Franklin Square‘s FSIC funds, which are sub-advised by Blackstone’s GSO, have agreed to provide $300 million in debt financing to NewStar. This transaction also includes warrants that will be issued in two tranches. Headquartered in Boston, NewStar is a specialized finance firm.
PHILADELPHIA, PA, November 5, 2014 – Franklin Square Capital Partners, the largest manager of business development companies, announced today that it formed a strategic relationship through its FSIC platform with NewStar Financial, (Nasdaq: NEWS) (“NewStar”), a specialized finance company. The FSIC platform includes FS Investment Corporation (NYSE: FSIC), FS Investment Corporation II and FS Investment Corporation III (collectively, the “FSIC Funds”). The strategic relationship between the firms is anticipated to contribute materially to NewStar’s growth, while extending Franklin Square’s access to the lower middle market.
Under the terms of the investment, the FSIC funds, which are managed by Franklin Square and sub-advised by GSO Capital Partners (“GSO”), have committed to purchase $300 million of 10-year subordinated notes plus warrants that will be issued in two tranches and exercisable into 12 million shares of common stock. NewStar expects to use the proceeds from the transaction to enhance its ability to originate and lead transactions across all of its business lines and, as a result, significantly increase origination volume and facilitate asset growth.
“In addition to our investment in NewStar, we expect our strategic relationship to result in further lending and co-lending opportunities, expand our access to attractive lower middle market investments, and allow us to offer additional financing solutions to current and future portfolio companies,” said Michael C. Forman, Chairman and CEO of Franklin Square. For more information you may also visit http://investor.newstarfin.com/releases.cfm
About Franklin Square
Franklin Square is a leading manager of alternative investment funds designed to enhance investors’ portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm’s funds offer “endowment-style” investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients.
Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry’s first non-traded business development company. The firm managed approximately $12.4 billion in assets as of June 30, 2014. Franklin Square distributes its non-traded funds through its affiliated broker-dealer, FS2 Capital Partners, LLC. For more information, please visit www.franklinsquare.com.
About NewStar Financial, Inc.
NewStar Financial (Nasdaq:NEWS) is a specialized commercial finance and asset management company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing a range of corporate debt financing options to mid-sized companies 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, Los Angeles CA, New York NY, Portland OR, and San Francisco CA. Please visit our website at www.newstarfin.com for more detailed information.
About Blackstone and GSO
Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Blackstone’s asset management businesses, with almost $300 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.
GSO is the global credit and distressed investment platform of Blackstone. With approximately $70 billion of assets under management, GSO is one of the largest alternative managers in the world focused on the leveraged-finance, or non-investment grade related, marketplace. GSO seeks to generate attractive risk-adjusted returns in its business by investing in a broad array of strategies including mezzanine debt, distressed investing, leveraged loans and other special-situation strategies. Its funds are major providers of credit for small and middle-market companies and they also advance rescue financing to help distressed companies.