset-based lending activity totaling $25 million increased from $19 million last quarter, but decreased from $32 million in the comparable quarter last year.  Equipment finance and asset-based lending activity represented 12% of new loan volume retained on the balance sheet in the third quarter.   
  • Assets held in managed funds remained consistent at almost $1 billion as of September 30, 2015.
  • The owned loan portfolio remained balanced across industry sectors and highly diversified by issuer. Exposure to energy sectors was 2.2%, up from approximately 1.0% at the end of the prior quarter, reflecting highly selective investment activity in the third quarter intended to capitalize on dislocation in the sector.  As of September 30, 2015, no outstanding borrowings by a single obligor represented more than 1.21% of total loans outstanding, and the ten largest obligors comprised approximately 10.2% of the loan portfolio.

Net Interest Income / Margin

  • Net interest income increased by $7.4 million, or 47%, to $23.2 million in the third quarter compared to $15.8 million in the prior quarter as a $7.7 million increase in interest income significantly exceeded a $0.3 million increase in interest expense.  Part of the increase in net interest income was related to a favorable comparison to the prior quarter, which reflected the recognition of debt extinguishment expenses totaling approximately $3.6 million.  The balance of the increase, or approximately $3.8 million, was due to higher interest income driven by growth in earning assets. 
  • The portfolio yield remained relatively stable at 6.32% in the third quarter of 2015 compared to 6.31% in the prior quarter and 6.13% in the third quarter of 2014.  The increase in yield over the prior year was due primarily to higher yields on new loans originated. 
  • Net interest margin widened to 2.57% for the third quarter of 2015 compared to 1.99% for the prior quarter as the cost of funds decreased by 49 bps in the quarter due to the accelerated amortization of deferred financing fees in connection with the prepayment of corporate debt in the second quarter which did not recur in the third quarter.  

Non-Interest Income

  • Non-interest income was $3.5 million for the third quarter of 2015, down from $7.4 million for the second quarter and up $3.3 million from the third quarter of 2014. The change from the second quarter was due primarily to a decline in the value of a reference portfolio of syndicated loans underlying a total return swap, requiring the recognition of a $3 million charge to earnings to write-down the fair value of the referenced portfolio.  At September 30, 2015, the reference portfolio underlying the swap had an unrealized loss of approximately $1.8 million.    
  • Other non-interest income in the third quarter of 2015 was centered in $3.4 million of capital markets fees, $1.0 million of asset management fees, $0.7 million of unused fees on revolving credit commitments, and a gain on the sale of loans of $0.4 million. It also included an impairment charge of approximately $0.5 million related to an equity position held by the Company.     

Credit Performance

  • Total credit costs in the third quarter of 2015 remained within expected ranges, increasing $1.3 million to $4.5 million from $3.2 million in the prior quarter due primarily to an increase in general provision related to loan growth. 
  • Total specific provision expense decreased by approximately $0.9 million in the third quarter of 2015 to $1.6 million compared to $2.5 million in the prior quarter. 
  • The allowance for credit losses was $54.5 million, or 1.76% of consolidated loans and approximately 51% of NPLs, at September 30, 2015, compared to $49.9 million, or 1.81% of loans and approximately 49% of NPLs, at June 30, 2015. The change in the ratio was driven primarily by an increase in the loan portfolio. 
  • Non-performing assets increased slightly to $107.7 million, or 3.48% as a percentage of loans at September 30, 2015 compared to $105.0 million or 3.79% of loans at the end of the prior period due to the addition of one legacy loan totaling $7.0 million to non-accrual status during the third quarter of 2015. 

Expenses

  • Operating expenses increased by approximately $2 million to $13.4 from $11.4 million due to higher accrued compensation expense. 
  • Expenses as a percentage of average assets were 1.45% in the third quarter compared to 1.39% of average assets for the prior quarter.
  • Adjusted operating expenses, excluding non-cash equity compensation were $12.5 million in the third quarter compared to $10.6 million in the second quarter. 
  • The Company had 110 full-time employees at September 30, 2015 compared to 107 full-time employees at June 30, 2015.

