NewStar Financial has sold off its equipment finance arm, marking the second transaction in which the Boston-based firm has divested a portion of its business as it works to hone in on its mid-market lending practices.
Radius Bank, also headquartered in Beantown, paid $140 million in the sale, which generated $105 million for NewStar, net of debt repayment, transaction fees and other retained liabilities, according to the statement. Alongside the purchase, Radius Bank also completed a $15 million capital raise.
Ten separate members of the NewStar equipment finance business will transition over to Radius, which will call the business Radius Equipment Finance. Those personnel include Stephen O’Leary, the former head of equipment finance and leasing division at NewStar. O’Leary’s management will also join Radius.
“For NewStar, the transaction generates an attractive financial return and further demonstrates the intrinsic value of our direct lending platforms that we believe is not fully recognised in our current share price,” CEO Tim Conway said.
In March, NewStar’s asset based lending business went for $112 million to Sterling National Bank, a New York State-based bank with offices in Montebello and Yonkers. Due to the retention of excess cash, NewStar realised $117 million from that sale.
“The successful sales of both our equipment finance and asset-based lending businesses have added significantly to our liquidity position and enabled us to streamline the company's operations,” Conway added in the statement.