================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
NEWSTAR FINANCIAL, INC.
(Name of Issuer)
COMMON STOCK (PAR VALUE $.01 PER SHARE) 65251F05
(Title of class of securities) (CUSIP number)
CAPITAL Z PARTNERS, LTD.
UNION SQUARE PARTNERS GP, LTD.
230 PARK AVENUE SOUTH, 11TH FLOOR
NEW YORK, NY 10003
ATTENTION: MR. CRAIG FISHER
TEL NO. (212) 965-0800
(Name, address and telephone number of person authorized to receive notices
and communications)
NOVEMBER 29, 2007
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240-13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [X].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See ss. 240.13d-7 for
other parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information that would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Capital Z Financial Services Fund II, L.P.
------------------------------------------------------------------------------------------------
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A (a) [_]
MEMBER OF A GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF, AF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Bermuda
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 5,714,972
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 5,714,972
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 5,714,972
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 13.1% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: PN
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
2
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Capital Z Financial Services Private Fund II, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A (a) [_]
GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF, AF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Bermuda
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: [_]
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 5,714,972
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: [_]
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 5,714,972
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 5,714,972
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 13.1% (1)
[__%]
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: PN
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
3
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Capital Z Partners, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A (a) [_]
GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF, PF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Bermuda
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 5,714,972
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 5,714,972
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 5,714,972
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 13.1% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: PN
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
*This page reflects beneficial ownership by Capital Z Partners, L.P. solely in
its capacity as the general partner of Capital Financial Services Fund II, L.P.
and Capital Z Financial Services Private Fund II, L.P.
4
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Capital Z Partners, Ltd.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A (a) [_]
GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF, PF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Bermuda
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 5,714,972
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 5,714,972
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 5,714,972
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 13.1% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
*This page reflects beneficial ownership by Capital Z Partners, Ltd. solely in
its capacity as the general partner of Capital Z Partners, L.P., which is the
general partner of Capital Z Financial Services Fund II, L.P. and Capital Z
Financial Services Private Fund II, L.P.
5
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Capital Z Management, LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A (a) [_]
GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF, PF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Bermuda
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 5,714,972
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 5,714,972
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 5,714,972
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 13.1% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
*This page reflects beneficial ownership by Capital Z Management, LLC, the
principal business of which is performing investment management services for
Capital Z Financial Services Fund II, L.P. and Capital Z Financial Services
Private Fund II, L.P.
6
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Union Square Partners, L.P.
------------------------------------------------------------------------------------------------
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A (a) [_]
MEMBER OF A GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF, AF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Cayman Islands
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 2,319,386
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 2,319,386
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 2,319,386
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.3% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: PN
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
7
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Union Square Partners GP, L.P.
------------------------------------------------------------------------------------------------
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A (a) [_]
MEMBER OF A GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF, AF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Cayman Islands
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 2,319,386
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 2,319,386
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 2,319,386
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.3% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: PN
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
*This page reflects beneficial ownership by Union Square Partners GP, L.P.
solely in its capacity as the general partner of Union Square Partners, L.P.
8
------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Union Square Partners GP, Ltd.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A (a) [_]
MEMBER OF A GROUP: (b) [X]
------------------------------------------------------------------------------------------------
3 SEC USE ONLY
------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: PF, AF, OO
------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [_]
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF Cayman Islands
ORGANIZATION:
------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
---------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 2,319,386
OWNED BY
---------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
---------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 2,319,386
------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 2,319,386
REPORTING PERSON:
------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.3% (1)
------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: PN
------------------------------------------------------------------------------------------------
1. This percentage is calculated based on 43,706,785 shares of the Issuer's
common stock, which includes (i) 36,258,531 shares of the Issuer's common
stock outstanding as of November 9, 2007 as reported in the Issuer's
quarterly report on Form 10-Q dated as of November 13, 2007, (ii)
7,248,080 shares of the Issuer's common stock sold by the Issuer in the
event which requires the filing of this statement and (iii) 200,174 shares
of the Issuer's common stock which may be acquired by Capital Z and
Capital Z Private Fund by exercise at any time at the option of Capital Z
and Capital Z Private Fund of one warrant.
*This page reflects beneficial ownership by Union Square Partners GP, Ltd.
solely in its capacity as the general partner of Union Square Partners GP, L.P.,
which is the general partner of Union Square Partners, L.P.