Income Taxes

  • Deferred income taxes increased to $35.6 million as of September 30, 2015 compared to $29.8 million as of June 30, 2015 due primarily to changes in the timing differences between when depreciation on leased equipment in our Equipment Finance portfolio is recognized for book and tax purposes.
  • Approximately $25.8 million and $9.6 million of the net deferred tax asset as of September 30, 2015 were related to our allowance for credit losses and equity compensation, respectively, which was partially offset by $2.9 million of deferred tax liabilities related to the lease portfolio.

Funding and Capital

  • Total cash and equivalents as of September 30, 2015 were $198.3 million, of which $57.5 million was unrestricted. Unrestricted cash increased from approximately $25.3 million at June 30, 2015 due primarily to the timing of cash distributions from CLO trusts. Restricted cash decreased to approximately $140.9 million at September 30, 2015 from approximately $189.5 million as of June 30, 2015 as restricted cash in the 2015-1 CLO was employed in new investments, as well as timing differences in settlement dates of CLO trusts and other non-recourse, secured financing arrangements.
  • Advances under credit facilities decreased by approximately $10 million during the third quarter as the repayment of advances under warehouse lines from the proceeds of two new securitizations were mostly offset by additional advances to fund new lending activity.
  • Increased the commitment amounts of two warehouse credit facilities agented by Citi and Wells Fargo by $75 and $50 million to $275 million and $475 million, respectively. 
  • Term debt securitizations increased from the prior quarter by approximately $347 million to $1.9 billion at September 30, 2015.  The increase was due primarily to the issuance of asset-backed notes totaling approximately $405 million through a new CLO Trust and a new securitization of equipment loans and leases, which was partly offset by continued amortization of the 2007-1 CLO. 
  • Completed a $398 million term debt securitization through the issuance of asset-backed notes through a new CLO trust 2015-2.  The notes were backed by a diversified portfolio of commercial loans originated by our Leveraged Finance group.  The Company retained all of the membership interests and a portion of the Class E notes, totaling $70.1 million.
  • Completed a $100 million equipment lease securitization through the issuance of $82.9 million of asset-backed notes backed by a diversified portfolio of equipment loans and leases totaling approximately $100.1 million originated through our Equipment Finance group.  The Company retained all of the membership interests and Class B notes totaling $40.6 million. 
  • $50 million of additional subordinated notes were issued in the quarter under an existing commitment from funds managed by GSO Capital and Franklin Square.  An additional $25 million was drawn after the end of the quarter, leaving a $25 million remaining to be drawn by December 2015.   
  • Total debt increased by approximately $428 million to $3.1 billion at September 30, 2015, which led to an increase in balance sheet leverage to 4.8x from 4.1x at June 30, 2015. The increase was due primarily to the company's issuance of subordinated notes and asset-backed securities in connection with two securitization transactions.  

Equity

  • Book value per share increased $0.04 to $14.40 at the end of the third quarter of 2015, up from $14.36 at the end of the prior quarter due primarily to comprehensive income for the quarter, which reflected approximately $2.6 of unrealized losses on securities recorded in other comprehensive income. Book value per share increased 13.1% from the same quarter of last year.
  • The company purchased 0.07 million shares of its common stock in the third quarter for an aggregate purchase price of $0.8 million under the stock repurchase program authorized in August 2014.
  • Average diluted shares outstanding were 48.2 million shares for the quarter, down from 48.5 million for the prior quarter, and total outstanding shares at September 30, 2015 were 45.8 million, consistent with June 30, 2015.
  • Pre-tax returns on average equity increased to 5.3% in the third quarter, from
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Oct 21, 2015

NewStar Financial Schedules Release of Results for the Third Quarter of 2015

BOSTON, Oct. 21, 2015 (GLOBE NEWSWIRE) -- NewStar Financial, Inc. ("NewStar") (NASDAQ:NEWS) announced today that it will report financial results for the third quarter of 2015 on Wednesday, November 4, 2015 before the markets open.

NewStar will also host a webcast/conference call to discuss the results on Wednesday, November 4, 2015 at 10:00am Eastern Time. All interested parties are invited to participate via telephone or webcast, which will be hosted through the Investor Relations section of the company's website at www.newstarfin.com. Please visit the website to register for the webcast and test your connection prior to the call. You can also access the conference call by dialing 877-755-7419 approximately 5-10 minutes prior to the call. International callers should dial 973-200-3080. All callers should reference "NewStar Financial."

