Boston-basedNewStar Financial, a middle-market commercial finance company, has added three managing directors and just completed a $50 million offering of long-term senior secured notes. The financing will boost its lending power, which is currently about $2 billion. This is the first notes offering the company has done, said CEO Tim Conway, who was head of loan syndications, high-yield bonds, asset-backed securities, acquisition finance and merger advisory at Fleet Boston. He formed NewStar in June 2004 with Peter Schmidt-Fellner, former co-head of the high-yield group at JPMorgan.
NewStar initially received $210 million of equity funding from Capital Z Financial Services andJP Morgan Partners, while Wachovia Capital Markets and CDC IXIS Capital Markets provided $450 million in debt financing (LMW, 7/23).
The decision to do a notes offering was "part of our original plan," Conway said. There was to be $210 million of equity tied into the business plan and $100 million of long term debt. The company will raise another $50 million, probably sometime next year. "We wanted to have just over $300 million of long-term capital, which gives us a significant amount of buying power before we would have to go to the market to raise additional long term capital, either debt or equity," he said.
NewStar is looking to expand regionally and in specific industries. "[We want] to build out our industry specialties, which include health care, media, transportation and energy," he said. "We expect to make loans in the range of a billion or more a year and expect to be managing several billion dollars of loan assets we directly originate over the next few years."
Fueling its expansion has been new hires, including Bob Kosian, managing director, who will lead origination efforts in the Southeast out of the firm's new Charleston, S.C. office. He will also cover national retail industry deals. He previously worked at Citigroup. Other hires includeGreg Pachus, managing director, who will lead the firm's national healthcare lending business. He was previously a senior v.p. at Brown Brothers Harriman in Boston, where he focused on medical device and healthcare lending. Patrick McAuliffe, managing director, will lead origination in the metro New York region and cover transportation deals nationally. He joins NewStar from Bank of America, where he was a regional executive working in the middle market. The trio will report to David Dobies and Tim Shoyer, co-heads of NewStar's middle market group.