9
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
The title of the class of equity security to which this Statement on
Schedule 13D relates is the common stock, par value $.01 per share (the "Common
Stock"), of NewStar Financial, Inc., a Delaware corporation (the "Company"). The
address of the Company's principal executive offices is
500 Boylston Street
Suite 1600
Boston, MA 02116
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Capital Z Financial Services Fund II, L.P.
("Cap Z Fund II"), Capital Z Financial Services Private Fund II, L.P. ("Cap Z
Private Fund II"), Capital Z Partners, L.P. ("Cap Z L.P."), Capital Z Partners,
Ltd. ("Cap Z Ltd."), Capital Z Management, LLC ("Cap Z Management"), Union
Square Partners, L.P. ("Union Square"), Union Square GP, L.P. ("Union Square
LP") and Union Square Partners GP, Ltd., ("Union Square GP"). Each of the
foregoing entities is sometimes referred to herein as a "Reporting Person" and
they are sometimes referred to herein collectively as the "Reporting Persons."
Each of Cap Z Fund II and Cap Z Private Fund II is a Bermuda limited
partnership formed to invest in securities of insurance, financial services and
healthcare service companies and other related businesses. Cap Z Fund II
historically invests in parallel with Cap Z Private Fund II.
Cap Z L.P. is a Bermuda limited partnership, the principal business of
which is serving as the sole general partner of each of Capital Z Fund II and
Cap Z Private Fund II.
Cap Z Ltd. is a Bermuda exempt company, the principal business of which is
serving as the sole general partner of Cap Z L.P. and is the ultimate general
partner of Cap Z Fund II and Cap Z Private Fund II.
Cap Z Management is a Delaware limited liability company, the principal
business of which is performing investment management services for Cap Z Fund II
and Cap Z Private Fund II.
Union Square is a Cayman Islands limited partnership formed to invest in
securities of insurance, financial services and healthcare service companies and
other related businesses.
Union Square LP is a Cayman Islands limited partnership formed to invest
in securities of insurance, financial services and healthcare service companies
and other related businesses.
Union Square GP is a Cayman Islands exempt company, the principal business
of which is serving as the sole general partner of Union Square LP and the
ultimate general partner of Union Square.
10
The principal business address of each of the Reporting Persons is 230
Park Avenue South, 11th Floor, New York, New York 10003.
The name and present principal occupation or employment of each director
and executive officer of Cap Z Ltd., Cap Z Management and Union Square GP are as
follows:
-------------------------------------------------------------------------------
Name Principal Occupation or Employment
---- ----------------------------------
-------------------------------------------------------------------------------
Robert A. Spass Chairman of the Board of Directors
-------------------------------------------------------------------------------
Bradley E. Cooper Senior Vice President and Director
-------------------------------------------------------------------------------
Roland V. Bernardon Chief Financial Officer and Treasurer
-------------------------------------------------------------------------------
Craig Fisher General Counsel
-------------------------------------------------------------------------------
Each of the above-listed individuals is a citizen of the United States of
America. The business address of each of the above-listed individuals is at Cap
Z Ltd. and Cap Z Management's and Union Square GP's offices, 230 Park Avenue
South, 11th Floor, New York, New York 10003.
During the last five years, none of the Reporting Persons nor, to the best
of their knowledge, any of their officers and directors, has (i) been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Cap Z Fund II, Cap Z Private Fund II and Union Square used contributions
from their respective partners to fund such their respective purchases of Common
Stock which are more fully described in Item 5 below.
ITEM 4. PURPOSE OF TRANSACTION
On November 12, 2007, Union Square into a Securities Purchase Agreement
(the "Purchase Agreement") with the Company and certain other investors.
Pursuant to the Purchase Agreement, Union Square purchased 2,319,386 shares of
the Company's common stock, $0.01 par value per share, at a price of $10.00 per
share, in a private placement sale, representing 5.3% of the equity securities
of the Company. The percentage in the immediately foregoing sentence is
calculated based on 43,706,785 shares of the Company's common stock, which
includes (i) 36,258,531 shares of the Company's common stock outstanding as of
November 9, 2007 as reported in the Company's quarterly report, on Form 10-Q
dated as of November 13, 2007, filed pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, (ii) 7,248,080 shares of the Company's
common stock sold by the Company in the event which requires the filing of this
statement and (iii) 200,174 shares of the Company's common stock which may be
acquired by Capital Z and Capital Z Private Fund by exercise at any time at the
option of Capital Z and Capital Z Private Fund of one warrant. Under the terms
of the Purchase Agreement, the Shares will be issued and sold in two
installments or tranches. The first tranche for the sale of 7,248,080 shares of
common stock is scheduled to close on November 29, 2007. The second tranche for
11
the sale of the remaining 5,251,920 shares of common stock (the "Second Tranche
Shares") is subject to the approval of the Company's stockholders and is
scheduled to close (assuming such approval is obtained) three business days
after a special stockholders' meeting, which is expected to be held no later
than January 2008, at which the Company will request such approval.