For convenience, an archived replay of the call will be available through November 11, 2015 by dialing 855-859-2056. International callers should call 404-537-3406. For all replays, please use the passcode 62163542. The audio replay will also be available through the Investor Relations section of the website at www.newstarfin.com.

About NewStar Financial, Inc.:

NewStar Financial (Nasdaq:NEWS) is an internally-managed commercial finance company focused on meeting the complex financial needs of companies and private investors in the middle markets. The Company provides a range of flexible debt financing options to mid-sized companies to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases through four specialized direct lending platforms. The Company targets 'hold' positions in loans of up to $50 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. Through its asset management platforms, NewStar also offers a range of investment products employing credit-oriented strategies focused on both middle market loans and liquid, tradeable credit.

NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, Los Angeles CA, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.

CONTACT:
NewStar Financial
Robert K. Brown
617.848.2558
rbrown@newstarfin.com

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Oct 07, 2015

NewStar Completes Acquisition and Authorizes New Share Repurchase Plan

BOSTON, Oct. 07, 2015 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) announced today that it has completed its previously announced acquisition of Feingold O'Keeffe Capital, LLC d/b/a FOC Partners ("FOC"), a private alternative asset management firm based in Boston, Massachusetts for $19.3 million, net of acquired cash.  The acquisition adds approximately $2.3 billion to NewStar's assets under management, increasing total pro forma AUM to approximately $6.4 billion. FOC will operate as NewStar Capital, a wholly-owned subsidiary of NewStar Financial, and will continue to be based in Boston. 

NewStar's Board of Directors has also authorized the repurchase of up to $5 million of the company's common stock from time to time on the open market or in privately negotiated transactions.  The timing and amount of any shares repurchased will be determined by the company's management based on its evaluation of market conditions and other factors.  The repurchase program, which will expire on March 31, 2016 unless extended by the Board of Directors, may be suspended or discontinued at any time.  The company may also establish from time to time 10b5-1 trading plans that will provide flexibility as it buys back its shares. 

About NewStar Financial, Inc.:

NewStar Financial, Inc. (Nasdaq:NEWS) is an internally-managed commercial finance company with specialized direct lending platforms that provide flexible debt financing options to companies and private equity firms in the middle market with proceeds typically used to fund acquisitions, working capital, growth strategies, and recapitalizations, as well as, equipment purchases.  The company originates credit investments directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments.  It also offers investment opportunities for qualified institutions to invest in managed credit funds that co-invest in middle market loans that it originates.  NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Darien CT, Chicago IL, Dallas TX, Los Angeles CA, San Francisco CA and Portland OR.

Forward-Looking Statements:

This press release contains forward-looking statements, including statements regarding the company's intention to repurchase shares of its common stock from time to time under the stock repurchase program.  There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements.  These forward-looking statements involve a number of risks and uncertainties that include, but are not limited to, the market price of the company's stock prevailing from time to time, the company's cash flows from operations, corporate developments and general economic conditions.  Additional information about the factors that may affect NewStar's operations is set forth in Item 1A, "Risk Factors" in its Annual Report on form 10‑K for the year ended December 31, 2014. 

  

Contact: NewStar Financial, Inc. Robert K. Brown 617.848.2558 rbrown@newstarfin.com   
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Sep 21, 2015

