NewStar to buy out Fifth Street CLO for $16 million, pay down loans

By Susanna Moon

Chicago, July 7 – NewStar Financial, Inc. said it has agreed to acquire Fifth Street CLO Management LLC, a wholly owned subsidiary of Fifth Street Holdings LP, an affiliate of Fifth Street Asset Management, Inc. for about $16 million.

The acquisition will add about $726 million to NewStar’s assets under management, increasing total pro forma assets under management to about $7.3 billion.

Included in the deal are contracts to manage two middle market CLOs and some retained interests in the CLOs that are required to comply with risk retention rules.

Fifth Street CLO Management will become a wholly owned subsidiary of NewStar and the funds will be managed by NewStar’s middle market investment team.

“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,” NewStar’s chairman and chief executive officer Tim Conway said in a company press release.

The estimated purchase price is net of $13 million of assumed debt and will be adjusted based on working capital at closing, which is expected in the third quarter, according to a company announcement.

In a separate announcement, Fifth Street said it plans to use proceeds to pay down its credit facility and for general corporate purposes.

NewStar is a Boston-based commercial finance company with $6.6 billion of assets managed across two complementary business lines – middle market direct lending and asset management.

Fifth Street is a publicly traded credit-focused asset management firm based in Greenwich, Conn.

Fifth Street CLO Management was formed in 2015 to manage Fifth Street’s middle market collateralized loan obligations business.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.