Indianapolis-based Oak Street Funding has raised more than a quarter billion dollars in capital through loans completed with Germany-based DZ Bank AG Deutsche Zentral-Genossenschaftsbank and Boston-based NewStar Financial. The transaction positions Oak Street Funding to expand and accelerate its commission-based lending services to financial service professionals throughout the United States, according to a written statement issued by the company today.
“Our decision to fund Oak Street was based on the integrity of Oak Street Funding’s management team and the vigorous growth of their high quality loan portfolio,” said Patrick F. Preece of DZ Bank.
Oak Street Funding pioneered the concept of commission-based lending in 2003. The company provides capital to insurance agencies for succession planning, mergers, acquisitions and working capital.
“Financial services professionals have demonstrated a tremendous appetite for this type of financing. Insurance agencies in particular represent an industry segment that has been historically underserved by commercial banks and thus often limited in their growth potential,” noted Richard S. Dennen, president and CEO of Oak Street Funding.
The investor agents worked carefully with Oak Street Funding’s management team to develop financing to fund the larger deals that insurance agencies have expressed interest in. “We worked closely with Oak Street’s management team to insure that the transaction provided adequate capital to satisfy market demand for commission-based lending solutions without compromising the integrity of the transaction,” said Thomas M. Calhoun of NewStar Financial.
As the insurance community’s demand for commission-based lending services has grown within the insurance industry, so too has the enthusiasm of the investment community. This transaction represents Oak Street’s third round of funding in as many years due to the success of Oak Street’s lending model. In negotiating the quarter-billion dollar transaction, Oak Street’s management team met with some of the world’s largest commercial and investment banks.
“The competition between investors to provide this funding is proof of the confidence and enthusiasm the investor community has for Oak Street Funding,” said Steven Alonso, chairman of the Board.
Dennen said that the financing will enable Oak Street Funding to conveniently structure larger lending transactions and meet the overall demand that exists. “As the Baby Boomers enter retirement and succession planning programs are implemented, there will continue to be an unprecedented need for capital within the insurance community”.
The concept for Oak Street Funding was based on the realization that commercial banks are often reluctant to loan against intangible assets such as insurance policies. Oak Street Funding says it developed a proprietary technology that evaluates the different risk aspects of lending and ultimately delivers the capital insurance agencies need to grow their business.
Source: Oak Street Funding
Topics Mergers & Acquisitions Agencies
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