NewStar Completes Third Loan Securitization of 2015

Issues third CLO in 2015, bringing cumulative CLO issuance to twelve transactions totaling to more than $5 billion   Placed five classes of floating rate notes priced at par to yield an initial weighted average spread of approximately Libor plus 268 bps   Achieved an advance rate of approximately 82%, placing $351 million of notes rated Aaa through Ba3 by Moody's and AAA by Fitch   Retained a portion of Class E Notes and equity interests, totaling approximately $71 million, or 18% of the capital structure, which is intended to satisfy European Risk Retention rules   Provides continued funding capacity to support new lending activity through a four-year reinvestment period ending August 2019 BOSTON, Sept. 21, 2015 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS), an internally-managed commercial finance company, announced today that it completed a $398 million term debt securitization known as NewStar Commercial Loan Funding 2015-2. All floating rate classes of notes were priced at par.   NewStar Commercial Loan Funding 2015-2 was the Company's 12th securitization since inception and part of a programmatic approach to its funding strategy. The notes were backed by a diversified portfolio of commercial loans originated by NewStar. The transaction was executed through a private offering via Rule 144A and Regulation S. Six classes of notes rated Aaa through Ba3 by Moody's and two classes rated AAA by Fitch, totaling approximately $228 million, were placed. NewStar retained a portion of the Class E Notes and the subordinated interests, which represented approximately 18% of the capital structure, or about $70 million. The deal was structured in a manner intended to satisfy European risk retention rules and included a small fixed rate tranche, rated Aaa/AAA, to meet specific investor demand.  "This transaction represents our twelfth CLO to date and our third deal of the year, which brings our total issuance to over $5 billion. Our leading track record of issuance in this market underscores the value investors place in NewStar's middle market franchise and credit management platform," said NewStar CEO, Tim Conway.  John Frishkopf, head of asset management and treasury at NewStar added, "We were also pleased by the speed and quality of execution by the Wells Fargo team and the level of support among repeat investors who continue to commit capital to our balance sheet securitization programs," he added. NewStar Financial will serve as collateral manager of the CLO, which has a 4 year reinvestment period. The notes were rated by Moody's Investors Service and the A-1 and A-2 classes were also rated by Fitch. All variable rate notes were priced to yield an initial weighted average of approximately Libor plus 2.68%. Wells Fargo Securities was lead placement agent and Capital One Securities was co-lead placement agent.This announcement is neither an offer to sell nor a solicitation of an offer to buy the notes. The notes subject to the private placement have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. About NewStar Financial, Inc.: NewStar Financial (Nasdaq:NEWS) is an internally-managed, specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company provides a broad range of flexible debt financing options used to fund working capital, growth strategies, acquisitions and recapitalizations, as well as equipment purchases. NewStar originates loans and leases directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. The Company targets 'hold' positions of up to $50 million and will selectively underwrite or arrange larger transactions for syndication to other lenders. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Chicago IL, Dallas TX, Darien CT, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.CONTACT: Corporate Inquiries: NewStar Financial Robert K. Brown (617) 848-2558
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Sep 16, 2015

NewStar to Add $2.3 Billion of Managed Assets Through Acquisition of Investment Manager