On November 12, 2007, each of Capital Z Financial Services Fund II, L.P.,
Capital Z Financial Services Private Fund II, L.P., and certain other existing
shareholders entered into separate voting agreements with the Company, in which
each such holders committed to vote the shares each such holder owns in favor of
the issuance of the Second Tranche Shares. The shares of the Company's common
stock subject to such separate voting agreements represent, in the aggregate,
over 50% of the outstanding voting power of the Company.
Union Square also executed a Registration Rights Agreement with the
Company and certain other investors, (the "Registration Rights Agreement") on
November 12, 2007. Under the terms of the Registration Rights Agreement, the
Company agreed to file a registration statement for purposes of registering the
shares for resale. The Company has agreed to pay the investors 1% of the
aggregate purchase price in cash liquidated damages if the registration
statement is not filed by the earlier of May 1, 2008 or the first date when the
Company becomes S-3 eligible (the "Filing Date"), the registration statement is
not declared effective by 45 days after the Filing Date, the Company fails to
file an acceleration request within five trading days of receipt of notice from
the SEC that the registration statement is no longer subject to review, or the
Company fails to keep the registration statement continuously effective. The
Registration Rights Agreement also grants the investors the right to request up
to three underwritten offerings of the shares under certain circumstances.
In addition, in connection with its agreement to purchase shares in the
private placement, Union Square entered into two letter agreements with the
Company related to board nomination and management rights. Pursuant to these
agreements, Union Square has the right to nominate one director to be included
on the slate of directors to be voted on at the Company's annual stockholders'
meeting. This right will terminate when Union Square's stockholdings decline to
below 51% of the percentage of the board represented by one nomination. Union
Square was also granted certain management rights that allow Union Square to
consult with and advise Company management on significant business issues and
examine the books and records of the Company. These management rights terminate,
with respect to Union Square, when Union Square holds less than 50% of the
shares purchased by it in the private placement. These rights are intended to
satisfy the requirement of contractual management rights for purposes of
qualifying Union Square's interests in the Company as venture capital
investments for purposes of the Department of Labor's "plan assets" regulations.
Union Square has agreed to hold in confidence and trust and not use or disclose
any confidential information provided to or learned by them in connection with
the exercise of management rights under this agreement.
Except as otherwise contemplated herein, the Reporting Persons currently
have no plans or proposals which relate to or would result in any of the actions
enumerated in paragraphs (a) through (j) of Item 4 of the form of Schedule 13D
promulgated under the Act. However, each of the Reporting Persons reserves the
right to change its plans at any time, as it deems appropriate, in light of its
12
ongoing evaluation of (i) its business and liquidity objectives, (ii) the
Company's financial condition, business, operations, competitive position,
prospects and/or share price, (iii) industry, economic and/or securities markets
conditions, (iv) alternative investment opportunities, and (v) other relevant
factors. Without limiting the generality of the preceding sentence, each of the
Reporting Persons reserves the right (in each case, subject to any applicable
restrictions under law or contract) to at any time or from time to time (A)
purchase or otherwise acquire additional shares of Common Stock or other
securities of the Company, or instruments convertible into or exercisable for
any such securities (collectively, "Company Securities"), in the open market, in
privately negotiated transactions or otherwise, (B) sell, transfer or otherwise
dispose of Company Securities in public or private transactions, (C) cause
Company Securities to be distributed in kind to its investors, (D) acquire or
write options contracts, or enter into derivatives or hedging transactions,
relating to Company Securities, and/or (E) encourage (including, without
limitation, through their designees on the Company's board of directors and/or
communications with directors, management, and existing or prospective security
holders, investors or lenders, of the Company, existing or potential strategic
partners, industry analysts and other investment and financing professionals)
the Company to consider or explore (i) sales or acquisitions of assets or
businesses, or extraordinary corporate transactions, such as a merger (including
transactions in which affiliates of Reporting Persons may be proposed as
acquirers or as a source of financing), (ii) changes to the Company's
capitalization or dividend policy, or (iii) other changes to the Company's
business or structure.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b) The responses set forth on rows 7 through 13 of the cover pages of
this Statement are incorporated herein by reference.
