BlackRock is set to acquire global credit investment manager HPS Investment Partners in a deal valued at approximately US$12 billion ($18 billion) as it bolsters its capabilities in alternatives and private markets.
It marks BlackRock’s third deal in this space this year, following the acquisition of Preqin in July and more recently, Global Infrastructure Partners (GIP) in October.
Founded in 2007, HPS manages various strategies across the capital structure, including privately negotiated senior debt, liquid credit, and asset-based finance and real estate, managing around US$148 billion in client assets.
In an announcement on 3 December, BlackRock confirmed it would acquire 100 per cent of HPS, with 100 per cent of consideration paid in BlackRock equity.
The equity is issued by a wholly-owned subsidiary of BlackRock, SubCo Units, and exchangeable on a one-for-one basis into BlackRock common stock.
Around 9.2 million SubCo Units will be paid at closing and approximately 25 per cent of the consideration, or 2.9 million SubCo Units, will be paid in five years, subject to achievement of certain post-closing conditions.
Following the transaction, the combined entity will hold around US$220 billion in client assets.
According to BlackRock, the combined private credit franchise will work side-by-side with BlackRock’s $3 trillion public fixed income business to provide both public and private income solutions for clients across their whole portfolios.
“We have always sought to position ourselves ahead of our clients’ needs. Together with the scale, capabilities, and expertise of the HPS team, BlackRock will deliver clients solutions that seamlessly blend public and private,” said Laurence Fink, BlackRock chairman and chief executive.
The transaction is also expected to increase private markets fee-paying AUM and management fees by 40 per cent and approximately 35 per cent respectively, and be modestly accretive to BlackRock’s as-adjusted earnings per share in the first full year post-close.
With the deal, the firms are set to form a new private financing solutions business unit led by HPS founders Scott Kapnick, Scot French, and Michael Patterson.
The combined platform will have broad capabilities across senior and junior credit solutions, asset-based finance, real estate, private placements, and CLOs, and will unite direct lending, fund finance, and BlackRock’s GP and LP solutions (fund of funds, GP/LP secondaries, co-investments).
This combination, BlackRock stated, creates an “integrated solution” across corporate and asset-based finance, investment and non-investment grade and private credit.
Kapnick, French, and Patterson will join BlackRock’s Global Executive Committee and Kapnick, who serves as HPS chief executive, will be an observer to the board of BlackRock.
“Today marks an important milestone in our drive to become the world’s leading provider of private financing solutions. Our partnership with BlackRock will further strengthen our position in this fast growing but increasingly competitive market,” Kapnick said.
“The combination of HPS’s proven culture of investment discipline with BlackRock’s global reach will allow us to seize new opportunities for our investors and employees and set us up for continued success for the next decade and beyond.”
The transaction is expected to close in mid-2025 subject to regulatory approvals and customary closing conditions.
Looking ahead, BlackRock noted durable global growth will require higher volumes of debt financing, with markets increasingly looking to private capital as an answer.
“The addition of HPS will position BlackRock to connect companies of all sizes, from small and medium-sized businesses to large corporations, with financing for investments that support economic growth and job creation,” BlackRock said.
It forecasts the private debt market will more than double to US$4.5 trillion by 2030.
It currently manages nearly $90 billion in private debt client assets across sponsor- and non-sponsor-led core middle market direct lending in U.S., European, and Asian markets; venture lending; investment grade private placements; real estate debt; and private infrastructure debt.
Fink remarked: “For over 35 years, BlackRock has grown and evolved alongside the capital markets. With GIP, and now HPS, we are expanding our private markets capabilities across our comprehensive global platform.
“Our Aladdin technology, including eFront, and soon Preqin, will make access to private markets simpler and more transparent. These capabilities, together with our global reach, deep relationships, and powerful technology, differentiate our ability to serve clients.”
