First Eagle Investment Management has agreed to acquire NewStar Financial, an investment manager specializing in direct lending to middle-market companies and management of broadly syndicated loans, confirmed First Eagle spokesman Peter Hill.
First Eagle is paying $11.44 per NewStar share in cash, plus contingent value rights worth up to an estimated additional 88 cents to $1 a share.
The acquisition will give First Eagle its first middle-market direct lending and broadly syndicated loan capabilities. First Eagle Investment Management has $116 billion in assets under management, while NewStar Financial has $7.3 billion.
First Eagle's and NewStar's investment teams will remain separate, and their current headquarters locations will be maintained in New York and Boston, respectively. Although they will remain separate, NewStar's functional teams will be closely aligned with and operate as part of First Eagle, Mr. Hill explained.
First Eagle's executive team will evaluate its options to determine what the optimal branding strategy is for the NewStar name going forward.
In a related transaction, NewStar has agreed to sell a portfolio of investment assets, including $2.4 billion of middle-market loans and other credit investments, to an investment fund managed by Blackstone Group's credit business, GSO Capital Partners.
The closing of First Eagle's acquisition of NewStar is conditioned upon GSO's completion of the acquisition of such assets. At closing, NewStar will enter into a servicing agreement with GSO, under which NewStar's current investment team will continue to subadvise the portfolio.
The transaction is expected to close by the end of 2017 or beginning of 2018.