The aggregate number of shares of Common Stock that the Reporting Persons,
in the aggregate, beneficially own is 8,034,358 shares of Common Stock, which
constitutes approximately 18.4% of the Company's outstanding shares of Common
Stock.
The percentage in the immediately foregoing sentence is calculated based
on Stock43,706,785 shares of the Company's common stock, which includes (i)
36,258,531 shares of the Company's common stock outstanding as of November 9,
2007 as reported in the Company's quarterly report, on Form 10-Q dated as of
November 13, 2007, filed pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, (ii) 7,248,080 shares of the Company's common
stock sold by the Company in the event which requires the filing of this
statement and (iii) 200,174 shares of the Company's common stock which may be
acquired by Capital Z and Capital Z Private Fund by exercise at any time at the
option of Capital Z and Capital Z Private Fund of one warrant.
As a result of the matters referred to in Item 2 the Reporting Persons may
be deemed to constitute a "group" (within the meaning of Rule 13d-5(b) under the
Act). As a result, and on that basis, the Reporting Persons may be deemed to
beneficially own shares of Common Stock that may be beneficially owned by such
persons. Each of the Reporting Persons disclaims beneficial ownership of shares
that may be beneficially owned by any of the persons referred to in Item 2 above
and any of their respective affiliates, and neither the filing of this Statement
nor its contents shall be deemed to constitute an admission to the contrary.
13
(c) See Item 4 above which is incorporated herein by reference.
(d)-(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
See Item 4 above and the Exhibits, which are incorporated herein by
reference.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
------------------------------------------------------------------------------
Exhibit No. Description
----------- -----------
------------------------------------------------------------------------------
7.1 Joint Filing Agreement
------------------------------------------------------------------------------
7.2 Securities Purchase Agreement,
by and among Union Square
Partners, L.P., Corsair
Capital, Swiss Re, Och-Ziff,
SAB Capital Partners, L.P.,
SAB Capital Partners II, L.P.,
OZ Master Fund, Ltd., GPC LV
II LLC, Fleet Maritime, Inc.,
OZ Global Special Investments
Master Fund, L.P., Corsair III
Financial Services Capital
Partners, L.P., Corsair III
Financial Services Offshore
892 Partners, L.P. and Swiss
Reinsurance Company (the
"Investors") and NewStar
Financial, Inc., dated
November 12, 2007
------------------------------------------------------------------------------
7.3 Registration Rights Agreement,
between the Investors and
NewStar Financial, Inc., dated
November 12, 2007.
------------------------------------------------------------------------------
7.4 Form of Voting Agreement
between each of Capital Z
Financial Services Fund II,
L.P., Capital Z Financial
Services Private Fund II, L.P.
and certain other existing
shareholders and the Company,
each dated November 12, 2007.
------------------------------------------------------------------------------
7.5 Management Rights Letter
between Union Square and the
Company, dated November 12, 2007.
------------------------------------------------------------------------------
7.6 Nomination Rights Letter
between Union Square and the
Company, dated November 12, 2007.
------------------------------------------------------------------------------
14
Signatures
After reasonable inquiry and to the best of the knowledge and belief of
the undersigned, the undersigned hereby certifies that the information set forth
in this statement is true, complete and correct.
Dated: December 7, 2007
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.
---------------------------------------------------------------
By: Capital Z Partners,
L.P., its General
Partner
---------------------------------------------------------------
By: Capital Z Partners,
Ltd., its General
Partner
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
CAPITAL Z FINANCIAL SERVICES PRIVATE FUND II, L.P.
---------------------------------------------------------------
By: Capital Z Partners,
L.P., its General
Partner
---------------------------------------------------------------
By: Capital Z Partners,
Ltd., its General
Partner
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
CAPITAL Z PARTNERS, L.P.
---------------------------------------------------------------
By: Capital Z Partners,
Ltd., its General
Partner
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
CAPITAL Z PARTNERS, LTD.
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
CAPITAL Z MANAGEMENT, LLC
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
15
UNION SQUARE PARTNERS, L.P.
By: UNION SQUARE PARTNERS GP, L.P., its General Partner
-------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
UNION SQUARE PARTNERS GP, L.P.
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
UNION SQUARE PARTNERS GP, LTD.
---------------------------------------------------------------
By: /s/ Craig Fisher
---------------------------------------------------------------
Name: Craig Fisher
---------------------------------------------------------------
Title: General Counsel - Authorized Signatory
---------------------------------------------------------------
16