Signed definitive agreement to acquire Feingold O'Keeffe Capital, LLC (FOC Partners)   Established in 2001, FOC Partners is a private alternative asset management firm specializing in credit-oriented investment strategies focused on bank loans, high yield bonds and distressed debt   Adds $2.3 billion to assets under management, increasing total pro forma AUM to approximately $6.4 billion   Builds on existing asset management capabilities, adding an established, diversified investment platform with fee-based accounts managed across a range of CLO, hedge fund, separate account and retail fund products   Co-founders, Andrea Feingold and Ian O'Keeffe, to lead FOC investment team   Expected to be accretive to earnings per share in 2016 BOSTON, Sept. 16, 2015 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS) announced today that it has agreed to acquire Feingold O'Keeffe Capital, LLC d/b/a FOC Partners ("FOC"), a private alternative asset management firm based in Boston, Massachusetts.  The acquisition will add approximately $2.3 billion to NewStar's assets under management, increasing total pro forma AUM to approximately $6.4 billion. The transaction is expected to close in the fourth quarter, subject to customary closing conditions, and be accretive to earnings per share in Q1 2016.    FOC Partners was established in 2001 by Co-founders Andrea Feingold, former Co-Head of PIMCO's High Yield Group, and Ian O'Keeffe, former PIMCO Head of High Yield Trading. The Co-founders launched the firm in 2001 to offer investors differentiated investment strategies intended to produce strong, non-correlated investment returns in a variety of markets with a focus on credit risk assets including senior loans, high yield bonds and stressed/distressed debt. The firm is a registered investment adviser and currently manages six CLOs backed by broadly syndicated loans, as well as, various separate accounts and retail funds employing long-only strategies focused on the leveraged finance markets. FOC also manages two hedge fund strategies.  Since forming a strategic relationship with Blackstone's GSO Capital in the fourth quarter of last year, NewStar has focused on expanding its asset management platform by launching new managed funds and increasing its investment activity. This transaction is the Company's first acquisition of an investment manager and represents another important step in that strategy. FOC's investment platform and capabilities are highly complementary to the company's existing middle market direct lending strategies, which are offered through three credit funds with approximately $1 billion of managed assets.  As a result, the acquisition is expected to be highly synergistic, adding significant breadth to NewStar's investment platform with liquid loan, long/short, and stressed/distressed debt strategies managed across a range of CLO, hedge fund, separate account and retail fund products.  NewStar will retain FOC's investment team and support staff to manage existing accounts and intends to expand the platform through organic growth in existing accounts and new fund formation with CLO risk retention solutions provided, or arranged, by NewStar. The platform will be co-led by Andrea Feingold and Ian O'Keeffe. The transaction is expected to add significantly to the Company's fee revenue in 2016 and will help serve as a further catalyst to the growth of NewStar asset management activities. FOC will operate as NewStar Capital, a wholly-owned subsidiary of NewStar Financial, and will continue to be based in Boston. "This acquisition is consistent with our strategy to expand our asset management activities in ways that add to our value proposition for institutional investors and leverage our core strengths in direct lending, securitization and credit management. This transaction also provides an attractive way to diversify our business mix, adding significantly to fee revenue and accelerating improvement in equity returns," said NewStar's Chairman and Chief Executive Officer Tim Conway. "FOC has a great investment team with an outstanding track record that will help us position our asset management platform for continued growth. We are excited to add Andrea and Ian to our management team." "The transaction is expected to be accretive to earnings in 2016, adding predictable fee revenue derived from long-term CLO management contracts," added John Bray, NewStar's Chief Financial Officer. "We were able to complete thorough due diligence and the terms of the transaction worked well for all parties.  We expect the business to contribute meaningfully to EPS in 2016 and be accretive to our equity returns." "We are enthusiastic about the opportunity to join NewStar and build on the combined platform with their strong sponsorship," said Andrea Feingold, co-founder of FOC Partners. "As part of NewStar, we see an exciting opportunity to offer differentiated investment strategies that leverage the company's proprietary deal flow in addition to growing AUM across the core platform, particularly in liquid loan strategies offered through our CLO products." K&L Gates LLP served as legal counsel to NewStar. GreensLedge Capital Markets LLC advised FOC Partners and Seward & Kissel LLP served as legal counsel to the firm. About NewStar Financial, Inc.: NewStar Financial, Inc. (Nasdaq:NEWS) is an internally-managed commercial finance company with specialized direct lending platforms that provide flexible debt financing options to companies and private equity firms in the middle market with proceeds typically used to fund acquisitions, working capital, growth strategies, and recapitalizations, as well as, equipment purchases.  The company originates credit investments directly through teams of experienced, senior bankers and marketing officers organized around key industry and market segments. It also offers investment opportunities for qualified institutions to invest in managed credit funds that co-invest in middle market loans that it originates. NewStar is headquartered in Boston MA and has regional offices in Atlanta GA, Darien CT, Chicago IL, Dallas TX, Los Angeles CA, San Francisco CA and Portland OR.Forward-Looking Statements: This press release contains forward-looking statements.  These forward-looking statements involve a number of risks and uncertainties. Such risks and uncertainties include, but are not limited to, the likelihood that the transaction is consummated on a timely basis or at all, including whether the conditions required to complete the transaction will be met, realization of the expected benefits of the transaction, and NewStar's expected return and planned growth for the asset management business following the closing of the transaction. Among the important factors that could cause actual results to differ materially from those results indicated in the forward-looking statements include uncertainties relating to future events that could affect FOC's investment performance and level of fee-paying assets under management. Additional information about the economic, competitive, regulatory and other factors that may affect NewStar's operations is set forth in Item 1A, "Risk Factors" in its Annual Report on form 10-K for the year ended December 31, 2014. CONTACT: NewStar Financial, Inc. Robert K. Brown 617.848.2558 rbrown@newstarfin.com
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